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The Malaysian company has committed to introduce sales and service tax (SST) to replace the goods and service tax (GST), taking effect on 1 September
- The Malaysian company has committed to introduce sales and service tax (SST) to replace the goods and service tax (GST), taking effect on 1 September 2018 (Dr Choong Kwai Fatt, Accounting and Business, July/August2019).
Required:
Analyse the differences of the GST and SST with focusing on the concept, tax rates, advantages and disadvantages.
(10 marks)
- GST provided for a multi-staged tax collection system in which every taxable person down the supply chain was taxed when a supply was rendered (output tax), but was allowed to reclaim from the Customs Department any taxes paid to the previous entity along the supply chain (input tax). GST was therefore very broad based, covering the supply of all prescribed goods or services made in Malaysia and any importation of goods into Malaysia. Sales tax, however, is much more narrow based, being levied only on specific goods manufactured in Malaysia by a registered manufacturer or imported into Malaysia by any person. It was also announced in Parliament by the Minister of Finance that SST will only be imposed on 38% of the Consumer Price Indexs basket of goods, compared with 60% under GST. SST was therefore welcomed by the Malaysian public due to the perception that it will be a less burdensome tax on the public (Abhilaash Subramaniam, Jan 2019).
Required:
Discuss your comment on the above statement.
(5 marks)
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