Posted on 25 October 2013 - 06:24pm
PETALING JAYA (Oct 25, 2013): The goods and services tax (GST) will take over current tax regime from April 1, 2015, at a rate of 6%, higher than what was largely expected from the government.
Prime Minister Datuk Seri Najib Abdul Razak was expected to announce an initial rate of 4%, despite many economists agreeing that such a rate would be revenue neutral.
He said as part of measures by the government to ensure that businesses do not increase prices indiscriminately, it will publish prices of goods and services as a guide for consumers to compare prices.
A GST Monitoring Committee will also be established and chaired by the Second Finance Minister, with members from government agencies as well as representatives from industries and non-governmental organisations.
GST WILL NOT BE IMPOSED ON :
- Basic food items such as rice, sugar, salt, flour, cooking oil, lentils, herbs and spices, salted fish, cencalok, budu and belacan;
- Piped water supply, and the first 200 units of electricity per month for domestic consumers;
- Services provided by the government such as the issuance of passports, licences, health services and school education;
- Transportation services such as bus, train, LRT, taxi, ferry, boat, highway toll as well as education and health services are exempted from GST; and sale, purchase and rental of residential properties as well as selected financial services are exempted from the tax.
INCENTIVES FOR INDIVIDUALS TO COPE WITH GST FROM 2015
- One-off cash assistance of RM300 to households which are already recipients of BR1M.
- Individual income tax rates will be reduced by 1 to 3 percentage points for all tax payers from 2015, freeing some 300,000 persons from paying taxes.
- The chargeable income subject to the maximum rate will be increased from exceeding RM100,000 to exceeding RM400,000.
The current maximum tax rate at 26% will be reduced to 24%, 24.5% and 25%.
INCENTIVES FOR BUSINESS TO COPE WITH GST
- Corporate income tax rate will be reduced by 1 percentage point from 25% to 24%.
- 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.
- Cooperative income tax rate be reduced by 1 to 2 percentage points from the year of assessment 2015;
- Secretarial fee and tax filing fee are allowed as tax deductions from the year of assessment 2015;
- Cost of purchasing ICT equipment and software is given Accelerated Capital Allowance until year of assessment 2016;
- Expenses incurred for training in accounting and ICT relating to GST be given further tax deduction for years of assessment 2014 and 2015;
-Training grant of RM100 million will be provided to businesses that send their employees for GST training in 2013 and 2014.
- Financial assistance amounting to RM150 million will be provided to SMEs for the purchase of accounting software in 2014 and 2015.