| November 10, 2013
GST is a single tax system introduced to eliminate the flaws seen in the multi-tier Sales and Service Tax (SST).
PETALING JAYA: The Goods and Services Tax (GST) is nothing new and replaces the in-efficient Sales and Services Tax (SST).
In an exclusive interview with FMT, Royal Malaysian Customs director-general Khazali Ahmad shared some insights on GST and its implementation.
The Customs DG said the GST will help to avoid any of the double taxation under SST.
“For example, any soft drink or mineral water could be subjected to 10 percent sales tax at the manufacturing stage and if someone consume these drinks at the hotel, they will be subjected to another six percent service tax.
“So to avoid this, the government has taken the right step by introducing GST,” he said.
According to Khazali, sales tax was introduced in 1972 and subsequently in 1975, as there were some flaws as well as inefficiency found in both tax scheme.
“Since these two taxes have some flaws and inefficiency, we wanted to have a better and robust tax administration system,” he said.
He also pointed out that in 1989, the former Finance Minister Tun Daim Zainuddin mooted the initial idea to replace the SST with a better tax system.
During the recent budget, PM Najib Tun Razak announced that the GST will be implemented on 1st April 2015.
“As we all know, there are 160 countries having GST tax system. We studied carefully before implementing GST.
“The general public will be educated on the GST through the programme we are developing.
“The six percent rate is introduced after a careful study and this will not be too burdensome for the public,” he said.
In addition, he stated that the rate is among the lowest compared to other Asean countries and added that it comes as a package whereby the income and business tax will be reduced with government subsidies such as1M given to cushion the situation.
When asked on how the customs will educate the public on GST, the DG said they have been educating the public since 2005 and will continue doing so until it is implemented in the next 17 months.
Customs to engage in GST outreach programme
Meanwhile GST advisor to Royal Customs Zaleha Hamzah said to educate on GST, the Customs will target three main groups – consumer, government and business groups.
“For the consumer group, we will educate on the scope of the GST and the items that will not fall under the category.
“The information will be disseminated through Custom State directors and consumer NGO.
“For the government, we will educate the statutory bodies, higher learning institution, and government staff through an outreach programme.
“On the business group, we have been educating them through sector leads since 2005 when the GST business plan was introduced,” she said.
In addition, the Customs DG also said they have a committee on implementing GST chaired by himself and the state directors to ensure a smooth GST implementation.