GST VS SERVICE TAX

BUSINESS ALREADY FAMILIAR WITH SERVICE TAX MAY IMAGINE GST AS A MERE EXTENSION OF A FAMILIAR SYSTEM. DON’T BE FOOLED. GST IS A MUCH MORE COMPLEX SYSTEM NOT TO BE TAKEN LIGHTLY.

Malaysia sees the withdrawal of Service Tax on 1 April 2015, as the new Goods and Services Tax (GST) comes into full implementation. Technically, and procedurally, GST is markedly different from service tax. Yet, it’s difficult to get truly worried about a new tax when it sounds so similar to the old. After all, service tax is already written into the name of GST, and the tax rate for GST is the same as the existing 6% under service tax. So an uninformed neutral party may be left wondering what all the fuss is about. But this time round, familiarity betrays the genuine need for anxiety.

GST "ZERO-RATED" And EXEMPT"

Following the Budget 2014 announcement, Malaysia's GST will come into effect on 1 April 2015 at the rate of 6% based on a "taxable turnover' threshold

of RM500,000 per annum. Businesses below the threshold do not need to be registered (and by extension, do not need to charge GST) although voluntary

registration is allowed. GST in a nutshell is a consumption tax or value added tax (VAT) that is levied on the supply of taxable goods and services made in the

course or furtherance of any business by a taxable person in Malaysia and the importation of goods and services into Malaysia. It is called value added as the

tax is charged at stages by the intermediaries in the production and distribution process (value added) and ultimately,will pass on to the final consumer. GST

is a replacement for the existing Sales Tax and Service Tax which is administered by the Royal Malaysian Customs Department.