GST set to be introduced in Malaysia

Following the tabling of the Goods and Services Tax (GST) Bill 2009 in Parliament recently, the Goods and Services Tax, otherwise known as GST, is set to make its début within Malaysia. The move to introduce GST was first announced during the tabling of the 2010 annual Budget.

If things are smooth sailing, the Bill could come into force by the middle of the year 2011, imposing a 4% rate on the sale of goods and services, replacing the 5% sale and services tax imposed currently.

The proposal is controversial for potentially being detrimental to the poor, and although the Malaysian Government has assured to allay such concerns by introducing it below the current sale and services tax rate, several have countered that the rate could be further hiked once the GST is introduced, as what had happened in Singapore which had introduced the rate at 3% only to bring it up to 7% later, as well as other countries such as Australia. In the United Kingdom, the GST is as high as 15%-17%. GST was slated to be introduced in Hong Kong in 2006 but was later cancelled following public opposition.

Reading Law will run an analysis or two on the GST and its potential impact once we obtain a copy of the Bill. Meanwhile please let us know what you think by participating in the following poll.

Current known GST rates worldwide

1. Australia                                        10%
2. Canada                                             5%
3. New Zealand                               12.5%
4. Singapore                                         7%
5. United Kingdom                            15%