The Implementation of the Goods and Services Tax in Malaysia: Potential Issues Perceived by Business Taxpayers

The implementation of the goods and services tax (GST) in Malaysia on 1 April 2015 was part of the Malaysian government's taxation reforms aimed at improving the collection of revenue and reducing the country's budget deficit. This study presents some of the major issues and concerns that Malaysian business taxpayers perceived as key challenges in preparing for GST implementation. A survey was conducted April to June 2013, in which 426 business taxpayers responded from various small- and medium-sized enterprises (SMEs). The results confirmed that, overall, business taxpayers were poorly prepared for GST implementation, with only 9 per cent claiming to be substantially ready. Around 22 per cent of the respondents stated that they were well equipped with computer systems for GST purposes. Over 25 per cent of eligible potential GST registrants stated that they would not register. Over 74 per cent of respondents felt that GST would place an additional compliance burden on them. Only 24 per cent of respondents were confident that they would get the required help and assistance from the Royal Malaysian Customs Department, the GST tax authority. Additionally, whilst larger businesses confirmed that they were well prepared for GST, smaller businesses experienced greater stress in their preparation. This article concludes with a discussion of policy implications for the Malaysian GST system, particularly those that would alleviate businesses' compliance burdens.