Wawasan Open University organised a talk on the Goods and Services Tax (GST) for staff and students at the main campus today to provide insights on the new tax that will be introduced in April 2015.
The presentation titled ‘Tax Law and You: GST and Monthly Tax Deductions as Final Tax’ by School of Business & Administration senior lecturer Dr Loo Choo Hong was attended by a crowd of 70, including staff of DISTED College.
GST, also known as Value-Added Tax, is a consumption tax added to every stage of business transaction up to the retail stage of distribution, stated Dr Loo. The GST tax will replace the current Government Sales Tax on goods and 6% Service Tax.
Malaysia is one of the last countries to have GST, lagging behind nations like France (1954), Germany (1968), United Kingdom (1973), South Korea (1977), Japan (1989), Singapore (1993), China (1994) and India (2005).
Elaborating that input tax is tax on purchases and output tax is on what we sell, Dr Loo said businesses can offset the GST incurred on inputs as a credit against output tax. “If their input tax is bigger than output tax, businesses can claim for refunds but if output tax exceeds their input tax, they remit the difference to the Government.”
He mentioned the three types of supply under GST – standard-rated, zero-rated and exempt. In standard-rated, goods and services are charged the standard rate of 6%. “For zero-rated supplies, there is no charging GST to the customer but businesses can claim from the government whatever GST paid on input. For exempt supplies, the final seller cannot collect GST from customer and whatever input tax he has incurred earlier, he has no right to claim from the government.”
Dr Loo said GST shall be levied on taxable supply of goods and services in Malaysia by a business registered under GST and on the importation of goods and services. Taxable supply is a supply that is standard rated or zero rated, while exempt and out of scope supplies are not taxable. Those out of scope include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.
Only a business registered under GST can collect or charge GST, and those required to be registered are ‘persons’ having businesses with annual sales turnover exceeding RM500,000. “Persons denote an individual, sole proprietor, partnership, company, trust, estate, society, union, club, association or any other organisation including a government department or a local authority which is involved in the business of making taxable supplies in Malaysia,” he stated, clarifying that businesses outside this criteria can apply to the Director-General of Customs to be registered voluntarily.
During the Q&A session, Dr Loo advised companies to register voluntarily as otherwise they cannot charge GST on taxable supplies but may be charged GST by their suppliers or wholesalers. To another query, he replied that under GST, “any person who buys anything will be subjected to some form of tax, including migrant and illegal workers”.
Regarding Monthly Tax Deductions, he said taxpayers with employment income have the option to make their monthly tax deductions as final tax, effective from year of assessment 2014. Among the criteria to qualify are having just one source of employment income with none from business or rental, 12 months of service with the same employer, and separate assessment of husband and wife.