Posted on February 27, 2014, Thursday
KUALA LUMPUR: Malaysia should keep the tax structure for the goods and services tax (GST) in a simple form in order to facilitate its implementation, said a UK expert.
Andrew Webb, Senior VAT Policy Manager at HM Revenue and Customs (the UK’s customs and tax department) said the GST is one of the most efficient tax mechanisms in the world, but if the structure becomes too complicated it will taint the system.
“Malaysia should keep the tax as simple as possible – not too many rates and exemptions because it will corrupt the system,” he told reporters on the sidelines of the National Forum on Malaysia’s GST: Possible Lesson from the UK and Singapore, here yesterday.
Webb, one of the speakers at the forum, said the government via its tax authorities should engage more with the business community and trade associations to develop trust and understanding between one another, which could then help make the transaction and implementation easier.
“Any kind of tax in this world has to rely on businesses as a whole to support the system because it is a contract. If they don’t honour the contract, the whole system will collapse,” he added.
Webb said the GST (also known as the Value Added Tax (VAT) in certain countries) “is the best tax system and a very important revenue raiser – about 158 countries have implemented such a system, including 28 countries in the European
“If the GST is a poor tax system, people wouldn’t have implemented it. In the UK, large businesses contribute a significant amount to VAT revenues.
“VAT is a major tax for the UK and it provides the government with a stable and reliable source of revenue,” he added.
Meanwhile, another speaker, Inland Revenue Authority of Singapore Deputy Commissioner of International, Investigation and Indirect Taxed Group, Chia-Tern Huey Min, said higher-income groups and foreigners contribute more than 80 per cent of the GST collection in the republic. — Bernama