The
proposed implementation of the Goods and Service Tax (GST) is to
replace the existing tax system which known as Sales and Services Tax
(SST). The government's intention to replace current SST with GST is
to enhance the effectiveness and efficiency of the current tax system
and in fact understand the differences between SST and GST will make
public to know the country tax system better.
Sales
and Services Tax (SST)
Both
of the SST and GST are consumption tax, however SST is a single stage
of consumption tax which tax paid at the level of final production or
supply of services. There are two flat rate in SST which include 10%
of sales tax and 6% of services tax that charge on the final
production and service only. The range of exemptions and taxable
items is lesser compare to the GST, under SST wherein everything is
exempted unless taxable. This mean not much item is taxable under SST
such as some basic needs is not taxable under SST because usually
only the upmarket restaurants and hotels is charging the SST and many
of low-middle income earners is not affected by this SST system.
Besides, the imported and exported goods and services are not
subject to the tax under the SST system as the existing tax rules do
not deal with the imported and exported services or intangibles.
Goods
and Services Tax (GST)
GST
is a multi-stage of consumption tax on goods and services which
charged at every stage of the supply chain. GST apply equally on
every stage of supply chain which is 6% of GST rate on supplier,
manufacturer, whole seller and retailer. This mean all materials or
inputs are taxable under GST but with the claimable practised. The
range of exemptions and taxable items are much more wider under GST
system, under GST everything is taxable unless exempted. This mean
that all the goods and services are subject to GST unless its
exempted under GST regime such as essential goods, healthcare
services, public transport in order to protect the low-middle income
earners. In addition, all the imported goods and services that made
in the course of business in Malaysia are subject to GST except
specific goods and services that are exempted under GST regime. Under
GST law there is no implication of GST on the classification and
valuation of exported goods because all exported goods are zero
rated.
