Friday, November 22, 2013

RMC: GST at 6% to raise RM22b revenue | Free Malaysia Today

RMC: GST at 6% to raise RM22b revenue

The Malaysian Reserve | November 22, 2013
The Royal Malaysian Customs believes GST is a good solution to fix leakages in the current consumption tax collection and result in the extra revenue.
by Prem Kumar Panjamorthy
PETALING JAYA: The proposed Goods and Services Tax (GST) at 6% will contribute a revenue of up to RM22 billion to the government’s coffers annually.

The new tax, effective April 1, 2015, subject to legislation approvals, will raise tax receipts by an additional RM5 billion to RM6 billion, on top of the current earnings of RM16 billion derived from the existing sales and services tax.

The Royal Malaysian Customs (RMC) believes GST is a good solution to fix leakages in the current consumption tax collection and result in the extra revenue.

“We expect at 6%, an additional of RM5 billion to RM6 billion will be raised. This additional amount will actually flow back to the people through incentives and cash aids.

“Corporations will also benefit through the non-tax packages and several redemption packages we are working on. Companies involved in the supply side of manufacturing will be reimbursed the GST they are charged,” RMC senior assistant director in-charge of GST Mohammad Sabri Saad told a media briefing yesterday.

He said the reimbursements will help contain major price hikes of several end-products like in the automotive and retail sectors.

Mohammad Sabri said Malaysians should not have the misconception that GST will only result in increase in prices of good and services.

“Products and services that are being charged 10% sales and service tax now will only be charged 6% GST. That would drive down the end-price.

“We cannot give the exact amount of price increase or decrease, as April 2015 is still 15 months away, and prices of goods would fluctuate by then,” he pointed out.

The Treasury and RMC are working together to set up a “shopping guide” for Malaysians, with a list of 325 essential goods showing price difference of pre-GST and post-GST. The guide will be made public in January 2015, Mohammad Sabri said.

“If consumers find that supermarkets or premises over price GST-taxed items against the guide, they can issue an official complaint to our department, so that action can be taken.

“We are in talks with supermarket and hypermarket operators over the possibility of them absorbing minimal hikes in price due to GST. It’s a winwin solution, where the prices do not change, people will not panic and business maintained for the retailers,” he said.

The RMC target of RM22 billion is somehow, far less than KPMG’s collection projection of at least RM30 billion.

The international tax and audit firm had said the government will earn a 20% hike in collection through GST over the current consumption tax revenue. It predicted a collection of RM25 billion for only the first nine months of GST implementation in 2015.

The GST has been proposed as part of the federal government’s commitment to reduce its budget deficit and with the view of achieving a balanced budget in 2020.

The 2014 government revenue is estimated RM224.1 billion, of which income taxes are expected to contribute RM125.7 billion while indirect tax collection estimated at RM38.8 billion.

The GST will be introduced in place of the sales tax and services tax introduced in 1972 and 1975, respectively.

Malaysia’s 6% GST will be the lowest in the Asean region, compared to Singapore (7%), Thailand (7%), Indonesia (10%), the Philippines (12%), Laos (10%), Vietnam (10%) and Cambodia (10%).

Items exempted from GST include rice, flour, vegetables, sugar, fish, chicken, salt, cooking oil, eggs, beef, chicken, mutton, spices, cencaluk, budu and belacan.

This content is provided by FMT content provider The Malaysian Reserve

No comments:

Post a Comment