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Tuesday, October 29, 2013

Budget 2014: GST on April 1, 2015 at 6% (update 1)

Published: Friday October 25, 2013 MYT 5:49:00 PM 
Updated: Friday October 25, 2013 MYT 6:29:23 PM

KUALA LUMPUR: With the inflation rate currently at a low 2%, the Government believes now is the best time to implement the Goods and Services Tax. 

According to the Prime Minister, with the implementation of GST, the Government would be be able to address the weaknesses in the current taxation system. 

The GST rate is fixed at 6% and to be effective from Apr 1 2015, approximately 17 months from today.

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

To ensure smooth implementation of GST by businesses, the Government proposes the following additional packages: 

First, corporate income tax rate be reduced by 1 percentage point from 25% to 24%. Whereas income tax rate for small and medium companies will be reduced by 1 percentage point from 20% to 19% from the year of assessment 2016; 

Second, cooperative income tax rate be reduced by 1 to 2 percentage points from the year of assessment 2015; 

Third, secretarial fee and tax filing fee are allowed as tax deductions from the year of assessment 2015; 

Fourth, cost of purchasing ICT equipment and software is given Accelerated Capital Allowance until year of assessment 2016; 

Fifth, expenses incurred for training in accounting and ICT relating to GST be given further tax deduction for years of assessment 2014 and 2015.

Sixth, training grant of RM100mil will be provided to businesses that send their employees for GST training in 2013 and 2014. In addition, financial assistance amounting to RM150mil will be provided to SMEs for the purchase of accounting software in 2014 and 2015.

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