Essential items, services to be exempted from Malaysia's GST
Published on Oct 25, 2013 5:40 PM
MALAYSIA will implement the goods and services tax (GST) at 6 per cent, which will begin on April 1, 2015, said Prime Minister Najib Razak in his 2014 Budget presentation.
In his widely-anticipated Budget speech themed "Strengthening Economic Resilience, Accelerating Transformation and Fulfilling Promises" on Friday, Mr Najib said the GST will replace the sales and services tax of up to 16 per cent currently.
"The GST will not be imposed on essential items such as flour, rice and sugar, and it is among the lowest among Southeast Asian countries currently," he said in Parliament.
Public transportation such as bus and train fares will also be exempted.
He said after the GST is implemented, personal income tax will be reduced between one percentage points and three percentage points, while corporate tax will be reduced between one percentage points and two percentage points.
Currently, individuals pay up to 26 per cent, while corporates pay up to 25 per cent in taxes currently.
The government is also cutting subsidy by allocating RM39.41 billion (S$15.42 billion) on essential items such as cooking oil, flour and sugar this year, 15.6 per cent lower than the RM46.7 billion allocated last year.
Revenue for 2014 is expected to be RM4 billion higher at RM224.1 billion, while the government plans to spend RM264.2 billion on development programmes and administrative expenditure.
The economy is expected to grow between 4.5 per cent and 5 per cent this year, and between 5 per cent and 5.5 per cent in 2014.
According to the Economic Report released by the Finance Ministry on Friday, public debt in 2013 will continue to rise to RM541 billion or 54.8 per cent to gross domestic product from 53 per cent last year.
However, its budget deficit this year is lowered to 4 per cent, from 4.5 per cent last year, and said it will continue to lower to 3.5 per cent in 2014.