Challenges GST of implementation in Malaysia

1. There is always challenge for a country to implement a new system or policy as

it has to consider the widespread effect on individual citizen, businesses,
government and the whole economy. The regulators have to balance the interest
between the benefits and disadvantages of the new policy along with the long term
goal.

2. One of the challenges in the implementation of GST might be the level of

technological knowledge of the citizen especially those senior citizen. This is
not a discrimination issue but in fact, many senior citizens in Malaysia are not
familiar with the technology equipments such as the uses of computer and
GST software. For an example, a case from Teluk Intan where a hardware store
owner, Chen, 65 tried to commit suicide due to the pressure from trying to
implement the Goods and Services Tax (GST).

3. Hence, the regulators should aware of the challenges of GST in order to

protect the interest of the public and to avoid any unintended consequences
by providing adequate of information to the public, sufficient of time and
more training programs should be take place in order to help people who are
still struggling on the implementation of the GST.

4. Challenge relates to education of staff in compliance with GST rules and

regulations. Retailer 1 expressed concern that some of his staff were not receptive
to change despite relentless effort made to educate them on GST matters. Other
participants were concerned that they may be potentially exposed to the risks of
unintentional errors or negligence in terms of actions committed by their staff.

Challenges SST of implementation in Malaysia

1. On challenges in implementing the SST 2.0, Paddy said he expected no major

problems except for new businesses which may not have the experience of
using the tax while some may still be clueless whether their goods are taxable
or not.

 Due to this, he said the Customs Department, after having organised hundreds of
hand-holding programmes for companies nationwide, would continue its effort
 until the second week of September.“Because we have simplified the
(exemption) process, there could be issues whereby businesses abuse the
system, but if there is, it should be minor. We don’t expect everyone to abuse
the system and we placed trust in the businesses,” he said.The department
announced that the number of consumer goods to be exempted from the sales tax
was 10 times the number of goods exempted under the GST.A total of 5,443
consumer items have been exempted from the sales tax, set at 5.0 per cent or 10 per
cent.Among the items that will not be taxed include live animals and daily food
items like rice, cooking oil and bread.

2. He explained that this poses a formidable challenge to businesses as tariff codes

for products are not easily available, particularly for businesses that are not
involved in import/export.As for service providers, Bromley said that their
challenge is to determine whether their services are “taxable” as prescribed.“Only
once these matters are addressed can a business determine whether it should be
registered for SST, what goods and/or services (purchases and sales) are affected
and therefore, the impact on pricing.”

 Challenges in changing prices

 Bromley further noted that communicating price changes will also be

challenging as confirmation of exempted and taxable goods, the Sales Tax
rates applicable, as well as the services subject to Service Tax, have only been
confirmed recently, or clarification is still required. He opined that businesses
may well be able to enhance their IT and point-of-sale systems in time, but for
those with a large number of outlets making sales to end-consumers, they will be
pressed for time to update all pricing.As such, he remarked that it is hoped that the
Royal Malaysian Customs Department (RMCD) will be flexible in allowing time
for these changes to happen, as was the case when the GST was reduced from six
per cent to zero per cent.“Overall, businesses will find their costs increasing for
purchases subject to SST. Unlike GST, SST incurred on inputs is not able to be
offset against SST charged and collected.”Bromley also pointed out that while
managing the introduction of SST, businesses will also have to manage the final
reporting for GST.
3. Challenge for businesses,though will be that the old SST did not have input
and output tax mechanism.