Restructuring the Malaysian tax system

Restructuring the Malaysian tax system

How would the GST regime work in Malaysia? Basically, it will be based on a self-assessment system similar to the current income tax system. As such, every enterprise needs to make its own assessment and submit returns with random audits to be conducted.

All businesses need to register an account with the Malaysian Customs Department, with exemption of companies with annual sales revenue of less than RM500,000 (S$196,000) each.

The registered companies would then need to collect GST from their customers on all relevant transactions and submit monthly returns together with the taxes collected. The government will refund the taxes paid to the suppliers in the subsequent month.

If the businesses have disagreements with the authorities, these can be brought to the "GST Dispute Tribunal" specially set up to handle disputes related to GST speedily.

Businesses will also be allowed to employ tax agents to perform GST submissions on their behalf if they feel the need to do so.

However, before GST is to be implemented, I strongly feel that the system needs to be modified to avoid burdening the poor and the middle class.

The Finance Ministry (MOF) has already agreed that certain basic necessities should be exempted from GST. These are listed in Table 1.

Besides these exemptions, I suggest that basic services needed by people in the low and middle classes for their everyday lives also be made zero-rated items.

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