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GST implementation in April 2015 is reasonable - Wahid Omar
KUALA LUMPUR: The introduction of the Goods and Services Tax (GST) in the 2014 Budget and its implementation on April 1, 2015 are reasonable moves, says Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.
Abdul Wahid said the GST's implementation in 17 months' time would enable businesses and companies to make the necessary preparations.
"The GST has been discussed for a long time, a bill was tabled in Parliament in December 2009, and many engagements have been held.
"We have taken into account feedback from the people and economists, and I think the time has come for us to implement it," he told reporters after attending the tabling of Budget 2014 in Parliament today.
Abdul Wahid said the GST is a new tax structure replacing the sales and services tax and is not an additional tax, while its rate, at six per cent, is the lowest among Asean countries.
"Its impact on the prices of goods is minimised as some goods will have zero tax and some are exempted from it, and there is also income support from the government like the one-off cash
aid of RM300 and reduction in income tax," he said, adding medium income earners also get a significant tax relief of RM2,000.
Under the new budget, the chargeable income subject to the maximum rate is raised to exceeding RM400,000, while the current maximum tax rate at 26 per cent will be lowered to 24 per cent, 24.5 per cent and 25 per cent.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said the tax incentives and lower taxes could compensate for the slight rise in prices of goods after the GST is implemented, while the reduction in corporate tax could attract more foreign companies to invest in Malaysia.
A GST Monitoring Committee, chaired by the Second Finance Minister, will ensure a smooth and orderly implementation of the GST, he added.
Meanwhile, Ministry of Finance Secretary General Tan Sri Dr Mohd Irwan Serigar Abdullah said the implementation time for GST is right because of the low inflation in the country currently.
Furthermore, he said, the GST has been implemented in more than 160 countries including less developed nations, and Malaysia should not be left behind by not introducing the same mechanism.
Meanwhile, PricewaterhouseCoopers (PwC) Malaysia Managing Partner Sridharan Nair said Budget 2014 has put Malaysia on a strong platform towards fiscal reform and becoming a high-income nation as it addresses one of the most comprehensive reforms to reduce deficit and manage debt level.
He said broadening the tax base to one that is more sustainable combined with responsible spending is the way to go as the country moves towards developed nation status in the near future.
"With less than 18 months to go before the GST goes live, corporates need to assess the impact on their existing business models and strategies," he said in a statement today.
Nair added that corporates have to start preparations to ensure they are ready, in their systems and processes as well as a broader organisational readiness.
In a separate statement, Khazanah Nasional Bhd Managing Director Tan Sri Azman Mokhtar said Budget 2014 clearly states that the country's future growth should not be driven by expansion of debt but by moving up the global value chain in an inclusive manner which leaves no citizen behind.
"Key to this is reducing the level of fiscal deficit, via a measured introduction of GST, through which the rates for corporate and personal income tax can be reduced to incentivise innovation and productivity," he said.
KPMG Tax Services Sdn Bhd Executive Director - Head of Tax, Khoo Chin Guan, said various assistance schemes and initiatives have also been introduced in tandem with the implementation of GST to allay the rakyat and businesses.
"Moving forward, it is timely for businesses to educate themselves on GST to ensure a smooth implementation and transition to the GST system. The key message for businesses is to be prepared and ready when the time comes," said Khoo.
Franklin Templeton Investments Executive Director/Head Malaysian Fixed Income and Sukuk, Hanifah Hashim, said subsidy rationalisation in Budget 2014 is a step in the right direction as it demonstrates the country's commitmment to addressing the weaknesses in its balance sheet.
She said the move adds another brownie point to avoid any sovereign downgrade.
"However, on the flip side, the government has also kept another eye on the inflation rate with the subsidy rationalisation," she said, adding that a spike in the inflation rate would lead to an increase in the bond yield, and in return will impact on the bond portfolio. -- BERNAMA