GST
which is also known as VAT or the value added tax in many countries
is a multi-stage consumption tax on goods and services.
GST
is levied on the supply of goods and services at each stage of the
supply chain from the supplier up to the retail stage of the
distribution. Even though GST is imposed at each level of the supply
chain, the tax element does not become part of the cost of the
product because GST paid on the business inputs is claimable. Hence,
it does not matter how many stages where a particular good and
service goes through the supply chain because the input tax incurred
at the previous stage is always deducted by the businesses at the
next step in the supply chain.
GST
is a broad based consumption tax covering all sectors of the economy
i.e all goods and services made in Malaysia including imports except
specific goods and services which are categorized under zero rated
supply and exempt supply orders as determined by the Minister of
Finance and published in the Gazette.
The
basic fundamental of GST is its self-policing features which allow
the businesses to claim their Input tax credit by way of automatic
deduction in their accounting system. This eases the administrative
procedures on the part of businesses and the Government. Thus, the
Government’s delivery system will be further enhanced.
We
need to pay taxes so that the government can finance socio-economic
development; which includes providing infrastructure, education,
welfare, healthcare, national security etc.
"Over
the past few decades, the worldwide trend has been for the
introduction of a multi-stage GST system. Today, almost 90% of the
world's populations live in countries with GST, including China,
Indonesia, Thailand, Singapore and India."
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