The implementation of Goods
and Services Tax (GST) by the Federal Government of Malaysia on 1st
April 2015 gives many reaction from the citizens as customers and consumers. Some
of them are agreed of the implementation and some of them are not. It depends
on the individual understanding. But, the complaint on the issue never stops
until today. It is because GST is to be blame as a main cause why the price of
goods and services keep rising. For a small businesses, most of them are not
compulsory to register under GST because of the total of yearly taxable
earning. The purpose of this study is to identify the impact of GST to the
small businesses both registered and not in Bandar Baru Bangi, Selangor. The
data is gathered through questionnaires which is distributed among the owners
and managers of the businesses. The indicators of the impacts are the level of
knowledge and demographic factors. Both indicators shows that the impacts of
GST are positively related.
Keywords: GST, SMEs
Background of study
Government has implemented GST to replace the Sales and Services Tax (SST)
which is a single stage of consumption tax where businesses cannot recover the
tax paid on their purchases. GST shall be charged only on the taxable supply of
goods and services made on the purpose of business in Malaysia by a taxable
person. It also includes imported goods and services. Taxable supply is the supply under standard
rated and zero rated supply. The exempt and out of scope supply is not consider
as a taxable supply.
rated supply is the supply of goods and services that are charged with a
standard rate of 6%. GST is collected by a business and paid to the government.
Zero rated supply is the supply of goods and services that are subjected to
zero rate. If a business had pay input tax of this supply, it can claim it back
from the government and charged its customers zero. Exempt supply is the supply
which is non-taxable and not subjected to GST. A business cannot make a claim
from the government and also is cannot charged its customers.
a registered business under GST can charged GST to its customer. A business can
be a mandatory or a voluntary registrant under GST. Registration under GST is
mandatory to a business that earn more than RM 500,000.00 taxable income
yearly. A business can be a person, sole
proprietor, partnership, company, trustee, society, union, club, estate,
association or any other organization including government department or local
authority which is involve in doing business in Malaysia. The calculation of
yearly taxable income can be in two ways. Firstly, taxable income for the
current month plus the total taxable income for the previous eleven months. Secondly,
taxable income for the current month plus the total taxable income for the next
are three option for a business to be a registration under GST which is
voluntary, group and branch registration. There is no need for a business which
earn less than RM 500,000.00 a year to register under GST. But, it can apply
for a voluntary registrant with a condition it must stay as a registrant for a
period not less than two years. As a registrant, the business are allowed to
charge and collect GST on any taxable supplies and at the same time it can
claim for input tax credit. It also entitle to enjoy for all facilities
provided under the law.
business registered under GST is allowed to apply for a group registration with
other business as one group to centralize the administration of GST in term of
accounting. The conditions for a group registration are as follows:
group registration of two businesses is allowed if one business is taken
control the other business directly or indirectly.
business from the group have to be appointed as a representative of the group.
taxable supplies made to or by group member must be treated as made by or to
the representative of the group.
supplies made between group members will not be treated as supplies.
group member have to maintain a complete record as they are responsible both by
jointly and separately.
the 6% of GST is a burden to small businesses? The implementation of GST will
give burden to the small businesses. It is because they have to pay extra 6%
for the goods and services they acquire for the purpose of business. The extra
6% is called input tax. Input tax is charged when a business getting any goods
and services for the business input. The more the input the input they acquire,
the more the input tax they have to pay. For the registered businesses, the can
get GST Refund if the input tax is bigger than output tax which they collected
from customers. But, for non-registered business, the input tax is on their
own. One of the objective of this study is to figure how GST can give impact to
small businesses in term of input tax.
GST implementation will affect the profit and loss of a business? The
implementation of GST also makes the operating expenses of a small businesses becomes
bigger. All the expenses such as license, repairs, advertising, utilities,
insurance, office and vehicle expenses occur by the businesses will be charge
of GST. The result of increment in operating expenses will makes the profit of
a business become smaller than before the implementation of GST. Another
objective of this study is to determine how GST can give impact to the profit
of small businesses.
study involved theoretical framework to determine the impacts of GST to the
small businesses in Bandar Baru Bangi, Selangor. There are two independent
variables selected which are level of knowledge and demographic factors. Level
of knowledge on GST is important to understand better about such as which goods
and services are taxable or non-taxable.
factors are socioeconomic characteristics of a population such as age, sex,
education level, income level, marital status, occupation, religion, and average
size of family. The dependent variable is the impacts of GST on small
businesses in Bandar Baru bangi, Selangor.
hypothesis is there will be significant effects on the impacts of GST on small
businesses in Bandar Baru Bangi, Selangor by the level of knowledge and
study involve questionnaire-based data collection. The sample of respondent is selected
among small businesses in Bandar Baru Bangi, Selangor. The businesses includes mini
markets, restaurants, grocery stores, workshops, car accessories, barber and
laundry shops. The questionnaire will be given to the owner, manager, assistant
manager, accountant or account executives of the shops as the respondents.
main purpose of this study is to determine the significant impacts of GST to
the daily operation of small businesses in Bandar Baru Bangi, Selangor. The
impacts will be related to the level of knowledge on GST and demographic
factors. The better understanding on GST will result the lesser impacts to the
small businesses. As for demographic factors, the education level will gives a
significant result which is the higher level of education, the more the
understanding on GST