Confusion over the GST continues

Business & Markets 2014

Written by Bernama 

Tuesday, 01 April 2014 13:52

KUALA LUMPUR (Apr 1): The Goods and Services Tax (GST) will be implemented in a year but many are still confused by what it entails. 

This is probably due to too many parties giving conflicting explanations on the tax that will come into effect on April 1, 2015. 

Although the government has made much efforts to clearly explain the benefits of its implementation, many still see the tax as a "gift" that should be returned. 

"There are too many people telling us what GST is all about. We have become confused", said petty trader Salleh Abdul Rahman.

The 38-year-old trader from Petaling Jaya said although he had heard the government’s explanation on GST, he had also received "authentic" information from other sources. 

"We (petty traders) believe the government, but sometimes it is hard to ignore the information given by other sources on the GST", he said.

Confused

Salleh is one among thousands, if not millions, of Malaysians who are feeling nervous over the implications of the GST as they have yet to fully understand it. 

The GST Department Head at the firm Salihin GST Services Sdn Bhd, Abdussalam Shokhawi said the confusion was mostly due to parties who have misrepresented the facts on GST. 

Poor understanding of the taxation system has led many to believe the GST would affect them negatively, said Abdussalam, who is also the GST Project Manager at the firm based in Batu Caves, Selangor. 

He said Malaysians should realise that they have been paying the Sales and Services Tax at a rate of 16 per cent all these while. 

There was no reason for them to continue being burdened by the SST which contained hidden tax charges when the government has sought to ease the burden by implementing GST at a must lower rate at six per cent, he told Bernama.

Negative picture

He said a negative picture of GST would present opportunistic traders with the chance to increase prices of their goods, when the fact was that the prices of goods remained the same. 

Abdussalam said his personal survey revealed that of 10 people interviewed, five had not heard of GST at all. 

Meanwhile, three of the five who have heard of it had conflicting ideas about it and were not even certain of their own understanding of the subject. 

Deputy Finance Minister Datuk Ahmad Maslan said the draft bill needed to be tabled this year to ensure the GST can be implemented by next year. 

The GST has been implemented in 160 countries with France being the first in 1954. 

Implementation in UK and Singapore

Although many countries have implemented the GST, the Malaysian Accountant Tax Association (MATA) sees the United Kingdom and Singapore as two countries worth emulating in terms of the offset package offered. 

UK and Singapore have implemented the GST in the past 30 and 20 years, respectively. 

MATA Technical Committee Deputy Director on GST, Mohd Rozlan Mohammed Ali, said both countries have assisted their people, particularly those in low-income group, in buffering the effect of the tax.

Singapore provides a dividend that is deposited directly into a Central Provident Fund account for the people. The account is similar to that of the Employee Provident Fund (EPF). 

The UK, meanwhile, introduced clothing subsidy for children aged 14 and below, comprising school clothes for the poor. 

Malaysia has already implemented its offset packages through Bantuan Rakyat 1 Malaysia (BR1M), schooling assistance, Kedai Rakyat 1 Malaysia, Perumahan Rakyat 1 Malaysia and many more.

Understanding how it works For the people to accept and even embrace GST, the government has to actively give out thorough and consistent explanation on the benefits of GST, including the offset packages provided. 

The government’s challenge now is to clear the confusion on GST that has been plaguing the people’s minds, even among the community leaders. 

Once the people have a clearer picture of the GST, they will understand how it benefits them and will be able to spot those who seek to profiteer from it and call them out. This in turn will ease its implementation.