GST In Malaysia To Be Zero-Rated Starting From 1 June 2018

Malaysia Resets Goods and Services Tax to Zero From June 1, 2018

Malaysia Resets Goods and Services Tax to Zero From June 1, 2018

The fiscal reform initiative is already under way, the Ministry of Finance (MoF) said today, adding that revenue shortfall resulting from the removal of the Goods and Services Tax (GST), which is to be zero-rated effective June 1 2018 in the initial stage, will be cushioned by specific revenue and expenditure measures that will be announced later.

The change would not include goods and services listed in the GST (Exempt Supply) Order 2014, allowing them to remain exempted from GST.

"What if a business were to continue charging GST beyond June 1?"

Pakatan Harapan (PH), the coalition that was voted into power in the 14th general election, had promised to abolish the GST within 100 days of forming government.

"This provides fiscal buffers for the immediate future", the ministry said, referring to the higher oil prices that will give the government more space to maneuver for its budget.

Moreover, the GST in India has had an indirect impact on the lives of Indians.

The federal government's previous administration led by Datuk Seri Najib Razak had been working towards achieving a government budget that balances between its spending and revenue, and had targeted to cut budget deficit from three per cent to 2.8 per cent this year.

She also believed that Malaysian government would increase its reliance on oil-related revenues and would also narrow the country's tax base if GST is eliminated.

"We have to take note that SST is a cost to producers and gets compounded on its way up, whereas GST is tax collected from end consumers, and appears as a claimable tax credit for producers", he said.

India studied the Malaysian model before implementing the GST and borrowed the anti-profiteering clause to ensure GST benefits are passed on to the end-consumer by the industry. Nevertheless, experts believe that India's GST will not meet the same fate as Malaysia's due to its unique structure and implementation. That is not sustainable.

According to the Commercial Taxes department, the growth rate in revenue through GST-subsumed taxes was around 12.3%. "That is why for India the different rates will work", said Sumit Dutt Mazumder, former chairman of the Central Board of Excise and Customs. The different rules, laws, and rates in the different states caused difficulties for businesses.

"However, sales in May could fall drastically as consumers hold back on purchases", the research firm said.

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