Goods And Services Tax (GST): A New Tax Reform In Malaysia: [Essay Example], 984 words GradesFixer
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Goods and Services Tax (gst): a New Tax Reform in Malaysia

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The Goods and Services Tax (GST) is a value included tax imposed most products and enterprises sold for domestic products. The GST is paid by customers, however it is dispatched to the governing body by the business offering the products and enterprises. As a result, GST gives income to the governing body. The first country to implement GST is France in 1954, and ever since then an approximately 160 countries have adopted this tax system in some form or another. Example of the countries with GST are Canada, Vietnam, Australia, Singapore, the U. K. , Monaco, Spain, Italy, Nigeria, Brazil, and South Korea. Malaysia implemented GST on 1st April 2015. The Malaysian GST system has two rates of GST (6% and 0%), and accommodates the zero-rating of exported products, international services, basic food items, and numerous books. Types of goods that are not affected by GST are residential property, financial services, childcare and private education services, healthcare services, and public transport services. The types of goods affected by GST are cosmetic, skin products, fast food, electronic devises and many more. The difference between goods and services tax (GST) and sales and service tax (SST) is that sales tax is only imposed on one level of production, which normally happens at the output level, when goods are being taken out from the factory. Service tax is imposed on certain services when offered to the customer. Moreover, GST is a consumerism tax based on added value concept at each level in the supply chain, from production to consumer. It is imposed on goods and services at every level of production and distribution in the supply chain including export goods and services.

In Malaysia have two acts govern separately the goods (Sales tax 1972 in Act 64) and service (Service tax 1975 in Act 151) and both taxes were handled by the Royal Malaysian Customs and Excise (the Customs). So sales tax and service tax will charged to the customer who consumers taxable goods and services. Sales tax is charged to the customer who consumers taxable goods and then collected by business and responsible for customs. Another service tax is charged for the customer who consumer taxable services such as in hotels and restaurant. Along with a growing budget deficit, government of Malaysia is just implementing GST in order to improve revenue collection. Actually general operation of the GST will taxed for only the value of each stage. So, the person is registered under the GST required to charge of goods and services to customers. The person can claim a credit on any GST incurred on purchases and if the person’s customer is making tax of goods and services also can allow to claim a credit, a way in order to avoid happening double taxation. But, rate of GST still did not concern because the government required to consider a few factors such as the current threshold of sales tax and service tax, number of businesses in Malaysia, exemption and zero-rating, social and economic considerations.

On the GST environment, tax will be imposed in two situations which are input tax and output tax. Input tax is the tax generated in the process who person is purchasing goods and services. Another output tax refers to the consumption tax changed to the customer at the time of sales. Moreover the taxable person will divided into three categories of GST rates separately standard-rated supplies, zero-rated supplies and exempt supplies. Standard-rated supplies and zero-rated supplies are a taxable supply and, if taxable person is eligible can claim input tax credit for business inputs. But, standard-rated supplies are taxable with standard line for the supply of goods and services, contrast, zero-rated supplies are taxable with zero rate.

Another exempt supplies are not taxable supplies and cannot claim input tax credit for business inputs. The implementing of GST will be actually a set to take place on January 2007, but on 22 February 2006, government proclaims that the implanting GST will postpone to a later date. One of foremost the readiness issues among small and medium-sized enterprises because GST preparation will effect on financial reporting and strategic decisions and company estimate to have a higher cost because need developing a new system and knowledge teamwork for GST operation. When implementing GST need to consider a lot of factors such as communications. Every company need provide knowledge and professional information to each department and employees in order to ensure their employees enable cope with this new operation of GST.

Graduates of accounting and finance has also been a factor because the GST is a new taxation, so future graduates need enough knowledge in order to ensure the company can smoothly operate in implementing GST. In this new taxation, tax authority is important to enforce GST because they need to ensure each company understands this taxation. In addition, cash flow management also important because along with implementing GST will cause increasing taxable charges of supplier, so companies need ensure keep a good level cash flow of daily operation. In implementing GST, suppliers will taxable their each of supplying item, so companies need to understand how to set up price for their goods and service in order to can receive enable revenue. Developing information technology also is a readiness issue when implementing GST.

Since this is a new taxation, so the company needs to modify or develop a new system because every part of manufacturing and servicing will be charged, so the company needs to have a good system in order to have an accurate financial accounting. Manage human resource is an important in each company and tax authority, especially implementing GST because companies need handle a new system of GST, so they need to improve their employees’ knowledge and perfect in handling any GST case. Moreover, the tax authority also must recruit more employees in order to solve fast problem of GST for other people.

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Goods And Services Tax (GST): A New Tax Reform In Malaysia. (2020, July 14). GradesFixer. Retrieved January 12, 2021, from https://gradesfixer.com/free-essay-examples/goods-and-services-tax-gst-a-new-tax-reform-in-malaysia/
“Goods And Services Tax (GST): A New Tax Reform In Malaysia.” GradesFixer, 14 Jul. 2020, gradesfixer.com/free-essay-examples/goods-and-services-tax-gst-a-new-tax-reform-in-malaysia/
Goods And Services Tax (GST): A New Tax Reform In Malaysia. [online]. Available at: <https://gradesfixer.com/free-essay-examples/goods-and-services-tax-gst-a-new-tax-reform-in-malaysia/> [Accessed 12 Jan. 2021].
Goods And Services Tax (GST): A New Tax Reform In Malaysia [Internet]. GradesFixer. 2020 Jul 14 [cited 2021 Jan 12]. Available from: https://gradesfixer.com/free-essay-examples/goods-and-services-tax-gst-a-new-tax-reform-in-malaysia/
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