Malaysia – Goods And Services Tax (GST) Bill 2014 Passed

The Goods and Services Tax (“GST”) Bill 2014 was tabled for its first reading in the Malaysian Parliament on 31 March 2014 and was passed by the Dewan Rakyat (lower house of the Malaysian Parliament) on 7 April 2014. The GST Bill 2014 will now proceed through the Dewan Negara (upper house of the Malaysian Parliament) before it can be gazetted into law.

The passing of the GST Bill 2014 is to facilitate the implementation of a GST regime in Malaysia with the implementation date scheduled to be 1 April 2015.

Earlier, when winding up the debate on the bill, Deputy Finance Minister Datuk Ahmad Maslan said the GST would have positive implications on the value of exports and Gross Domestic Product.

“Exports will rise by 0.5 per cent as exported goods will be cheaper and more competitive and the GDP on the whole will rise by 0.3 per cent,” he said.

Ahmad said the GST structure in Malaysia encompassed exemptions on various goods and services to meet the needs of the people. Compared to Singapore, the implementation of GST was imposed on all goods and services and exemptions were only given to financial services and residential houses, he said.

“The GST rate of 6% set by the government is consistent with the current economic situation after taking into consideration several factors including reduction of personal tax and corporate tax and the cash financial assistance,” Ahmad said.

Besides that, he said, the government would also consider the proposal of not using the term ‘service charge’ for services in hotels and restaurants as consumers might be confused between service tax imposed by the government and the operators.

Last October, when tabling the 2014 Budget in Parliament, Malaysian Prime Minister Datuk Seri Najib Tun Razak announced the implementation of GST effective from April 1, 2015 at 6% to replace the sales and service tax at a total of 16%.