Value Added Tax System

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In 1954, Goods and Services Tax (GST) was first adopted by France Government to replace their old tax system which were defective and ineffectiveness on collecting taxes. By general, GST is proposed to be a comprehensive indirect tax levy on the manufacturers, the sales and consumption of goods. It was also known to be Value Added Tax (VAT) due to its multi-stage consumption tax of goods and services, although it is charged on local consumption by multi staging, eventually is borne by the end consumers. The register vendors able to claim it back from the respective government. In the late 1980s, the Government of Canada was the second country to adopt GST by eliminating their old tax system Manufacturer’s Sale Tax (MST). The main motive behind…show more content…
All countries have their own policies on collecting taxes from their people, and most of the business are paying multiple taxes and higher levels of taxes that will ultimately borne by the consumers, ended up high price of goods and discouraging business activities environment. Besides, GST do provide effectiveness and transparency on preparing accounts. It helps to build corruption-free tax administration when all taxes are integrated and systematic. Moreover, most nations that adopt GST will able to predict income from collecting taxes from the people due to the effectiveness of taxing system, it will help build the nation’s wealth and has the ability to repay debts, if there is any. Besides, GST create a fair and equate taxing system towards companies. In generally, before GST was implemented, most of the industries has respective tax rate on their production and service, it depend on the government policy. (Refer to Diagram 2) After adoption of GST, all industry shall share the same tax rate depending on their respective government on deciding the rate. (Diagram 3) Adaption of GST will also increase the government revenue due to the tax collections now are wide coverage of goods and…show more content…
This tax system exist for decades since early of 1970s after our independent day. Until 31st March 2015. On 25oth October 2013, our Prime Minister as well as a Finance Minister Datuk Seri Najib Razak has announced that GST will be commence from on 1st April 2015. Rome wasn’t built in a day, it same goes to GST. GST discussion was first initiated on year 1983. The Malaysia government sends a researcher team to South Korea to study the potential of GST if implementing in Malaysia. After 9 year, in 30th October 1992, Dato’ Seri Anwar Ibrahim, the Minister of Finance at that time, announces GST to be included for the 1993 Malaysia Budget. It was rejected and deferred. In 2009, the GST bill was tabled for reading at Dewan Rakyat. It was further deferred again for it defectiveness and lack of laws and regulation on implementing it. Finally on 2013, after the 13th General Election, the Prime Minister Datuk Seri Najib Razak declares GST of 6% in Malaysia effectively commence from 1st April 2015. Please refer to Diagram

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