Goods and Services Tax (Malaysia)

The Goods and Services Tax (GST), in the context of Malaysia, refers to a multi-stage consumption tax levied on most goods and services supplied in Malaysia. It was implemented on April 1, 2015, at a rate of 6%, replacing the Sales and Service Tax (SST).

The GST operated on a value-added basis, meaning that businesses collected GST on their sales (output tax) and could claim back the GST they paid on their purchases (input tax). This system aimed to reduce tax cascading, a situation where tax is applied repeatedly at different stages of the production and distribution chain.

Businesses with an annual taxable turnover exceeding a specified threshold (initially RM500,000) were required to register for GST and act as tax collectors on behalf of the government. Registered businesses were required to submit regular GST returns, detailing their output tax and input tax.

The GST system included provisions for certain goods and services to be zero-rated (taxed at 0%) or exempted from GST. Zero-rated supplies were taxable but at a rate of 0%, allowing businesses to claim input tax credits. Exempted supplies were not taxable, and businesses could not claim input tax credits related to those supplies.

The implementation of GST faced various challenges, including public understanding, compliance burden for businesses (particularly small and medium enterprises), and potential inflationary effects.

The Goods and Services Tax (GST) was abolished on June 1, 2018, and the Sales and Service Tax (SST) was reintroduced on September 1, 2018. The SST regime differs from the GST system in its structure and application.