GST rates of other countries and Malaysia's compared

IThe final countdown is on. By April 1, 2015 we will join the 90% of the world's population to 'enjoy' the much debated Good and Services Tax.

The concept of GST (Goods and Services Tax) - not to be mistaken for the current Government Sales and Service Tax, GST - was invented by a French tax official in the 1950s. In some countries it is known as VAT, or Value-Added Tax.

Today, more than 160 nations, including the European Union and Asian countries such as Sri Lanka, Singapore and China practice this form of taxation. Roughly 90% of the world's population live in countries with VAT or GST.

Here are some of the tax rates of countries around the world who have implement GST or VAT:

Table 1: Selected nations around Malaysia and other Commonwealth countries.

Do I agree with implementation of GST in Malaysia?

It doesn't matter. Really. What I agree or disagree is not important; it is going to happen regardless.

I have this to say though:-

To the people who manage the tax money we pay: Just be prudent, transparent with the expenses. Put the money to good use. 

To fellow consumers: If you think tax is bad, then you should also be against the current taxation system, especially individual tax. No one want to pay tax, right. Me included.

But since it is legal requirement, we might as well share the burden. All of us

Countries with GST, and Malaysia perspective

To begin with, I'll state here that I am for the implementation of the GST (Goods &Services Tax) in Malaysia. Whether you agree to it or otherwise, 160 countries in the world think VAT/GST is the one that is right for them.

In the ASEAN region, only Malaysia, Myanmar and Brunei have yet to adopt this taxation system.

I read that many people are unhappy with the proposed GST rate of 6% as they are worried that this will quickly be revised and it won't be too long before it becomes double that figure. I think this is unlikely and by right it should not be the case. You don't need to be unduly worried.

Take the following cases for example - many countries did not change their GST/VAT rates after so many years of implementation:


Source: ASTRO Awani 


I say we are in the right direction. We just need to have an efficient way of enforcing the implementation, and transparent way of spending the extra billions of Ringgit collected.

You can find out here what are the goods and services exempted from GST.

GST: Taxable and non-taxable goods

Some people say that the implementation of the GST is premature in Malaysia as we have not achieve high income status yet. I say, the time is now. If we think we are not ready yet, we'll never be ready for it. Not in five years' time and not 10 years later.

It is good for the country and everybody will be contributing to the government's coffers. As it is now, only the working class and those with reportable businesses are paying tax.

The more important question (at lease to me) is how efficient and transparent would the billions of Ringgit collected be spent. Everyone should enjoy the benefit of the government's better financial standing as a result of GST implementation. Not just some selected few.

If you've been asking, the followings are goods and supplies exempted from the GST:-


Zero rated supplies include major essential goods such as foodstuff and utility services.



Essential services are also exempted, meaning you should not experience increase in prices of services rendered after the implementation.


The other big question is how stringent will the enforcement be. Traders will tend to increase selling prices citing GST as reason when in actual fact they remain similar or lower. Spend money on public education, monitoring, and enforcement - prosecuting those violating the law.


Infographic source: Astro Awani

Time is now ripe to implement GST

I agree. In the situation that I'm currently in, I'm all for the implementation.

According to PricewaterhouseCooper, except for Malaysia and Myanmar, all the countries in Asia had implemented the Good & Services Tax (GST). Two things: (1) protect the poor through special mechanism and, (2) do up public awareness and some public relations. The more we drag, the more confusion there will be, IMHO.

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Malaysian Rating Corp: Time is now ripe

The time is ripe for the government to implement the Goods and Services Tax (GST) as part of the move to boost revenue.

Malaysian Rating Corp Bhd Chief Economist Nor Zahidi Alias said while the government is seen to be stepping up implementation of the GST, he suggested complementary measures to protect the low-income earners from its impact.

“Overall, having the GST is good. I think public relations work has to be done a little bit more on GST and the fact that we shouldn’t be so idealistic by saying it won’t cause inflation. It will.

“I believe that even if there is an uptick in the prices, it won’t be that much even if we implement GST.”
- Nor Zahidi Alias during the Perdana Leadership Foundation CEO Forum 2013.

Nor Zahidi cautioned the possible inflation in the initial phase of GST implementation.

“I think that is why the government in the last couple of years came out with the Anti-Profiteering Act to make sure if we were to introduce GST, traders don’t take advantage by hiking up prices which they don’t need to,” he said.

In May, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the government would not implement the GST in the near term as it was still studying its implications.

Ahmad Husni said the government was still engaging politicians, the private sector and the people before arriving at a decision.

PricewaterhouseCoopers Taxation Services Sdn Bhd Senior Executive Director Jennifer Chang said all the countries in Asia had implemented GST except Malaysia and Myanmar.

“Why are we not implementing GST? I think it is the very misunderstood taxes. Towards a certain extent, it is the most efficient way of collecting tax because the more you spend, more taxes you pay,” she added.


Source: New Sabah Times

Seminar transformasi negara

Date: 29 March 2012
Venue: Tun Hamdan Hall, Tamparuli
Speaker: Datuk Hj. Ibrahim Saad - Director of BTN, Sabah



"Minum dulu, Datuk", an organising committee member offering Datuk Hajiji Hj. Noor a drink during the closing ceremony.

It was an interesting session with the Village Heads and JKKK Chairpersons whereby they get some insight of the ongoing government transformation programs. A relatively brief session considering the large crowd turnout from Tamparuli, Kiulu and Tuaran.

I wished there was Q&A session so that participants could ask questions and bring forward suggestions and comments. I've wanted to ask about the GST implementation and seek clarification on how it will champion the interest of the generally poor people, or at least how this would benefit them. Tuaran is not one of the Districs with better income population. 

Then again, seminar lke this may not be the venue for such dialogue. Datuk Hj Ibrahim seem to be a well learnt person and he should've been able to provide a reasonably good answer to such query.

GST likely after general election

Quote of the day:

“I guess when the time is right, in the near future, probably after the next general election, we will introduce the GST," - PM, Najib Razak during an interview with Forbes Media, September last year.

Image credit: isarawak.com

Firstly, politics is not my cup of tea, so, the title should be read in no way affiliated to my or anyone's political inclination. This entry is just a reminder to all of us of the imminent implementation of the goods and services tax (GST). Should Malaysia implement it, or should we stick to the current taxation system?

What is GST

GST, also known as VAT (value added tax) in many other countries is a multi-stage consumption tax on goods and services. It is levied on the supply of goods and services at each stage of the supply chain, and the proposed rate is 4% of the value of the supply.

In simple term, if you buy an item (say Manchester United cap) for RM100.00, a goods tax of RM4.00 (4% GST) will be levied on you pay a total of RM104.00 for the merchandise.

Why switch to GST

To replace the current consumption tax i.e. the sales tax and service tax. The government hopes to enhance the efficiency and effectiveness of the existing taxation system by introducing GST. It is also capable of generating a more stable revenue to the nation.

How does it work

Registered businesses charge and collect from buyers/customers GST on the taxable supplies of goods and services made by them. Businesses must be registered under GST if their annual sales turnover has exceeded the prescribed threshold. The collected taxes would then be remitted to the Government. For illustration and if you enjoy lengthy explanation, make a jump to Ministry of Finance website and look for 'How does GST work'.

Is GST widely practiced?

Most developed nations implement GST and as of 2010 there are 146 countries adopting this taxation system. These includes United Kingdom, Germany, France, Italy, Denmark, Netherlands, Portugal, Spain, Australia, Brazil, Canada, China, Japan, Indonesia, India, to name a few. Click to see the list of countries which have implemented GST/VAT.

How about South East Asia?

Indonesia (10%), Philippines (12%), Singapore (7%), Thailand (7%) and Vietnam (10%) are currently implementing GST. The figures in brackets are rate at which GST is levied, as at August 2010.

In comparison, GST rates in other countries are higher. For instance:-
Denmark (25%)
France (19.6%)
United Kingdom (20% as of Jan 2011)
Canada (5%) - notably lower
Japan (5%)
China (17%)
South Korea (10%)
Spain (18%)
Argentina (21%)

Malaysia proposed a GST to be levied at the rate of 4% on the value of the supply. This has not been finalised yet.

How will this affect me and you?

I will quote PM Najib: "Malaysia has a 12 million workforce and only 1.2 million paid taxes" - The StarOnline, Tuesday September 13, 2011.

With the implementation, all 28 million Malaysian will be paying taxes instead of the current 15% (roughly) working population, plus corporate taxes. From this point of view, I would agree to it as I'm currently in the 15% category and I am feeling the pinch of paying high individual tax while others who work and earn more than me pay nothing because of the limited scope of taxation.

Then again, the 85% earning less than the threshold salary, and those self employed earning 'just enough' would be victimised by the GST. A poor farmer would pay the same GST as the high income CEO of a company. It is no surprise then that the proposed GST implementation have come under strong criticism and protest from many quarters.

There has to be a mechanism to discriminate the rich and poor in terms of paying taxes. The well educated and experienced policy makers just need to work harder.