pros and cons of GST registration

If a company is not required to register, is it beneficial to register for GST?


It depends. If you are required to register for GST, you have no choice. Otherwise however, you should consider the following pros and cons of GST registration:

Benefits
To the government

1. It generates a stable and predictable tax income in both good and weak economic environment.
2. It is an efficient tax due to the comparatively lower cost of administration and collection.
3. It allows the Government to lower corporate and personal income taxes(going to propose when GST implemented)  This leads to overall economic growth.

To businesses and individuals

1. Most large, established businesses are GST registered - getting your business GST registered is often a signal to customers that your business is an established business and has certain size.
2. GST is a fairer tax system. It taxes the self-employed and wage earners only when they spend their money.
3. Cost of doing business is reduced, thereby contributing to lower prices. Businesses do not suffer a tax cost due to the multi-stage credit mechanism since the real taxpayer is the end-user.

Drawbacks

1. The disadvantage of GST registration is the administrative burden that comes with discharging the duties and responsibilities of GST registration.
2. One must either study the intricacies of GST or pay an accountant to undertake this work which in some cases can be a reasonably high cost.
3. Being GST registered effectively increases your selling price by 4%. Your customers who are not GST registered would not be able to recover the GST you charge. So although your costs are reduced because you can recover GST, your customers might not be too pleased.
4. GST can be a burden to lower income groups, especially during times of high inflation when the 4% tax is paid on the increasing price of daily essentials.

GST when exporting goods or services out of Malaysia

Must a Malaysia company collect GST when exporting goods or services out of Malaysia?


No. Export goods and services are called zero rated supplies and GST tax is not applicable.

GST registered

If a Malaysian company is not GST registered, can it collect GST tax?


No. Goods and Services Tax in Malaysia can only be collected by GST registered entities.

claim back from the tax authorities

When paying GST tax collected from customers, can your company offset the GST tax charged by its suppliers?

Yes. The GST charged by a company to its customers is known as output tax whereas GST paid by the company to its suppliers is called input tax. What you pay to (or claim back from) the tax authorities is difference between your output and input tax.

are your company need to register go GST ?

Are your companies required to collect GST tax?

unless your company is mandated to register for GST if your annual turnover exceeds RM500,000.00

GST - what does it mean for a company?

If you are GST registered, you are required to collect GST tax from your customers for the goods and services rendered by your company and then pay the collected tax to goverment .

As an example, if you charged $1,000 for your goods or services to a customer, you must invoice your customer $1,040 ($1,000 for your service plus 4% GST).

This GST amount in the invoice (appropriately must be called a Tax Invoice) collected on behalf of goverment from your customer must be sent to Malaysia tax department on a montly, quarterly or half yearly basic via GST tax filing.

Remember These Important Points on GST

The Goods and Services Tax (GST) applies to most goods and services. going to implements at 4%.

The GST is a value-added tax, because the government only receives tax on the increase in the value of the good at each stage of distribution.

Zero-rated items are goods and services that at the time of this lesson have the GST percentage set of 0%. Sellers of zero-rated goods and services will receive a rebate of any GST they paid in acquiring those goods and services from their suppliers while sellers of GST exempt goods and services will not.

A GST Payable account is kept in the general ledger. This account is a record of the tax collected on sales (credited) and paid on purchases (debited). The balance represents what must be remitted to the federal government.

GST collected on sales - GST paid on purchases = GST remitted to the Government.

A credit balance in the GST Payable account is remitted to the government on a monthly, quarterly, or annual basis depending on the size of the business.

If there is a debit balance, the company will receive a refund from the government because it has paid more on purchases than it has collected on sales

Taxable Period

Taxable period is a period where a taxable person is liable to account and pay tax to the goverment his GST Liability.

The standard taxable period is on a quarterly basic but a person may apply or be allocated monthly or half yearly taxable period. Taxable period are proposed as follow

1.Category A - Monthly Submission of GST Return - Non Standard taxable period of 1 month for taxable person with annual taxable tunover exceeding RM5 million or any export based traders who may suffer cashflow problems if they file their returns on a quarterly basic subject to approval.

2.Category B - Quartely Submission , standard taxable period of 3 month for all taxable person with annual taxable turnover not exceeding RM5 million

3.Category C - Half yearly Submission , Non standard taxable period of 6 month in special cases subject to approval.

A taxable person may after being assigned a category apply in writting to the Director General to be assigned to any other category at the absolute discretion of the DG.

Introduction of GST

The Malaysian Goverment in its 2010 Budget Speech annouced the final stage preparation for the introduction of the Goods and Service Tax which is expected to take ffect from mid 2011.

This proposal will integrate the present Sales and Services Taxes into a single broad based tax on consumption to be called the Goods and Service Tax (GST)

GST is a consumption tax and it collected at every stage of production and distribution chain unlike the present tax system which is a single stage tax and it also impose when goods are imported into Malaysia.