Gst Case Study

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SALES TAX Sales Tax was introduced on the 29th February 1972 as a single stage consumption tax, levied, charged and paid on goods manufactured in Malaysia and imported. Currently, the rates of sales tax are as follows:- • Reduced rate of 5% for non-essential foodstuff and building materials • A general rate of 10% • Specific rates for petroleum products Licensing Manufacturers of taxable goods whose annual sales turnover exceed RM100,000 is required to be licensed under sales tax act. Those with annual sales turnover does not exceed RM100,000 are required to apply for a certificate of exemption from licensing. Scope of Tax Sales tax is levied on locally manufactured goods at the time the goods are sold or otherwise disposed of…show more content…
the sales tax and service tax (SST). The introduction of GST is part of the Government's tax reform programmed to enhance the efficiency and effectiveness of the existing taxation system. GST is proven to be a better tax system as it is more effective, efficient, transparent and business friendly which could spur economic growth as well as increase competitiveness in the global market. GST is capable of generating a more stable source of revenue to the nation because it is less susceptible to economic fluctuations. It is important to replace the existing SST in order to eliminate its inherent weaknesses such as cascading and compounding effects, transfer pricing and value shifting, no complete relief on goods exported, discourage vertical integration, administrative bureaucratic red tape, classification…show more content…
With GST, business can benefit from recovering input tax, thus reducing cost of doing business. For example, under the current taxation system, manufacturers are not allowed to claim service tax on telecommunication, accounting and legal services and sales tax on indirect inputs such as office equipment and furniture. These taxes are embedded into the price of the goods sold. Hence, the cost of doing business increases. Under the GST system, any GST incurred on acquisition is claimable and is not a cost to businesses Nation building GST is better and more efficient method of revenue collection for the government. More funds can be channeled into nation – building projects for progress towards achieving a high income nation. Public facilities such as Hospitals, Charity House, Market, shop lot, Public service centre, Schools and college have quick fund raising and enough financial support to faster the development progress due to steady rate of tax collection. Fairness and Equality With the GST taxes are levied fairly among all the business involved, whether they are in the manufacturing, wholesaling, retailing or service

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