Whether we need to have

Consumption Tax Reform or not?

NABILA SURAYA BINTI MOHD FADZIL

P112228
DR.ROSIATI BINTI RAMLI
Yes we need!
Malaysia needs
consumption tax reform.

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 Why do we need
1
Consumption Tax
Reform??

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 Economic Growth
◉ The consumption tax will
increase the revenue of the
tax.
◉ Stabilize the economy growth
by reduce fiscal deficit.
Hence, increase affected to
GDP.
◉ The Malaysia’s economic
growth is increasing between
2 years.
◉ It is proven when revenue
from GST implemented april
2015 is projected increase to
RM39 billion in 2016 from
RM27 billion. (Meena
Lakshana,edge Malaysia) 4
 Difference amount
39 billion (2016) - 17.22 billio (2014) =
RM 12.78 billion

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 Economic Growth

For future economic growth

GST is necessary to help sustain the country's economy in the longer term. returned
Mohd fariz mohd faruk (director of taxation, deloitte malaysia, 2020)

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 REDUCING BLACKMONEY

Consumption tax will help in FICCI believes that introduction of

curbing domestic black money. GST will help in a major way in
reducing the generation of black
money and the spread of the parallel
economy in the country. (New
They will be require to file and Delhi,2017)
furnish under reporting of their
incomes and returns, hence it
help tax department to track
any transaction.

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More Resources

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 Increase employment opportunities There will be high demand for semi
skilled workers such as carpenters,
plumbers, tailors, food technologies
and others.

Government will also increase

employment as work is overloaded.
It has been expected that by 2018 July
GST will create 1.3 million jobs.
(Goel, 2017)

https://economictimes.indiatimes.com/industry/services/consultancy-/-audit/demand-for-tax-experts-rises-as-gst-date-nears/articleshow/59275105.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst 9
 Increase employment
According to tax consultants and
experts, GST portals where
companies will be registered will large companies
eventually have 9 million assesses. 5 people

Medium
companies 1
people

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What kind of tax reform that
had already taken place

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GST act ,section 9 (1)

A tax known as goods & services tax shall be

charged and levied
a. Supply good or services made in Malaysia;and
b. Imported goods

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GST dalam Malaysia
GST act was effectived on 1 april 2015 and implemented on 24 April 2015 to
replace the current sales tax and service tax (SST).

GST is essentially a form of consumption tax that is levied incrementally at the

different levels of the production and distribution process until the product or
service reaches the customer.

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 GST vs SST
SST (1970)
a. Sales tax 6%
b. Service tax 10%

GST
c. Standard 6%
d. 0%(GST act section 17)
e. Exempt supply (GST act
section 18) 14
 STANDARD 6%
Manufacturer Cost price = RM80.00
Profit = RM20
Sales price = RM100
GST = RM6.00
Total sales price = RM100.00
Wholesaler Sales price = RM106.00
GST input claim= RM6.00
Profit = RM20
Gross sales price = RM126.00
GST = RM7.56
Total sales price = RM133.56
Retailer Sales price = RM133.56
GST input claim= RM 7.56
Profit = RM20
Gross sales price = RM153.56
GST Rates
GST = RM9.21
Total sales price = RM162.77
Consumer
Final Sales price = RM162.77
Total tax collected = RM9.21
ZERO-RATED EXEMPT SUPPLY
SUPPLY
Cost price = RM80.00 Cost price = RM80.00
Profit = RM20 Profit = RM20
Sales price = RM100 Sales price = RM100
Total sales price = GST = RM6.00
RM100.00 Total sales price = RM100.00
Sales price = RM106.00
Sales price = RM100.00 GST input claim= RM6.00
Profit = RM20 Profit = RM20
Total sales price = Gross sales price = RM126.00
RM120.00 GST = RM7.56
Total sales price = RM133.56
Sales price = RM120.00 Sales price = RM133.56
Profit = RM20 Profit = RM20
Total sales price = Gross sales price = RM153.56
RM140.00 Total sales price = RM153.56
Final Sales price =
RM140.00 Final Sales price = RM153.56
Total tax collected = RM0 Total tax collected = RM7.56
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 Excise duty

Excise duty starts on 1 July 2019

Excise duty are imposed to:

Excise duty is a kind of duty or tax i. Alcoholic beverage
that imposed on certain items that ii. Tobacco and tobacco products
imported into Malaysia OR in an iii. Car, 4WD, Van/MPV
internal factory Malaysia. iv. Motorcycle
v. Playing cards
vi. Mahjong tiles

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Give suggestion to any kind
of Tax reform
to the given topic that you
choose.

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TAX TOWARDS
NICOTINES

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Excise duty

Excise duty is a kind of duty or tax

that imposed on certain items that
imported into Malaysia OR in an
internal factory Malaysia.
Excise duty are imposed to:
i. Alcoholic beverage
ii. Tobacco and tobacco products
iii. Car, 4WD, Van/MPV
iv. Motorcycle
v. Playing cards
vi. Mahjong tiles

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Tax towards nicotine

Type of Goods Excise Duty Rate

Cigarettes RM0.2/stick & 20%
Beedies RM7.50/kg & 5%
Smoking Tobacco RM27.00/kg & 5%
Homogenised or reconstituted RM27.00/kg & 5%
tobacco
Snuff RM27.00/kg
Vape without nicotine (1 Jan RM0.40/ml
2021)

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Tax towards nicotine Findings in this study
revealed that most of the e-
cigarette users preferred
locally produced e-liquid
(55.6%) rather than
imported e-liquids (44.4%).
A total of 312 (32%)
respondents preferred e-
liquid that contained ≤6 mg
nicotine, followed by 212
(21.7%). About 178 (18.3%)
preferred e-liquid without
nicotine, while only 2.4%
preferred e-liquid with a
high amount of nicotine
(≥16 mg).

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Tax towards nicotine

Based on analysis results, there is an urgent need

for regulation for these marketed available
nicotine e-liquids in Malaysia (Azizur
Rahman,2017)

Currently, there are 1.12 million vapers in

Malaysia, according to the National Health and
Morbidity Survey 2019 conducted by the Ministry
of Health. (New Straight Times,2020)

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 Maryland increase nicotine tax

By increasing tobacco taxes and

its investment in tobacco
prevention and cessation
programs, Maryland can
accelerate progress in reducing
tobacco use and improve the
state’s health for generations to
come. 

Tobacco product means “any product that is: (i) intended for human inhalation, absorption, ingestion, smoking, heating,
chewing, dissolving, or any other manner of consumption that is made of, derived from, or contains: (1) tobacco; or (2)
nicotine; or (ii) an accessory or a component used in any maner of consumption of a product described in item (i) of
this paragraph [and includes]…(ii) electronic smoking devices…” (Maryland General Assesmbly) 23
 Results in Maryland

“Following the $1.00 per pack cigarette tax increase in 2008, smoking by
Maryland adults decreased by 26 percent among current smokers between
2011 and 2016. Among Maryland high school students there was a 47
percent reduction in students who reported smoking a cigarette in the
preceding 30 days, as well as a decline in frequent smoking between 2007
and 2015.” Abell Foundation,2018

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GST
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 Introduction for GST

GST in Malaysia
GST is essentially a form of consumption tax that is levied incrementally at the
different levels of the production and distribution process until the product or
service reaches the customer.
GST had implemented for 160 countries including ASEAN.

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 GST rates according country

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 GST in New Zealand

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Conclusion

Even if the consumption tax is a complicated issue. But,this effort of

any consumption tax reform to facilitate and promote faster growth of
economy.

Tax reform also could minimize reduce corruption and reduce

distortions.

Various consumption tax are increasingly responsive to taxes with

regard to real investment and attract good inflows.

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Thank You!

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