Uniqueness of Good and Service Tax

On 1 April 2015 Prime Minister Datuk Seri Najib Tun Razak has announced the introduction of a Goods and Services Tax which Good and Service Tax (GST). In addition, it is also known as Value Added Tax (VAT) or value-added tax imposed at the level of use. The purpose of the GST is to abolish the sales tax and service as one of the steps to strengthen fiscal management to make Malaysia more economically is resilient. In addition, it is one of the steps taken by the government to improve the country's financial system as well as finding new sources of revenue by improving the efficiency of tax collection in the country.

A total of 160 countries around the world have been using GST as part of their income. Among the countries that have implemented GST are Singapore, Europe, Africa, Vietnam, Cambodia and others. Singapore has implemented the GST since 1993 with a rate of 7%, while Indonesia, Cambodia and Vietnam with a rate of 10%. Furthermore, the rate of GST is imposed in Malaysia by 6% compared to other countries. Before the implementation of the GST citizens have to pay the tax where the two Sales Tax (SST) of 10% and Service Tax of 6% in Malaysia. After the implementation of the GST people only need to pay as much as 6% only.

In addition, based on the Global Competitiveness Report 2014-2015 by the implementation of the GST in Malaysia's the ranking has jumped to 20th from 144 countries and has led the developed economies such as Austria, Australia, France and South Korea.

There are three types of GST is implemented differently on certain goods and services which are standard rated supplies, exempted supplies and zero rated-supplies. Standard rated supplies is all the goods and services that are in this category will be subject to the GST tax rate of 6%. GST tax will be charged on the consumption of goods and services at each stage of the supply chain. This means that there is an input tax and output tax in GST system rate "Standard". In addition, each party (unless the end user) in the supply chain can reclaim their input tax (GST) and will avoid duplication in taxes. However, end users are not allowed to claim back the GST. Therefore, end users should bear the entire burden of tax. Examples of items in this category are clothes, cars, and fruits

While the zero-rated supplies of goods and services where in this category will be subject to 0% GST. This means that GST will not be imposed on end users. However, the business entity can claim their input tax. Examples of items in this category are the basic food such as meat, fish and cooking oil, and the first 200 units of electricity per month. The Zero-rated supplies of goods will not rise in prices after the GST is implemented. If it's up, it is because the shopkeepers take the advantage. The important point here is the goods and services are zero-rated supplies, allowing traders to claim input tax of Customs and traders will not or can collect the GST from.

Next is exempt suppliers for goods and services that are in this category will not be taxed and are not subject to GST. In this output stage is the stage at which they sell to end users only. This means that GST will not be imposed on end users. Business entities, especially the last in the supply chain before the end user cannot reclaim input tax credit even though they may be subject to GST when buying inputs. Examples of goods and services in this category is residential and health services. other than that,  exempt food items such as milk for babies and children based organic soybeans and milk, dhal, sugar, noodles kolok dry and others. GST also exempted on all types of drugs controlled under the Poisons list of groups A, B, C & D.

Good and Service Tax  actually can educate consumers become more prudent. If users do not want to pay more GST will limit spending to do the necessary. This is based on the GST is a consumption tax where the more you use or buy the more you pay. People are likely to be used more. This may indirectly contribute to the national income which could eventually be used for the people's interests also. Nowadays, the users regardless of class incomes have to pay sales tax and service tax on their daily expenses. But it was mainly the tax paid sales tax is not recorded in the receipt because it is hidden in the price charged. Once the GST is the tax burden will decrease. This means that with the implementation of GST on most goods and services will decline in price. The important thing is that when the GST is implemented the dealer should channel these savings through lower prices.

Many ways those governments do to overcome the impact of the GST. The government will provide the Bantuan Rakyat 1 Malaysia (BR1M). BR1M 2016 for households with a monthly income RM 3000 and below was increased from RM 950 to RM 1000. BR1M 2016 also was introduced a new category of recipients in e-Kasih list with a monthly income below which will receive BR1M  RM 1000 to RM 1050 exceeded. While for households earning between RM 3,001 to RM 4000 , BR1M was increased from RM 750 to RM 800. Other than that, for single individuals 21 years of age, income does not exceed RM 2000 month, was raised from  RM 350 to RM 400

The government has also introduced innovations to the mechanism for tax payers to provide that a tax paid in every month is considered as a final tax. Budget 2016 also addresses the concerns of the increase in house prices soaring, housing supply shortage and difficulty in obtaining financing. Budget 2016 outlines five main thrusts accelerating economic activity, strengthen fiscal management, human capital topped, intensify the development of urban and rural areas, and ensure the well-being of the people's livelihood.

LRT3 project of Bandar Utama, Damansara-Johan Setia, Klang will be built at an estimated cost of RM 10 million and will begin construction in 2016 and be completed in 2020. In addition, the government had also allocated RM 200 million to upgrade roads in FELDA , While RM1.4 million to build and upgrade 700 km of rural roads across the country.For the purchase of a 20% stamp duty exemption on instruments of Shariah-compliant financing. Furthermore, the Bus Rapid Transit Project KL-Klangakan implemented at a cost of more than RM1.5 million and Bus Rapid Transit Kota Kinabalu at the cost of almost RM1 million

Therefore, the GST helped widen the tax base of the country, to make sure the country has a tax system that is more resilient and improve compliance in the affairs of government tax collection. International agencies such as the World Bank and the International Monetary Fund (IMF) has long warned the government that the country has a small tax sources and cannot last for long time. Only 1.5 million of the taxpayers in the country, while the oil resources will not last long. Besides that, it can encourage investment and help encourage the economic growth in a competitive global environment. Economic growth will also create jobs and increase income. GST were implementation in 160 countries around the world to prove GST is a tax system that is both efficient and fair because everyone pays tax on consumption.