Government to implement GST at 6pc

The government will implement the Goods and Services Tax (GST), effective April 1, 2015 at a fixed rate of six per cent.

Replacing the existing sales and service tax, it would be a fair and comprehensive tax system that would benefit all Malaysians, said Prime Minister Datuk Seri Najib Razak when tabling the 2014 Budget in the Dewan Rakyat today.

He said the GST would be implemented approximately 17 months from today and described the rate is the lowest among Asean countries.

"I must stress that GST is not a new tax," Najib, who is also Finance Minister, said.

When implemented, the single tax or GST will enable the government to address weaknesses in the current taxation system.

"More than 160 countries have already implemented the GST. This clearly demonstrates that GST is proven to be a transparent, effective and fair tax system.

"The vast majority of nations in the world would not have implemented GST, if it is disadvantageous to the people and the country," he said.

Najib said the government believed that this was the best time to implement GST as inflation was contained and the rate was low at two per cent.

The Prime Minister also said the GST would not be imposed on basic food items such as rice, sugar, flour, cooking oil, herbs and salt.

GST will also not be imposed on services provided by the government such as the issuance of passports, licences, health services and school education.

Piped water supply and the first 200 units of electricity per month for domestic consumers will also be exempted from the tax.

Najib also said transportation services and highway toll would also not attract the GST.

Sale, purchase and rental of residential properties, as well as, selected financial services will be exempted from the GST.

Upon the implementation, the government will provide a one-off cash assistance of RM300 to households who are BR1M recipients, as well as, the reduction by one to three percentage points and restructuring of individual income tax.

On businesses, among the packages proposed by the government were reduction in corporate and small-and-medium enterprises (SMEs) income tax from the year of assessment 2016, as well as, an accelerated capital allowance for cost of purchasing ICT equipment and software, given until year of assessment 2016.

It also included reduction in cooperative income tax by one to two percentage points from the year of assessment 2015, as well as, a RM100 million training grant to businesses that send their employees for GST training in 2013 and 2014.

"With the various special packages provided by the government, certainly no parties should take opportunity to increase prices of goods and services unscrupulously.

"Prices of goods will be constantly monitored. The government will publish prices of goods and services as a guide for consumers to compare," explained Najib.

In addition, he said a GST Monitoring Committee would be established to ensure the smooth implementation of the tax.

The committee will be chaired by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, with members comprising government agencies and representatives from industries and non-government organisations