...If you are planning on doing business in Malaysia knowledge of the investment environment and information on the legal, accounting and taxation framework are essential to keep you on the right track. Doing business in Country Name Contents Page Foreword Country Profile Regulatory environment Finance Imports Business entities Labour Financial reporting and audit Contact details 1 2 4 6 7 8 10 13 18 Doing business in Malaysia 1 Foreword SJ Grant Thornton is a member firm within Grant Thornton International. SJ Grant Thornton was established in 1974 and ever since, has progressed expeditiously in every aspect. We provide innovative, yet practical advice in a range of assurance, tax and specialist services to privately held businesses and public interest entities. Today, we are ranked as one of the leading accounting and consulting firms in Malaysia. We operate from our main office in Kuala Lumpur and other offices in Penang, Johor Bahru and Kuantan. Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist advice to privately held businesses and public interest entities. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business. This guide has...
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...and Management Studies - IJEBMS ISSN: 2226-4809; EISSN: 2304- 6945 Vol. 2, No.1 (January, 2013) 12-19 Indexing and Abstracting: Ulrich's - Global Serials Directory Goods and Services Tax (GST): A New Tax Reform in Malaysia Nor Hafizah Abdul Mansor Faculty of Accountancy Universiti Teknologi MARA (UiTM), Malaysia Email: norha058@johor.uitm.edu.my Azleen Ilias College of Business and Accounting, Universiti Tenaga Nasional (UNITEN), Malaysia Email: Azleens@uniten.edu.my Abstract The Goods and Services Tax (GST) is becoming one of the most prominent topics in Malaysia. The announcement by the Malaysian Ministry of Finance (MOF) in the Budget 2010 on the implementation of GST had created various reactions from practitioners, academicians, general public and most important businesses. GST is one of the tools that are proposed by the Government to reduce continuous deficit budget in Malaysia. This paper discusses the GST as a new tax reform in Malaysia, and covers several issues in order to enhance the understanding and readiness among Malaysian in adopting GST. Keywords: Tax reform; GST; budget deficit. 1. Introduction The introduction of Goods and Services Tax (GST) was first announced in the Budget 2005 in order to replace the existing sales and services tax structure in Malaysia. This new tax reform is projected to be implemented in January 2007. However, the Government has announced on 22 February 2006 that the implementation would be postponed to a later date. Recently in Budget...
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...Doing business in Malaysia Contents Foreword Chapter 1 - Introduction • • • • • • • • • • • • • • • • • • Geography & population Advantages of investing in Malaysia Language Political environment Economy Major exports and imports Import controls Regulatory environment Financial services Currency denomination Exchange controls Government policy on foreign investment Communications 5 6 Chapter 2 - Intellectual property protection Patents Trade Marks Industrial Design Layout Design of Integrated Circuits Geographical Indications 19 PKF – Doing business in Malaysia 2 Chapter 3 - Business Structure • • • • • • • • • • • • • Types of business structures Companies limited by shares Companies limited by guarantee Foreign companies and foreign investments Sole proprietorship and partnerships Trusts 24 Chapter 4 - Business Finance Equity financing Loan Funding Grants & soft loans 28 Chapter 5 - Investment Incentives Manufacturing Multimedia Super Corridor Status Operational Headquarters International Procurement Centres / Regional Distribution Centres 35 Chapter 6 - Accounting • • • • • • • • • • • • Statutory Accounting Requirements Audit Requirements Accounting Standards 60 Chapter 7 - Taxation Overview of taxes in Malaysia Scope of taxes: Residency Sources of income liable to tax The Tax Year Payment of Tax Corporation tax Interest Deductions Interaction with International Tax Regime Taxation of Partnerships & Trusts ...
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... 6 1.3 Why is GST implemented 8 1.4 Difference between GST and SST 9 1.5 General operations of GST 10 1.5.1 Goods and Services Tax (Zero-rated supply) Order 2014 11 1.5.2 Goods and Services Tax (Exempt supply) Order 2014 132. Content 14 2.1 Effect of implementation of Goods Services Taxes (GST) in Malaysia 14 2.1.1 GST are regressive tax or progressive tax? 14 2.1.2 Effect of implementation of GST on inflation based on CPI 16 2.1.3 Effect of implementation of GST on the household income 19 2.2. Impact of GST on sub regions of Malaysia 24 2.2.1 How GST improve the standard of living 29 2.3. The implementation of GST in other ASEAN Countries 303. Implication Of Implementing GST On Economy...
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...GST (good and service tax), other words it also known as VAT (value added tax). It have implemented in many countries throughout the world. Currently there are 170 counties in the world that have implemented GST /VAT. NO REGION No of country 1 ASEAN 7 2 Asia 19 3 Europe 53 4 Oceania 7 5 Africa 44 6 South Africa 11 7 Caribbean, Central and North America 19 Table 1: No of countries implement GST/VAT Sources: Ministry of Finance GST is a multi-stage tax system, this is due to its nature which the tax is collected based on the supply of goods and services at each of the supply chain from the supplier to the retailer stage of the distribution. Even though GST is imposed at every stage of the supply chain, but the tax element will be not become a part of the cost of the product, because the GST paid on the business inputs is claimable as input tax. Where the business will pay the GST as output tax and claim for the input tax from the customs. In addition, it does not matter how many stages where a particular goods and services goes through the supply chain because the input tax incurred at the previous stage is always deductible by the businesses at the next in the supply chain. GST consider as a broad based consumption tax, which includes all sectors of the economy. In Malaysia the GST have been establish in a very clear manner, for example all goods and services made in Malaysia including imports supply...
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...AND SERVICES TAX (GST) IMPLEMENTATION IN MALAYSIA CHAPTER ONE - INTRODUCTION 1.1 Backgroud of Study Malaysian taxation system is generally divided into two, which are direct taxes and indirect taxes. Indirect taxes are controlled by the Royal Malaysian Custom Department (RMCD) and it consists of four components such as excise duties, customs duty, sales tax and service tax. Direct taxes are under the control of the Inland Revenue Board of Malaysia (IRBM). The IRBM is responsible for all policies relating to direct taxes such as income tax of individual and business, petroleum income tax, real property expansions tax, and stamp duty. From the government perception, taxation is a vital economic tool because it can be employed to regulate the economy, to invigorate economic growth through the granting of fiscal incentives as a principal aim of implementing tax policies and to provide funds for development projects (JeyapalanKasipillai, 2005). The contribution of direct taxes and indirect taxes to government revenue in 2009 amounted to RM78.375 billion (49.4%) and RM28.129 billion (1 7.73%), respectively. This shows that taxation contributes more than 60% to the Malaysian government revenue. Recently, the Malaysian government established the implementation of goods and services tax (GST) to replace Sales Tax and Services Tax (SST). The GST plan was first raised in 1988 but at the time it was considered unnecessary because the sales tax and services tax was effectively...
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...Malaysia is an emerging country with continuously grow in its economy. As announce in 2016 Malaysia budget, Malaysia government lists some objectives of the budget is to strengthening economic resilience by increase the capacity of domestic market and also increase exports. Promoting the well-being of nation by to be more prosperous and easing the cost of living of the people by giving subsidy and fair and equal tax also wealth distributions. A) Important issues in 2016 Malaysia budget There are a number of issues that being concerned in the 2016 Malaysia budget. By focusing to individual and Small and medium enterprises (SMEs), 2016 budget seems as the relief for Malaysian. Firstly, to encourage SMEs to expand their export markets, the new exemption are being given to SMEs with the following revised value added criteria, a) income tax exemption of 10% of the value of the increased exports to manufacturers provided that the goods exported attain at least 20% value added b) income tax exemption of 15% of the value of the increased exports to manufacturers provided that the goods exported attain at least 40% value added. All of this income tax exemption is restricted to 70% of the statutory income. This effectively starts from year assessment of 2016 to 2018. Secondly, for the individual, there are increases of tax rate especially to high income earner. The marginal tax rate for the chargeable income bracket from RM 600,001 to RM 1 million to be increased to 26%....
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...11 3.5 EXPECTED RESULT 12 4.0 DISCUSSION AND CONCLUSION 12 5.0 REFERENCES 13 1.1. Abstract The Government of Malaysia on its latest Budget 2011 has announced on their intention to implement the Goods and Services (GST) tax system by middle year of 2011 and therefore, will replace the present tax system which is known as Sales and Service tax (SST). It was first announced by the previous Prime Minister, Datuk Seri Abdullah Ahmad Badawi in 2005. The primary objective of the government in replacing the previous SST system with GST is for the economy development and also to generate more revenue for the country since Malaysia is facing a bad budget deficit. Goods and Services tax is being practiced by more than 140 countries worldwide which most of the countries that are practicing it are the developing countries including our neighbors, Singapore and Thailand. However, there has been much protest, notably from the people against this new tax system. Throughout the research, it will determine on the people’s thought regarding the GST system and why are they against it. A brief explanation about GST system will be given first, in terms of the meaning and the workflow of the system as a way in conformity with their raw perception about the system before they understand it. This research will use the citizen of Malaysia as the sample. 1.2. Introduction...
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...Lesson from Malaysian Companies towards Goods and Services Tax (GST) Mohd Rizal Palil1, Rosiati Ramli1, Ahmad Fariq Mustapha1 & Norul Syuhada Abu Hassan1 1 School of Accounting, University Kebangsaan Malaysia, Malaysia Correspondence: Mohd Rizal Palil, School of Accounting, Faculty of Economics and Management, University Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia. E-mail: mr_palil@ukm.my Received: May 6, 2013 Accepted: June 20, 2013 Online Published: August 30, 2013 doi:10.5539/ass.v9n11p135 Abstract URL: http://dx.doi.org/10.5539/ass.v9n11p135 Various parties including academics, professionals and the society (the potential GST payers) are arguing about the introduction of GST in Malaysia. Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumption tax imposed on the sale of goods and services. The Malaysian government introduce this potential tax mechanism, in order to increase the existing tax bracket and replacing the long-implemented service and sales taxes. With the introduction of GST, the Malaysian government felt it would provide them with the prospect to reduce the rates of individual and corporate income tax. However, do all companies particularly small and medium enterprises (Companies) ready to adopt the systems efficiently? If they could adopt the system, how much their compliance costs involved such as developing new software, human resource training and accounting systems? The objective of this paper is to obtain companies’ compliance...
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...concerning the individuals and sole-proprietor business have been introduced in 2015 budget. The first issue is about individual tax. The first change is that the income tax rate is reduced by 1 to 3% for resident individuals depending on different levels of chargeable income since Year of Assessment (YA) 2015 (KPMG, 2014). This results in that tax payers with family and income of Rm4,000 per month will not have tax liability. Besides, the income tax rate for non-resident individuals is reduced by 1% from 26% to 25% (KPMG, 2014) Chargeable Income(RM) | Current Tax Rate (%) | Proposed Tax Rate (%) | Reduction(%) | 1—5,000 | 0 | 0 | - | 5,000—20,000 | 2 | 1 | 1 | 20,001—35,000 | 6 | 5 | 1 | 35,001—50,000 | 11 | 10 | 1 | 50,001—70,000 | 19 | 16 | 3 | 70,001—100,000 | 24 | 21 | 3 | 100,001—250,000 | 26 | 24 | 2 | 250,001—400,000 | 26 | 24.5 | 1.5 | Exceeding 400,000 | 26 | 25 | 1 | This tax brackets illustrates the chargeable income is raised from RM100,000 to RM400,000 and the rate for chargeable income band exceeding RM100,000 is structured into three bands with reduced rates of 24%, 24.5% and 25%, which results in existing taxpayers receiving a saving of at least 5.3% (Reuters, 2014). It is significant to note that the deduction in tax rates is expected to provide tax saving for individuals This significant change in income tax rate aims to increase the disposable income of individuals and in line with GST implementation. Secondly, Malaysian government also...
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...literature on the GST is extremely wide . The are many areas that can be focus on basically while doing my research . The most highlight areas on GST is on the public reaction towards GST in Malaysia before the implementation which can known their readiness , perception and awareness on GST. According to ( Mohd Rizal Palil ,2011) he has done a research in Malaysia on the impact of Good and Service Tax towards Middle Income Earners. The author has done survey towards people all around Kuala Lumpur through questionnaire. Based on the finding of his research he reveals that most of the employees does not support the government decision for the implementation of GST and also they strongly does not accept the fact that GST will be implemented in the nearest future. At the same time they strongly does not support the implementation. Based on (K. Saira ,2010) he has done a research on the awareness of the people towards GST and his finding indicates that people are not aware that GST will be charge on Goods and Services. The researcher conclude that people are not aware of GST as soon its going to be control in their life. Beside that they are not aware that it will impact on the economy very well. (K. Saira ,2010) There is also another research which is concerning about the perception of Tax Payers on GST by (Tan Mei Lian ,2010) .The author has also done survey questionnaire towards people randomly. Based on the researcher finding it show that many people feel that it is not...
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...Malaysia’s effort has been marginal in achieving effective management of resources, pollution control and prevention of environmental degradation. Tax Incentives ENERGY Energy sector is one of the target sectors of Green Technology under the National Green Technology Policy. Various attractive incentives are given to businesses to encourage the generation of renewable energy (RE) such as biomass, biogas, hydropower and solar power, and the efficient use of energy (EE). Conservation of energy is a promoted activity under the Promotion of Investments Act of 1986, companies providing EE services or companies that incur capital expenditure for conserving energy for own consumption can be considered for the Pioneer Status or the Investment Tax Allowance. Besides, for companies who intend to implement Power Quality Improvement Projects can apply for Accelerated Capital Allowance (ACA). On top of these, income received from the sale of certified emission reduction would be exempt from income tax. Incentives Available to Companies Adopting RE/EE Initiatives: a) Pioneer Status: Exempt from income tax on 100% of statutory income for 10 years. Accumulated losses and unabsorbed capital allowance incurred during the pioneer period can be carried forward to offset against the subsequent pioneer income of the company; or b) Investment Tax Allowance: Capital expenditure incurred on buildings, plants and machineries used for the RE/EE activities can be utilized against 100% of statutory...
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...GST, the Goods and Services Tax, in Malaysia has been critically received by citizens. This study has been conducted to gauge the level of awareness and approval of GST among IIUM students. The general outlook on GST is negative, stemming from a lack of awareness as to what GST truly is and the taxpayers mindsets (Abdul Mansor & Ilias, 2013). Questionnaires were distributed to random IIUM students aimed at getting their awareness on GST and its implementation. The findings indicate that IIUM students are aware of GST and its imminent implementation and conflicting views on whether or not they approve of its implementation. Perhaps with a little scrutiny and education it might be possible to increase awareness on GST, and may change people perceptions and reception of it, be it positive or negative. 1.0 Introduction In general, Goods and Services Tax (GST) is a consumption tax which is imposed on the sale of goods and services, and it is divided into two categories indirect taxes and direct taxes and is administered by the Royal Malaysian Custom (RMC). The Malaysian government has announced that the new system which will be implemented starting 1st April 2015 at the rate of 6% (Robinson, 2014). The GST (goods and services tax) system will be replacing the present SST (sales and services tax). In the current tax regime, the 10% Sales Tax and 6% Service Tax is collected by one party (usually the seller) and passed on to the tax authorities. For instance, in...
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...The Malaysia Goods and Services Tax (GST) Royal Malaysian Customs Department (2013) state that the government does implement the GST is because the existing consumption sales tax is unsatisfactory. There are also a reduction in the rate other taxes is sought. The existing tax system has not kept pace with the development of the economy. This is because they want to avoid tax cascading, multiple taxation and transfer pricing bias (Ministry of Finance Malaysia, 2014). Next, when they want to enhance tax compliance as well as to reduce tax avoidance and tax evasion, they have to avoid the issue of transfer pricing and value shifting. Then, they want to implement self-policing, lessen the bureaucratic red tape(Ministry of Finance Malaysia, 2014). Moreover, they want to lower the administrative cost and to enhance Malaysia’s competitiveness and to improve efficiency, Prices of Malaysian exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain. This will strengthen our export industry, helping the country progress even further (Ministry of Finance Malaysia, 2014). Thus, the GST will enhance the capability, effectiveness and transparency of tax administration and management. In addition, it will help the government find new sources of revenue. Malaysia Goods and Services Tax (GST) Royal Malaysian Customs Department 2013, Why GST?, Malaysia Goods and...
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...PROPOSAL EPGB6122 Title: “Public Readiness in GST Implementation 2015 - In case of Kuala Lumpur, Malaysia” Prepared by: Noorul ‘Aini Hanifa binti Su’aidi EGC140004 Masters in Public Administration Semester 2014/2015 Public Readiness in GST Implementation 2015 - In Case of Kuala Lumpur, Malaysia 1. Background Taxation is one of the important elements in managing national income, especially in developed countries and has played an important role in civilized societies since their birth thousands years ago (Lymer and Oats, 2009). The introduction of Goods and Service Tax (GST) was first announced in Malaysia Budget 2005, and then projected to be implement in January 2007. In February 2006, government has announced that the implementation would be postponed to a later date. In 2010, it was when Government finalizing the study of the implementation of GST and identifying the social impact of GST on the public and inviting many discussions among expert and GST proponents publicly. The uncertainty on GST implementation cast many doubts as to whether Malaysia needed the GST regime, and if so, what could be the public benefits to the public from this exercise. The government had putting a great effort in promoting the implementation of GST, however an attention to educate the public of GST understanding should be in place as well. Hence, GST is not a new exercise of tax; with more than 140 countries worldwide having had implemented GST, and this is includesd many...
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