Malaysia set for new consumption tax

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Income-Tax-MalaysiaNow that general elections are over, the Malaysian government seems eager to move ahead with the long-delayed goods and service tax (GST) to replace the more generous sales and service tax which has been used in the country for several decades.

The GST, in discussion since 2009, could come at a rate of 7 per cent as a value-added tax for end consumers by 2014. The current system is a sales and services tax imposed on local manufacturers or importers of goods (sales tax at a rate of between 5 to 10 per cent) and on services (5 per cent).

The new GST, modeled after the same system implemented in Singapore, would comprise most goods and services for end consumers and is seen as a major tax reform that would help Malaysia to offset its budget deficit and reduce its dependence on revenue of state-owned oil company Petronas.

The Minister in the Prime Minister’s Department, Datuk Seri Idris Jala, said the GST would guarantee additional revenue of RM20 billion to RM27 billion per year.

He added that the fresh tax burden on the population would be balanced out by reducing corporate as well as personal income taxes, a promise the government had made ahead of elections.

Despite Malaysian taxes being the second lowest in Southeast Asia behind Singapore, there is open protest against the new GST being voiced by many. Some are concerned about the effects such as tax would have on low-income Malaysians, others are wondering whether the GST would also be applicable on medical goods and services.

A platform of rights groups and opposition parties, called Protes, which is supported by the Socialist Party of Malaysia, is the most active opponent of the GST and has already stages a number of rallies against it.

 

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Reading Time: 2 minutes

Now that general elections are over, the Malaysian government seems eager to move ahead with the long-delayed goods and service tax (GST) to replace the more generous sales and service tax which has been used in the country for several decades.

Reading Time: 2 minutes

Income-Tax-MalaysiaNow that general elections are over, the Malaysian government seems eager to move ahead with the long-delayed goods and service tax (GST) to replace the more generous sales and service tax which has been used in the country for several decades.

The GST, in discussion since 2009, could come at a rate of 7 per cent as a value-added tax for end consumers by 2014. The current system is a sales and services tax imposed on local manufacturers or importers of goods (sales tax at a rate of between 5 to 10 per cent) and on services (5 per cent).

The new GST, modeled after the same system implemented in Singapore, would comprise most goods and services for end consumers and is seen as a major tax reform that would help Malaysia to offset its budget deficit and reduce its dependence on revenue of state-owned oil company Petronas.

The Minister in the Prime Minister’s Department, Datuk Seri Idris Jala, said the GST would guarantee additional revenue of RM20 billion to RM27 billion per year.

He added that the fresh tax burden on the population would be balanced out by reducing corporate as well as personal income taxes, a promise the government had made ahead of elections.

Despite Malaysian taxes being the second lowest in Southeast Asia behind Singapore, there is open protest against the new GST being voiced by many. Some are concerned about the effects such as tax would have on low-income Malaysians, others are wondering whether the GST would also be applicable on medical goods and services.

A platform of rights groups and opposition parties, called Protes, which is supported by the Socialist Party of Malaysia, is the most active opponent of the GST and has already stages a number of rallies against it.

 

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