Goods and Services Tax and Sales and Services Tax in Malaysia: A Review of Literature

Abstract

Introduction: Tax is the main source of revenue for the Malaysian government. Thus, to increase the government revenue, Goods Services Tax (GST) was implemented in Malaysia starting from April 2015 to replace the Sales and Services Tax (SST). However, starting from September 2018, the GST has been replaced back by the SST.Methodology: The study will review the prior literature on the tax reforms. It will analyse data from scholarly journals, newspapers, review articles and other related documents. The focus will be on the implementation of GST and new SST in Malaysia from different stakeholders’ perspective.Results: The results indicate that SST is much better to match with the Malaysian environment. This is because SST is tax friendly for both the business entities and the people of Malaysia.Conclusion and Recommendations: The findings would contribute to the literature and explains whether the move made by the Malaysian government to revert to SST is justifiable.

GST complexities in Malaysia: views from tax experts

“…The GST was introduced in Malaysia on 1 April 2015 as part of a government initiative to replace the SST that had a few loopholes (Mansor and Ilias, 2013; Sidik et al , 2019). The loopholes in SST include double taxation imposed on customers through sales plus service tax, a cascading effect where consumers did not know that the sales tax were enforced on the goods at the manufacturing level, transfer pricing and no complete relief given on goods exported (Othman et al , 2017).…”

Dimensions of GST on Small and Moderate Business Units: A Systematic Review

“…The study by Govinda Rao (2000) is a descriptive study which critically examines tax reforms in Indian context since 1990. Vasanthagopal (2011), Sehrawat and Dhanda (2015), Chaturvedi (2018) and Nayyar and Singh (2018) make an exploratory study highlighting GST's positive impact on prime sectors of Indian economy, and Zainol and Soon (2017) and Sidik et al (2019) conduct a systematic review to examine the opportunities and challenges of Malaysian MSMEs and other stakeholders.…”

“…The Malaysian government saw widespread unrest even though the government tried to convince that various measures have been taken to control the increase in prices of basic items (Shamsuddin et al, 2016). Barely three years after its roll out on 1 April 2015, GST levied at 6% in the country got abolished to address the rising cost of living according to official reports (Sidik et al, 2019). Malaysia goes on record to be the only country till date to retrace to SST from the GST system (Li, 2018;Sidik et al, 2019).…”

“…Barely three years after its roll out on 1 April 2015, GST levied at 6% in the country got abolished to address the rising cost of living according to official reports (Sidik et al, 2019). Malaysia goes on record to be the only country till date to retrace to SST from the GST system (Li, 2018;Sidik et al, 2019). As per Deloitte Malaysia, many businesses found that the administrative costs associated with GST compliance were high as well as the cash-flow costs due to delayed payment of refunds (Smith, 2018).…”

“…From this, it is perceived that unless technical infrastructure is in place credits/refunds are delayed and thereby would block funds resulting in increased costs and also not to deny with Cryderman John (2016), that for tax reforms to be successful, one of the essentials is 'Trust' (in elected leaders, bureaucracy and the democratic process) which the previous Malaysian government could not achieve. However, Malaysia's economic scenario and the citizens of Malaysia perceive SST amicable than GST (Sidik et al, 2019).…”