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ECO 223 - MACROECONOMIC ASSIGNMENT TABLE OF CONTENT CONTENT PAGE NUMBER 1.0 Table of Content 2 1.0 Introduction To GST 3-4 2.0 The effect of GST tax system to Malaysia’s economy 3.1 Economic Growth 3.2 Government Budget and Income 3.3 Cost of Living 5 6-7 8-9 3.0 Conclusion 10 4.0 References 11 Page 1 of 9
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ECO 223 - MACROECONOMIC ASSIGNMENT 2.0 Introduction to the GST GST (Goods & Services Tax) will start in Malaysia on 1 st of April 2015 was announced by our Prime Minister – (Dato' Sri Najib). The bill is now going through parliament. GST is a major change and will significant effect all the businesses and individuals in Malaysia. It is a value-added tax in Malaysia. GST is charged on most transactions in the manufacturing process, but back with the exception of Input Tax Blocked, all parties in the supply chain, other than the end user. The current standard rate for GST is 6%. GST is a Goods and Services Tax based on consumption. All businesses are required to register for GST. It is charged on the value added at every stage of the supply chain. GST is imposed when a sale is made but not when payment is received and paid monthly to the government. GST is much more difference from the present sales and service tax in Malaysia. Some very small businesses will be exempt from registration of GST. There are four types of Goods and Services Tax (GST) that have been implemented in Malaysia since 1 April 2015. The four types of GST are standard rated supplies, zero rated supplies, exempt supplies and supplies not within the scope of GST. Firstly, standard rated supplies is goods and services that are charged by GST with a standard rate. The rate of the tax is 6 % and every stage of supply chain will be charged by that tax. Who is registered under GST that called taxable person need to collect Goods and Services Tax on behalf of government in every goods and services that the person business makes. The person who is registered under GST can make claim input tax in everything that the business purchase by saying it is supplies for the business. Example of standard rated supplies is business that makes construction in any type of buildings. Next, zero rated supplies are the supply of goods and services being tax at the rate 0 %. Supplier will not collect GST but the supplier still can make claim in input tax. This type of GST will not charge any GST to the final consumer. Example of zero rated supplies is business that makes services to the rest of the world. Other than that, an exempt supply is good or services supplies that are not subject to GST and being classified as non taxable supplies. Who is Page 2 of 9
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ECO 223 - MACROECONOMIC ASSIGNMENT registered under GST no matter company or taxable person cannot collect any GST in their business and they also cannot claim the input tax. This type of GST also will not charged
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