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Sunday, October 19, 2014

SST not robust enough for current business environment

Deputy Finance Minister also says that implementation of GST is gaining traction and acceptance.
SSTSUBANG JAYA: The current Sales and Services Tax (SST) is not robust enough to handle the current business environment as it was set up in the 1970s, said Deputy Finance Minister Chua Tee Yong.
He said in 160 countries, the implementation of the Goods and Services Tax (GST) was gaining traction and acceptance.
“In terms of implementation, there are more countries implementing the GST instead of Inheritance Tax or Capital Gains Tax (CGT),” he told reporters at a seminar on ’2015 Budget on GST’ here on Saturday.
On the recent budget, he said the opposition had proposed that the government should implement the Inheritance Tax and CGT instead of the GST.
“In Malaysia, we actually have a form of CGT called the Real Property Gains Tax, but we must understand that Malaysia is still a developing country and based on the limited population that we have, we need to continue to attract investments as we are competing with other countries within the region,” Chua said.
“As such, implementing these two taxes, might not be the best in terms of increasing competitiveness in attracting investments into Malaysia,” he said.
He also hoped that businesses register for the GST and on top of that continue to engage and attend briefings to understand more on the GST implementation.
He also said the Prime Minister Najib Tun Razak had in Budget 2015 announced there was an additional list of GST goods which are zero-rated.
“What we have are five categories under GST, which are the standard-rated, zero-rated, exempt, out-of-scope and relief,” he said.
“The purpose of having these different categories was to reduce the impact of the implementation of the GST on consumers. However, when you have different categories, it will add to the complexity of businesses, as it is important for businesses to understand these different types of categories, for implementation in their businesses,” Chua said.
“From what was announced and if you look comparatively with other countries, like Singapore, Thailand and Indonesia, most of their items are standard-rated, but if we were to give standard-rate for everything, it would pose a huge burden on consumers.
“With the announcement of the recent items that are zero-rated or exempt, there have been a lot of industries that requested to be zero-rated, but experts have already mentioned that the government should not zero-rate and exempt too many items because it will create more complexity in the implementation.
“Once you have more zero-rated and exempt items, there is room for potential abuse,” he said.
“So if there is any industry that still wants to go for zero-rated and be exempted, they have to go through the relevant ministry, because at the end of the day, the Finance Ministry does this in consultation with the other ministries. The decision is not by the Finance Ministry alone,” he added. –BERNAMA

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