As the Budget 2014 (tabled on the 25th of October 2013) announcement came, Malaysians awaited with bated breath on whether the government of the day will or won’t finally introduce a Goods and Services Tax (GST) in Malaysia.
Update: A GST of 6% was announced, with the abolishment of Sales Tax and Service Tax effective 1 April 2015.
For the full lowdown on what was announced in the budget, check out our complete Malaysia Budget 2014 review, as well as our Live Blog: Malaysia Budget 2014 – As it Happened blog post. Alternatively, we covered the Malaysia Budget 2013 in similar fashion. Take a look at our Malaysia Budget 2013 – How the Budget Can Save You Money article.
GST wasn’t the only big thing that was announced, with changes to Personal Income Tax Rates as well.
Read our guide below to find out all about the GST, get the full low down on why it’s being introduced, and what it means for you!
What is the Goods and Services Tax (GST)?
Known across the world as either GST or VAT (value added tax), it is a broad-based consumption tax (tax on your spending!) which affects all parties in a multi-stage taxation system across the value chain from manufacturing to sales, it is based on a tax-on-value-add concept which avoids duplication of taxes. This is in contrast to both the Sales and Service Tax in Malaysia which is just added at one stage (Sales Tax at manufacturer level, and Service Tax at consumer level).
The Goods and Services Tax in Malaysia (GST) was initially mooted by the federal government in 2011 to replace the existing Sales and Service Taxes, but was met with much resistance from the public at large, partially due to the implication of a price hike in essential goods and services, but also partially due to the lack of clarity around the current consumption tax systems in Malaysia.