Main Features of Goods and Services Tax (GST)

Our Prime Minister, Datuk Seri Najib Razak announced the introduction of the
Goods and Services Tax (GST) in Budget 2014 on 25th October 2013. GST will be
effective on April, 2015 and replace the current sales and services tax.
GST also known as value-added concept, which is multi-stage tax. GST will
be charged on all taxable supplies of goods and services trading in Malaysia by a
taxable resident. GST is tax neutral to businesses. GST charged to all intermediaries
in the production and distribution chain. Businesses which have registered for GST
are allowed to claim input tax credit. GST also is a broad-based tax since all supplies
of goods and services will involve GST. Exemption is given to zero-rated supplies and
exempt supplies, or those fall within particular special schemes. Besides that,
imported services will be subject to GST.

Standard-rated Supplies
Standard rate supply those goods and services that are charged GST at a fixed
rate. GST is collected by the seller and paid back to government. They can recover
back the difference between the input and output tax when their input tax is higher
than their output tax.

Zero-rated Supplies
Businesses can claim input tax credit in purchasing these supplies. Customer
will be charged at zero rate of GST. Most basic food items such as meats, fish,
cooking oil, rice, sugar, salt, vegetables and first 200 units of electricity supply used
monthly for domestic consumers are classified into this category.

Exempt Supplies
These businesses cannot claim tax credit in purchasing these supplies. At the
same time, output tax is not allowed to change to consumer. Certain financial services,
private healthcare services, domestic passenger transportation, education services,
agriculture land supply and residential properties will be exempted from GST based
on the draft proposal of exemption supplies list in the Budget 2014.

Reference
http://www.yycadvisors.com/overview-of-gst-malaysia.html
www.wongpartners.com/files/.../WP/al_wp_goodservicestax_nov13.pdf

http://www.gstcustoms.gstmalaysia.org/images/Basic-Understanding-of-GSTCustoms-Malaysia.pdf
http://www.klsfea.org.my/sites/default/files/Salient%20KLSFEA%202-1.pdf
http://www.smecorp.gov.my/vn2/sites/default/files/Salient%20Features%20of
%20GST.pdf