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Implementation of Gst in Malaysia

In: Business and Management

Submitted By heimster13
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(i) There were several changes in income tax rates and policies concerning individuals and sole proprietor businesses that were proposed in the Budget 2014. The three significant changes in tax policies are listed below.

Review of Individual Income Tax

In consideration of the implementation of the Goods and Services Tax (GST) which takes effect on 1stApril 2015, the government had proposed several changes to reduce individual income tax rates with effect from Year of Assessment (YA) 2015. The proposed changes are: I. Income tax rates for resident individuals is to be reduced by 1% to 3% II. Income tax rates for non-resident individuals is to be reduced by 1% from 26% to 25% III. Current maximum tax rate at 26% to be reduced to 24% IV. Two new chargeable income bands be added above the existing highest income band exceeding RM 100,000, with RM100, 001-RM250, 000 as the second highest band and RM250, 001-RM400, 000 as the highest band. V. Chargeable income subjected to the maximum rate will be increased from exceeding RM100,000 to RM400,000.

Such proposed changes will bring about savings across the band for all taxpayers and so increase the disposable income for all individuals. This measure is necessary as the implementation of GST will increase the cost of living which will impact the lower income bracket the most.
The proposed change will bring about a more progressive tax structure as families with a monthly income of RM4, 000 will no longer have a tax liability. Also, this will create tax rate differentials between those middle and upper-middle class families with the rich.
Besides that, the lowering the individual income tax rates will also enhance the competitiveness of the nation as well as retain and attract talented and skilled workers to the country.

Relief for Middle Income Taxpayers

In the existing legislations,…...

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