Gst on Malaysia Economy

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2)Comparison of Budget deficit in Malaysia and Singapore Malaysia can reduce budget deficit by implement GST. Because GST help boosting government revenue and it’s a more efficient and effective tax system. The first month implementation of GST has increased Rm30 billion government revenue. Obviously, GST Helps reduce the budget deficit of Malaysia.

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The above diagram show that GST is a useful tools to reduce Singapore’s budget deficit. As result, GST can reduce a country’s budget deficit. As result, GST will pan out in Malaysia.(TradingEconomics)

3) Repayment of input tax/bad debt reliefMalaysia GST acquired a business who register under GST which has make a input tax claim but failed to paid his supplier within 6months from the date of supply to repay the input tax. From the supplier’s perspective he will be entitle to a bad debt relief if the payment is not received within the same six months period and subject to meeting the qualifying conditions. Unlike Malaysia, Singapore allow a long period of 12months. The timeline is more pragmatic as six month is seem short, supplier hard to grant a six month credit term. This requirements will probably drive up compliance cost of businesses in Malaysia.(KPMG)

4)Claiming of Input Tax On Entertainment

generally, taxable businesses are able to claim input tax by provide competent document are maintain. Whereas, input tax is not allow to claim on certain expenses, despite these are for the business purposes because there are personal expenses that could be misused if GST claim is allow. Malaysia GST prohibits input tax claim on entertainment expenses to a person other than employees and existing customers, probably is to control abused. But there is no such restriction in Singapore. In result, Malaysian businesses must

separate entertainment expenses for existing customers and future customers otherwise compliance cost will be increased .(KPMG)

Question3

Comment whether or not GST should be implemented in Malaysia. I personally think GST should not be implemented in Malaysia because most of the Malaysian is not ready for GST. As a student, I also could not even afford to pays item at normal prices and now it was more expensive with GST. The 6% GST charge is too much for us and as a result, the price of food at restaurant has increased as well as groceries. And Because due to the product prices go up, Consumers like me tend to spend less at goods and services and cause the demand of the market substantially decrease. In addition, because the low demand of the market, businesses will cut their cost of production such as labor cost eventually lead to high unemployment rates. Besides that, businesses is not producing in the efficient and effective condition as they are not fully utilize machines, labor and etc. and it will lead them downsize they businesses and eventually lead to the recession or inflation in Malaysia.

I highly disagree implemented GST in Malaysia because GST will impact of those lower income workers who are not taxpayers now they will have to pay for GST when they consume and purchase on goods and services. And I’m worrying about the rate of GST will increase in the future in order to increase government revenue. Because most of the countries increase the rate of GST after few years . Consumers or student like me will expect the GST rate in the future will increase and we will spend less on goods and services instead making more saving.

Lastly, I could not see the long term effect of GST but I could really feel the impact on the first day of GST implemented. I personally think that government should not implement GST so early because most of the citizen is lower income people. We don’t mind if government implemented GST, But make sure our salaries are increase and high enough to pay that tax.

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ConclusionIn conclusion, i have done my assignment and it takes me a lot of time to do research. After finished this assignment, I understand how is the GST work and it’s good side and bad side. And how is the effect and impact of the GST. Malaysia Government still have a lot of things need to improve for GST.

References

1.) http://www.tradingeconomics.com/malaysia/gdp-growth

2.) http://gst.customs.gov.my/en/rg/SiteAssets/industry_guides_pdf/Manufacturing%20Sector.pdf

3.) http://www.internationaltaxreview.com/Article/3385730/GST-in-Singapore-and-Malaysia.html

4.) https://www.iras.gov.sg/irasHome/default.aspx#

5.) http://www.nbc.com.my/gst/faqs-malaysia-goods-and-services-tax-gst/

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