Malaysia GST - Third time lucky, or will someone shout "cry wolf"?
In the fable "the boy who cried wolf", you learn that people lose their trust in you when what you say do not materialize over time. The magic number for when you lose that credibility - the third time.
It is the same with Malaysia GST. After two failed attempts at implementing the GST, the general sentiment then was the peoples' voice is stronger than any reasons that the government can bring to the table. The Malaysian government knows this. If they do not implement the tax at a third attempt, it will be an even more challenging task to implement the GST thereafter.
And so it is now. The implementation of GST is at its crossroads. It's make or break time!
In the latest Budget presentation for Malaysia on 25 October 2013 (Friday), Prime Minister Najib Razak announced that the country will be implementing the GST at 6% from 1 April 2015. "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. Public transportation will also be exempted.
(With the implementation of GST, personal income tax will be reduced by 1% to 3%, while corporate tax will be reduced by 1% to 2%. The current individual income tax rate is up to 26%, while corporate tax rate is up to 25%.)
Will the GST be third time lucky, or will it end up like "cry wolf"? Firstly, the resolve of the government is much stronger than the previous two attempts based on the level of GST activities (e.g., specific industry guides were released in draft, intensification of engagements with business associations and public education) in the past year leading to the above announcement. Secondly, a date has been fixed. Businesses should therefore not consider this implementation too lightly. On average, you will need between 6 months to a year to effect the changes to your transactions, systems and processes (we have about 17 months to implementation date), depending on how complex your business is. You know what they say, "Fail to Plan, Plan to Fail". My advice: it is never too early to start planning. So get the head start while you can!