Goods and Services Tax(GST) Dato Subromaniam Tholasy Director of GST ROYAL MALAYSIAN CUSTOMS

Transcription

1 Goods and Services Tax(GST) Dato Subromaniam Tholasy Director of GST ROYAL MALAYSIAN CUSTOMS

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3 Type of taxes in Malaysia Direct Taxes Ø Corporate Tax Ø Individual Income Tax Ø Stamp Duty Ø RPGT Ø Petroleum Income Tax Ø Coopera>ves and others Indirect Taxes Ø Import duty Ø Export duty Ø Excise Ø Sales tax Ø Service Tax Ø Windfall profit tax 3

4 SALES & SERVICE TAX (SST)

5 Sales Tax & Service Tax 1972 ImplementaKon date 1975 Sales Tax Certain goods produced locally & imported Scope Of Charge Certain services Service Tax RM100,000 Threshold 0 RM3 m 5%, 10% & specific Tax Rate 6% & specific Manufacturer Wholesaler Retailer Consumer Service Provider Consumer Sales tax is collected at the manufacturing stage Service tax is collected when the service is rendered

6 Examples of Goods - Sales Tax 5% Consumers have been paing sales tax not knowingly

7 Examples of Goods - Sales Tax 10% Consumers have been paying sales tax not knowingly

8 Examples of Services Service Tax 6 % Restaurant Hotel Vehicles Service Centres Parking Security Services Telecommunication Services

9 Why GST Is Required?

10 Why GST? To restructure the na>on's tax structure to be more efficient, effec>ve, transparent, business- friendly and capable of genera>ng a stable revenue source Bersatu Membangun Bersama 10

11 Why GST? Weakness in SST Tax on Tax Transfer Pricing No Tax Relief On Exports GST more EffecKve & Efficient NaKonal Revenue Shadow Economy Self policing & Increase Tax Compliance Less red tape Transparent Reduce dependence on income tax % (2014) Reduce dependence on petroleum products % (2014) Come out and register under the GST Size in Malaysia is quite big (30%) Not only the locals have to pay tax Tourist and foreigner also have to pay GST

12 160 GST / VAT Countries CARIBBEAN, CENTRAL & NORTH AMERICA No. of countries= 19 The highest tax rate = 17.5% The lowest tax rate = 5% EUROPE No. of Countries= 53 The highest tax rate = 27% The lowest tax rate = 5% ASIA No. of countries= 19 The highest tax rate = 20% The lowest tax rate = 3% ASEAN No. of countries = 7 The highest tax rate = 12% The Lowest tax rate = 7% SOUTH AMERICA No.of countries= 11 The highest tax rate = 22% The lowest tax rate = 10% AFRICA No. of countries= 44 The highest tax rate = 20% The Lowest tax rate = 5% 12 OCEANIA No. of countries= 7 The highest tax rate = 15% The lowest tax rate = 5% % 12

13 VAT/ GST Countries Malaysia ( ) Brunei Myanmar 160 countries implemented GST/VAT 82% 18% Only three Southeast Asian countries have not implemented GST / VAT 49 have not implemented GST/ VAT

14 Malaysian model Progressive or Regressive? 14

15 Designing the GST Model Approach I Tax everything possible with little exemption and zero rating with a single rate Advantages ü simple to administer ü low compliance cost ü less complexity ü high productivity Disadvantages ü less popular ü Regressive ü Bill may not get passed in Parliament 15

16 Designing the GST Model Approach II Tax everything possible with little exemption and zero rating with multiple rates (standard, reduced and luxury rates) Advantages ü Potentially Progressive ü Easier to convince the critics Disadvantages ü high compliance cost ü Complexity ü abuse 16

17 Designing the GST Model Approach III Exemption and zero rating of basic necessities and critical sectors Advantages ü easier to convince the critics ü potentially progressive ü Easy passage to become law Disadvantages ü zero rating and exemptions enjoyed by everyone ü complexity ü compliance cost ü low productivity 17

18 Malaysia s GST Model

19 GST model Zero rated supply Basic food Fruits Infant milk Exported goods and services Basic food Basic food Others: Medicines (NEM) Books Newspapers Bread (only plain white) Coffee,&Tea powder 300 units a monthdomestic use only Domestic use only 19

20 GST model Exempt supply HEALTH AND EDUCATION SERVICES BUS TRANSPORTATION -school, express, stage WATER TRANSPORTATION -ships, ferries and boats TOLLS X TAXIS RESIDENTIAL HOUSES FINANCIAL SERVICES RAIL TRANSPORTATION : KTM, ERL, LRT, Monorail LAND FOR PUBLIC USE 20

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22 SST GST Cascading Eliminated No Complete Tax Relief On Export Export is zero rated and eligible to claim input tax credit Transfer pricing GST can overcome Transfer pricing problem in every supply chain

23 Impact on Consumer Price Index (CPI) Territory CPI Penisular Malaysia 1.20 % Sabah 1.02 % Sarawak 1.03 % Average 1.08 %

24 Comparison of expenses under SST and GST. *Note- compared with monthly expenses EEXPENDITURE (RM)) TAX EXPENSES DIFFERENCE(RM) SST % GST % 2, , HIGH INCOME = HIGH TAX

25 Malaysian Expenditure Pattern % Basic Food & Non- Alcoholic key : Utilities Transport (fuel, motor vehicles) Low Income Middle Income High Income Source: HES

26 GST is not imposed on basic food and needs Threshold value (RM500,000) is high ( Many SMEs would be exempt ) GST will replace Sales Tax (5 % & 10 %) & service tax (6 %, specific) GST will not burden the people BRIM is raised to RM950 from RM650

27 Cont Individual income tax rates reduced between 1% and 3% on all taxable income group GST will not burden the people GST rate is among the lowest in the world The highest taxable income raised to RM400,000 from the current RM100,000 The maximum income tax rate of 26% is reduced to 24 %, 24.5 % and 25 %

28 GST impact on the economy Goods and services produced in Malaysia will become more compe>>ve Exports and internakonal services are zero- rated A`ract more tourists to visit and shop in Malaysia Tourist refund scheme At internakonal airports Duty Free Zone - Labuan, Langkawi and Tioman - no GST Computable General Equilibrium Model (CGE) GST will boost GDP to 0.3 % export (0.5%)

29 Example of GST Impact on Prices 532 category of products may see reduction in prices up to 4.1% and 354 category of products may see increase in prices not more than 5.8%. - Budget speech on 10 October 2014 by PM NO ITEM Price before (RM) Price aier (RM) Change 1 OR FILLET BURGER KFC * * * EH RICE MALAYSIA SUPER 5% * * * KG POWD- MILK INF LACTOGEN *900 GMTN HEN'S EGGS GRADE A * * * * No Change 5 FABRIC COTTON * * * * * * * M The above figures subject to factors such as the cost of produckon, supply and demand

30 Example of GST Impact on Prices NO ITEM Price before (RM) Price aier (RM) Change 6 RENT APARTMENT * * * * * * MH TOL PLUS * * * * * * * * TRIP MOBILE PHONE * * * * * * * EH PROTON WAJA 1.6 (M) SEDAN * EH 58, , ( ) 10 ASTRO SUBCRIPTION * * * * * MH The above figures subject to factors such as the cost of produckon, supply and demand

31 ISSUES RAISED ON GST

32 ANTI- GST PROTEST 23 March 2015

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34 FIRST DAY CHAOTIC SITUATION

35 Why service charge has GST? Why newspaper is standard rate? Why traders issued hand wri`en invoice? Why top up card is RM10.60 now? Restaurant charge GST but why no GST ID No. on the invoice? Why non- registered trader is selling cigare`e with price inclusive of GST? 35

36 Bersatu Membangun Bersama 36

37 APOLOGY LETTER Bersatu Membangun Bersama 37

38 Bersatu Membangun Bersama 38

39 Bersatu Membangun Bersama 39

40 Bersatu Membangun Bersama 40

41 Bersatu Membangun Bersama 41

42 Recently, The Malaysian Insider reported that two ladies, S. Kasthuri and Kamelia Shamsuddin, had started an online campaign to get the government to stop taxing Malaysian women for their periods. The petition received more than 5,000 supporters in five days. Bersatu Membangun Bersama 42

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44 The day before GST & first day Pay before 12am no GST 6% Angry Pay after 12am subject GST 6%

45 First day and in the subsequent weeks REGISTERED RETAILER NON REGISTERED RETAILER Confused Price with GST 6% Price with no GST 6%

46 First day and in the subsequent weeks GST 6% WHAT?????...I thought cooking oil is zero rated!!!! But.sunflower oil is standard rated.

47 WAY FORWARD HELP DESK / CALL CENTRE On the day of introduckon of the GST and through the month, queskons from businesses and public were expected to be so much that everyone has to atend to the queries

48 HAND- HOLDING PROGRAM FOR GST REGISTERED PERSONS CriKcal to the successful implementakon of GST AcKviKes Includes Changes from SST to GST In- depth training on GST requirements Cash Flow Impact on business FaciliKes under GST ApplicaKon for various facilikes Online training for GST Return Filing Price Impact/Changes System requirements &GST accounkng soiware and Tax Codes Undertaken by Customs with MOF HQ Materials and Training of Trainers STATES To carry out the programme Target group Note: Customs has so far trained 100,00 parfcipants out of 376,000

49 CriKcal factor for the successful implementakon of GST Informed Compliance vs Enforced Compliance - Almost 80 guides are uploaded in our Portal - Guide Books for every Industry will be published 1,642 NEW Posts have been approved ALL SOP s have been completed Most Customs staff have been trained

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