Advantages of GST in Malaysia

Goods and Services Tax or GST is a consumption tax based on the concept of added value. In contrast to the sales tax and service tax is a single stage tax, the GST is a tax. Payment of tax is made in stages by the intermediaries in the production and distribution process. The tax itself is not a cost to the intermediaries as they can claim back the GST incurred on their business inputs.

GST is imposed on goods and services at each stage of production and distribution in the supply chain, including the importation of goods and services.

GST can actually educate consumers become more prudent. If users do not want to pay more GST will limit spending to do the necessary. This is based on the GST is a consumption tax where the more you use or buy the more you pay. Rich people are likely to be used more. This may indirectly contribute to the national income which could eventually be used for the people's interests also.

Among the other advantages of GST is the GST rate is lower (six per cent) compared to sales and service tax (SST) at 10 per cent and six per cent. SST is double taxation, contrary GST is a tax system on goods and services. Under the SST users are forced to pay higher prices because the sales tax is part of the cost that will be included in the sale price and services are taxed when providing services to users.

GST can increase the flow of national income. The central government is expected to generate more revenue with the implementation of the GST. The increased government revenues that can be used for development expenditure and welfare. More people will be able to help the poor. GST also allows the government to reduce corporate and income taxes.

This can encourage investment, encourage economic growth in a competitive global environment. Economic growth will also create jobs and increase income. GST implementation in 160 countries around the world prove GST is a tax system that is both efficient and fair because everyone pays tax on consumption. In Budget 2016 was presented by YAB Dato 'Sri Mohd. Najib bin Tun Haji Abdul Razak, the government intends to make a number of improvements that appeal to me in the GST that has implemented starting last January 1, 2016.

Among the improvements is the imposition of GST at zero rate for all types of Controlled Medicines under the Poisons Groups A, B, C and D, as well as an additional 95 brand drugs "over the counter", including medicine for 30 diseases such as cancer drugs, diabetes, hypertension and heart disease. This involves a twofold increase, from 4.215 to 8.630 brand drugs.

Not only that, the imposition of GST at zero rated the following food items:

1. Milk infants and children based on soy and organic milk;

2. Dhal (ARPU) pulses of chickpeas, green peas and white beans;

3. Lotus root and water chestnut;

4. Seeds of mustard;

5. Brown sugar;

Further improvements are government proposes that the annual sales threshold for registration under the scheme reduced from 100 thousand to 50 thousand ringgit to enable small-scale farmers to benefit from the flat rate scheme under GST. For companies involved in the maintenance, repair and overhaul in the aerospace industry will be allowed to join the Approved Trader Scheme and given relief GST on imported goods.

In addition, GST relief is also provided on the importation of the goods which have been exported temporarily for the purposes of promotion, research or exhibition. Further improvements are GST relief for the oil and natural gas supplied to the importation of equipment exported temporarily, for purposes such as equipment rental and leasing of oil rigs also floating platform. The latter improvements are also given GST relief for the acquisition of equipment and teaching materials, training providers and vocational skills to carry out the program approved under the National Skills Development Act 2006.

For GST on prepaid cards for telecommunication services, a Malaysian who use prepaid telecommunications services will receive a rebate equal to the amount of tax paid, which will be credited directly into their prepaid service account. This step is to begin January 1, 2016 until December 31, 2016. GST Exemption for Rural Air Services - Air passenger transport is the main mode of transportation for rural residents, in Sabah and Sarawak and Labuan. Thus, the domestic air passenger transport services on the route in economy class Rural Air Services exempted from GST.

Conclusion, the GST helped widen the tax base of the country, to make sure the country has a tax system that is more resilient and improve compliance in the affairs of government tax collection. International agencies such as the World Bank and the International Monetary Fund (IMF) has long warned the government that the country has a small tax sources and cannot last for long time. Only 1.5 million of the taxpayers in the country, while the oil resources will not last long.