Will GST implementation be announced in Budget 2011?


Many have concerned whether the Malaysia Government will announce the implementation of the Goods and Services Tax (GST) in Budget 2011, which has drawn mixed views.

KPMG tax partner Tan Eng Yew said the platform for GST implementation had been set; people are just waiting for the implementation date, which could be announced any time, not necessarily in the budget. 

Affin Investment Bank chief economist Alan Tan said: “While we do not expect a specific date to be mentioned for GST implementation in this budget, we do expect some focus on the rationale for the country’s tax reform.”

An economist said it was hard to predict if the Government would announce the GST implementation in the coming budget but noted it was definitely another area that could boost revenue and help reduce the budget deficit.

The Government gave the assurance that GST is expected to have little impact on inflation. In a study by the Government, prices of certain goods such as shoes and clothing could be actually drop by about 2.7 per cent as the rate under the GST is only 4 percent compared to the 5 per cent and 10 per cent under the goods and sales taxes, respectively. However, services such as recreation, private health care and education would increase by about 2 percent.

To ensure the traders do not profit from the reduction in the costs of goods due to lower GST rates, Domestic Trade and Consumer Affairs Ministry is the midst of drafting the Anti Profiteering Law in counter for this.

Source: The Star Business News, Royal Malaysian Customs