Archive for the ‘Goods and Service Tax (GST)’ Category

Kedah padi farmers cry rise in operational costs, plea for GST exemption

Monday, October 16th, 2017

Kedah Farmers Association chairman Datuk Abdul Lateh Mohd Saman said the move was to ease the farmers’ financial burden which has escalated due to the rise in the operational costs. Pic by NSTP/ Noorazura Abdul Rahman

ALOR SETAR: Kedah Farmers Association, on behalf of 100,000 padi farmers in the state, will submit a memorandum to the Finance Ministry to appeal for Goods and Services Tax (GST) exemption.

Its chairman Datuk Abdul Lateh Mohd Saman said the move was to ease the farmers’ financial burden which has escalated due to the rise in the operational costs.

He said farmers had to make multiple GST payments, from padi planting process to the shipment of the crops, which sums up to 30 per cent.

He said the memorandum will be submitted as soon as possible, before the tabling of the 2018 Budget by Prime Minister Datuk Seri Najib Razak on Oct 27

“We have to pay five types of GST charges, from transportation of the fertiliser, seedlings, ploughing process, harvest process and finally, the transportation of the crops to the rice millers.

“For each of the process, we have to pay six per cent, which brings the total GST charges to 30 per cent.

“Padi farmers especially those who owns small plots do not earn much, as the floor price of padi is fixed by the government and having to pay GST is burdensome to them,” he said after the opening of the association’s 34th annual general meeting by Menteri Besar Datuk Seri Ahmad Bashah Md Hanipah at Dewan Kolej Insaniah here.

Meanwhile, Bashah said he backed the association’s move to appeal for the GST exemption as it would help eased their burden.

“The memorandum is vital to address the plight and the wishes of padi farmers and I believe they will be able to improve their yield quality if the federal government agrees to reduce their GST charges even by half,” he said.

By Noorazura Abdul Rahman.

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GST on uncompleted property

Sunday, August 17th, 2014

PETALING JAYA: Commercial property that is not completed by April 1, 2015, will be subject to the Goods and Services Tax (GST).

Projects under construction will be valued as of March 31, and GST will be levied on the uncompleted portion of the project. For example, a project that is 40% complete on March 31 will see GST imposed on the remaining 60%.

“The bearer of this tax will depend on the agreement between the contractor and the developer, and between the developer and the buyer,” said BDO Malaysia advisory executive director Mok Chew Yin at StarLive, a monthly talk by industry experts and columnists hosted by Star Publications (M) Bhd.

Mok said if there was no provision in the agreement for such a tax to be passed on to the buyer, the developer would have to absorb it.

“Ultimately, the implementation of GST is likely to bring about a slight increase to residential property prices in general – perhaps 2% to 3% by my estimation – as developers would not be able to claim input tax as sale of residential properties is exempted.

“The increased cost will either be passed on to buyers or absorbed by the developer or shared, but it wouldn’t be as high as 6%,” he said.

However, BDO tax/GST executive director Jeff O’Connell said GST would actually lower costs to businesses in some instances as GST input tax could be claimed, unlike the sales and services tax, which was not claimable.


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GST to have minor inflation effect

Friday, June 20th, 2014

KUALA LUMPUR: THE Goods and Services Tax (GST) to be introduced next year will have some inflationary effect but it would be temporary, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said.

He said the inflationary effect will subside as the economy adjusts to a “new equilibrium”.

Husni said the Consumer Price Index — the official barometer of inflation, is expected to see an additional 1.48 percentage points to its reading after the GST comes into effect in April next year.

The GST is part of the government’s efforts to broaden its
revenue base.

It has already reduced income tax from 30 per cent to 26 per cent while corporate tax has been reduced to 26 per cent and 20 (for small and medium enterprises).

The mechanism was derived after a study of the 116 countries which have implemented it, particularly economies with per capita of below US$1,000 (RM3,220).

The government is finalising the list of goods and services which should provide some relief to the lower-income groups.

Speaking at the launch of the 18th Malaysian Banking Summit yesterday, Husni said a spike in oil prices following the Iraq crisis would not impact the timing of the GST or the ongoing subsidy rationalisation programme.

“The fuel subsidy programme we are studying will be good for the rakyat as the savings would be channeled to the target group,” he said, adding that the programme would be first tabled in the cabinet.

On 2015 Budget which will be tabled in Parliament on October 10, Husni said the government’s target to trim the budget deficit was on track.

Last year, it achieved 3.9 per cent to the gross domestic product, below its four per cent target.

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MTUC urges govt to scrap proposed GST

Sunday, May 18th, 2014

KOTA KINABALU: The Malaysian Trade Union Congress (MTUC) wants the government to scrap the proposed Goods and Services Tax (GST) planned for implementation starting April next year.

MTUC Exco and Council Member, Sivanathan Arumugam, said the organization opposed the introduction of GST as it fears the new tax system would burden the people especially the low and medium income groups, who would have to pay more for the same products and services they are using today.

Speaking to reporters here yesterday, he said although GST, which has been promoted as a more efficient and transparent taxation system that has long been practised by developed countries, it was still unclear how much it would dig into the pocket of the ordinary working men and women in Malaysia.

“GST might benefit the government as they would gain more income from a broader taxation but it is a real burden to the lower and middle income group, who are already struggling with higher cost of living caused by the increase in utilities tariff and prices of daily goods.

“It is not very clear until now how much the six per cent GST will be totally exempted for the workers in the low and medium income cap and we believe that once implemented people will be affected and burdened.

“For example, in medical cost, although the doctor’s fee may be exempted, what about medicine and medical appliances? They are not subject to exemption. So, there will be additional cost. This is why we are rejecting the proposed implementation of the GST,” he said.

Sivanathan also demanded for current laws affecting the working class, such as the Employment Act and SOCSO Act to be amended to remove provisions impending the rights of employees, in line with the government’s manifesto of adopting a people-first policy.

However he did not specify which provisions or articles in any of these Acts should be looked into.

On another issue he urged for the implementation of the minimum Act to be stepped up by getting related enforcement agencies to conduct rigorous check across the country to ensure total compliance among employers.

He lamented that although the government was moving in the right direction by slowly introducing such an Act including in Sabah and Sarawak, enforcement was still lacking thus allowing errant bosses to continue taking advantage of their workers by refusing to pay the minimum rate.

“What we heard is that there are many industries who are not adhering to the minimum wage. Also, we don’t want allowances and all that be added as minimum wage. Minimum wage should not include allowances and service charges,” he said.

Have a trial period for GST, says economic expert

Sunday, May 11th, 2014

KUALA LUMPUR: The Goods and Services Tax to be enforced on 1 April 2015 should undergo a trial period beforehand to ensure it is really effective and beneficial for the people and the nation.

An economic expert at the Economy, Finance and Banking Studies Centre at Universiti Utara Malaysia Prof Datuk Dr Amir Hussin Baharuddin said the trial period was necessary to ensure the GST did not benefit one group and put the consumers at the losing end.

“What the people are most concerned is that when there is GST, there are found to be agents or parties seeking tax exemptions and pass the buck to the consumers.

“As consumers they have genuine concern if the producers, wholesalers and retailers pass the tax to them, they will have to pay more than the six per cent tax mandated by GST,” he said.

Have yet to be tried:

Dr Amir Hussin noted that as long as it was not implemented, the GST’s real effect would not be felt.

“Some may think that the six per cent for a start is too high but my opinion is that if we don’t start the GST how are we to know whether the rates are high or low. We implement first and see its suitability.

“There may be some shortcomings in the taxation system at the initial stage. The people have to be patient and offer constructive criticism so that the tax system can be improved along the way,” he said.

Prime Minister Datuk Seri Najib Tun Razak while tabling the 2014 Budget last October had said that the Sales and Services Tax (SST) amounting to 16 per cent at present has some shortcomings, including double taxation on consumers, the absence of tax exemption on export items and the price issue.

Therefore, the government will address all the shortcomings through GST that will take effect from 1 April 2015, replacing the SST.

GST promises more exemptions.

Speaking on the tax exemptions offered by GST, Dr Amir Hussin said the people have to be realistic on the items where GST applies and understand GST’s objective.

“The GST offers many exemptions, but that does not mean all goods and services enjoy exemptions and if that is the case then there is no need for GST,” he said.

Food items like rice, sugar, salt, flour, cooking oil, lentil, chili, spices, salted fish, pekasam (fish pickled in brine), cencaluk (fermented shrimp), and shrimp paste, piped water and the first 200 units of electricity per month for domestic consumers are exempted from GST.


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The good, the bad and the ugly of tax

Sunday, May 4th, 2014

IN less than a year, the Goods and Services Tax (GST) will be a reality. Come April 1, 2015, Malaysia will join the ranks of some 160 countries in having this form of tax system.

In fact, some 90% of the world’s population already live in countries with GST or Value-Added Tax. In a sense, therefore, we are not venturing into new territory.

But any form of taxation, be it new or simply revised upwards, is bound to evoke an emotional response.

The anti-GST rally held on May 1 is indicative of such a response. While we should respect the right to peaceful assembly as a means to articulate one’s grievances, we also need to ask if those present fully understand how GST works, and how they will be personally impacted.

It is never easy to explain things in a rational manner when certain quarters play the populist card to the hilt. After all, they are not the ones who have to administer the painful medicine necessary to boost the country’s economic health.

The Malaysian population has just crossed 30 million but only about 5.6% or 1.7 million of the country’s population pay income tax. Figures from the Inland Revenue Board reveal that only one million Malaysian employees pay tax although there are four million employees with income tax files.

Similarly, of the 450,000 companies that have files in the IRB, only 75,000 companies are classified as eligible taxpayers.

This being tax season, we hear the usual lament about how those who are employed and taxed upfront pay more because they do not have tax consultants to help them minimise their tax liability. We have anecdotal evidence about the entrepreneur driving a luxury car who probably pays less tax than the senior manager he employs.

There may be creative ways to file one’s tax returns so as to fall out of the tax bracket but the GST will at least ensure that those who spend more on goods and services, based on their consumption patterns and habits, will contribute to our tax coffers

The Star Says.

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GST to take effect next April despite protests, says Ahmad Maslan

Thursday, May 1st, 2014

KUALA LUMPUR: Despite protests from some quarters, the Government will implement the Goods and Services Tax (GST) effective next April, said Deputy Finance Minister Datuk Ahmad Maslan.

Describing the protest rally against the GST as inappropriate, he said the rally organisers should use a better approach to voice their opinions.

“They should have submitted a memorandum on the matter, this (the protests) only serves to politicise all the good things that the government wants to implement”, he told reporters at the Kuala Lumpur International Book Fair 2014 here on Thursday.

The GST will be implemented at a fixed rate of six per cent, replacing the existing sales and services tax.

It will not be imposed on basic food items such as rice, sugar, salt, flour and cooking oil.

Some of the other services exempted include government services such as issuance of passports and licences and healthcare services.

Ahmad Maslan said the GST was not something new, adding that 90% of the world’s population lived in countries which had implemented the GST.

The GST rates to be charged next year were also among the lowest in the world, he noted.

“The principle that all must understand is that tax processed from the people is returned to the people for their social and economic development.


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Serious GST impact: Lawmakers

Monday, April 14th, 2014

Kota Kinabalu: Lawmakers from both the ruling coalition and the opposition in Sabah believe the Goods and Services Tax (GST) will greatly affect the people, particularly those in the lower income bracket, once it is implemented in April next year.

Sepanggar Member of Parliament Datuk Jumat Idris said even economists were divided in opinions, with some saying it would burden the people and others saying the burden would only be temporary.

However, Jumat believed that the anticipated drastic increase in prices despite having many goods exempted from the GST, when it is implemented, would be a big slap to the people.

“Once subsidy has been taken off, definitely the price of goods will increase and in the end the extra cost due to taxation on the traders will be passed on to the people who are customers,” he said.

Jumat, who is also Sepanggar Barisan Nasional (BN) Chairman, said for instance, with the implementation of the GST, smallholders earning about RM500,000 a year are required to open a GST account with the bank.

“They need to pay the six per cent GST for the fertilisers and other agriculture equipment,” he said.

Commenting on the Goods and Services Tax Act which was passed in the Parliament recently, Jumat said low-income workers in the private and public sectors in his sub-urban constituency would be badly hit.

“Everything they would need to pay such as house rent, car loan, Internet service, children schooling, family expenses, etc. Those earning RM3,000 a month are already finding it hard to maintain their savings, what more for those who are earning RM1,000 and below?” he asked.

According to Jumat, about 68 per cent of his constituents are earning RM1,000 and below.

“Before they could get a mixed vegetables rice at RM3.50 for lunch, but nowadays they have to fork out RM5,” he said, adding that traders were increasing prices to cover the rising cost.

Jumat said in his debate on the GST Act in the Parliament, he proposed that the Government assist people by providing macro business facilities, build more stalls and business premises, while the GLCs buy commercial premises to be rented out to the low-income people.

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CPI to see 1.8pc rise next year

Thursday, March 20th, 2014

THE Consumer Price Index (CPI) is expected to see a temporary rise of 1.8 per cent when the goods and Services Tax is implemented next year.

Deputy Finance Minister Datuk Ahmad Maslan told the Dewan Rakyat yesterday that the rise was non-permanent and the tax would not be imposed on basic needs, such as healthcare, private education, public transportation, toll and residential properties.

“A study by the Customs Department indicates that those earning less than RM1,000 spent 33.4 per cent of their income on food and 31.4 per cent on water, electricity and utility bills.

“GST will not be imposed on 64.8 per cent of their monthly expenses.”

He a said 15,542 restaurants would impose GST when it is implemented by April next year. Presently, 4,357 restaurants have imposed the sales and services tax.

Understanding the new tax system

Monday, February 17th, 2014

SO you want to consider opting for the “final tax” plan but are not quite sure what it’s about?

KPMG Tax Services executive director Datin Pauline Tam (pic) tackles some of the questions raised by The Star readers.

> With reference to Monthly Tax Deduction (MTD) as “final tax”, can you please advise how it actually works?

Your employer would have been deducting MTD from your monthly remuneration (comprising your salary­, allowances, etc) if your remuneration falls within the taxable income bracket.

Your employer would normally rely on your personal data submitted to your Human Resource department to compute your monthly MTD.

In other words, your entitlement to personal relief, spouse relief and child relief would be taken into account and this would reduce your MTD.

If you are entitled to other relief such as medical expenses for your parents, purchase of books and magazine and computer, etc, and your employer does not have such details to compute the further reduced MTD, you would have to claim this relief in your yearly tax returns and request for a tax refund.

To facilitate the computation of MTD such that the amount is equivalent to the actual tax liability of the employees, the Inland Revenue Board (IRB) has designed a form, Form TP1 (downloadable from the IRB website) for employees to complete and submit the details of their expenses of the following nature to their ­employers.

1. Medical treatment, special needs and carer expenses for parents

2. Basic supporting equipment for use by the disabled employee, spouse or parents

3. Self education fees

4. Medical expenses on serious diseases

5. Complete medical examination

6. Purchase of books/magazines/journals

by Lisa Goh.

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