Saturday, October 26, 2013

Is GST implementation confusing you?

The Malaysia 2014 Budget is tabled on the 25th October 2013, and one thing consider new concern from the rakyat will the implementation on 6% of  Goods and Services Tax (GST) starting from 1st April 2015.

There are few website can be refer to check more info for the GST, like the official website  and if it is too complicated to flip the pages on the official website, is rather useful for your reading reference.

And I think what most of the consumer is concerning is how is the final goods price end up to the end user? Is it will be higher or lower with compare to the previous tax method?

Taking and extraction from a forum discussion may have a clearer view on this,

The question start with,

People who doing business in trading of goods should have some confusing on GST.

For example, how a car spare parts end up at end user.

If using normal circumstances, it will be,

Importer in Malaysia (Dealer or Distributor) -> Retailer (Spare Parts shop) --> Foreman (Workshop) --> End User (Car Owner)

So when distributor sell to retailer, their bill need to impose 6% GST, and retailer sell to foreman another 6% and foreman to owner another 6% ?

In the scenario, end user is concerning if the GST is charging as such above example ended up with compounding 6% for 4 times (In some industry may be more than 4 level of transaction), but please find how the actual transaction go through in the below example,

After registration, all businesses say with revenue > RM1 million must charge GST at the prevailing rate. This GST that they charge and collect is known as output tax, which has to be paid to LHDN. GST incurred on business purchases and expenses (including import of goods) are known as input tax. Businesses can claim input tax if conditions for claiming are satisfied. This credit mechanism ensures that only the value added is taxed at each stage of a supply chain, hence GST also known as Value Added Tax (VAT). 

As an Illustration

The GST-registered manufacturer imports leather from overseas
The GST-registered manufacturer uses them to manufacture a bag. 
The GST-registered manufacturer sells the leather bag to a GST-registered retailer. 
The GST-registered retailer sells the bag to end user like you and me

1. Manufacturer

Pays GST to Malaysia Customs for imports
Import value = $100
Import GST paid = 6% X $100=$6 (input tax to claim from LHDN)

Charges and collects GST for sale of toys to retailer
Selling price to retailer = $200
GST charged to retailer = 6% X $200 = $12 (output tax to pay LHDN)

Net GST payable to LHDN = $12 - $6 = $6 (6% of original import amount)

2. Retailer

Pays GST to Manufacturer
Purchase value = $200
GST paid = 6% X $200=$12 (input tax to claim from LHDN)

Charges and collects GST for sale of toys to end consumer
Selling price to end consumer = $300
GST charged to end consumer = 6% X $300 = $18 (output tax to pay LHDN)

Net GST payable to LHDN = $18 - $12 = $6  (still 6% of original import amount)

3. End Consumer

Pays GST to Retailer
Purchase value = $300
GST paid = 6% X $300=$18

Net GST payable to LHDN = $18 - $0 = $18 (End consumer is not GST-registered. Therefore, he cannot claim GST paid on his purchase from LHDN

4. How to check how many people should pay GST in the above mentioned supply chain?

No. of parties
= End Consumer GST / Intermediate GST
= RM18 / RM6
= 3

5. How to minimise your GST as end consumer?

Always buy from the top source, meaning directly from manufacturer. 
Those people who have been overseas will know warehouse sales very popular overseas, reason is able to bypass all the intermediaries.
So I forsee a lot of retailers will die off slowly and a lot of manufacturers will come out with warehouse direct selling !

6. How a RM1 million revenue kopitiam can avoid collecting GST?

Simple, split into 2 companies with RM500k each.

The above example is extract from a forum discussion which I personally feel it is rather simple for consumer to understand the mechanism without need to reading such a long article in the official website.

Monday, October 14, 2013

Yeah, the 100 Doraemon is coming to Malaysia

When the Harbour City of Hong Kong hosting the "100 Years Before the Birth of Doraemon" exhibition on 14th August 2012, Doraemon fans in Malaysia is wondering if there are any chances this exhibition will come to Malaysia, especially most of us is exciting to watch the 100 unique figure of Doraemon along with his difference gadget.

And after Hong Kong, the exhibition is pass by Taiwan, Shanghai China and Japan, which the Tokyo exhibition just finished on 6th October, we finally hear the news that the exhibition will be coming to Malaysia tentatively in the mid December 2013.

The event which bring in by Animation Internation (M) Sdn. Bhd. still facing some technical problem of the venue for the exhibition as the exhibition need a place of 50,000 square feet, with the venue owner willing to rent out 100 days for the exhibition, this is quite a big challenge for the organizer.

The full article on the news in Chinese version from Sinchew website as below,


  • 鄒億明認為,國人此次將會被許多博覽中的意外驚喜所震撼。(圖:星洲日報)
國際影業有限公司(Animation International(M)Sdn Bhd)大馬區董事鄒億明在接受本報專訪時表示,這是他將哆啦A夢博覽帶進我國的原因,希望將哆啦A夢故事中的正面思想和價值觀傳達給國人,以製造一個充滿正能量的地方。

For those interested in the previous exhibition news and photo, can log in to their official Facebook page in the below link.

Friday, October 11, 2013

Between collector and investor

Had been involving in share market trading, and seeing most trader are more interesting trading in penny stock rather than the value investor who buy the fundamentally strong blue-chip, which let me have some kind of rather similar feeling on the current local coin collection scenario.

In my earlier post on the commemorative coin issue from Bank Negara Malaysia(BNM), we can find out some interesting fact in the after market price trend of this coin.

BNM is issuing 5 types of specification of coin, normally mintage quantity is lesser for the higher price range for Single Gold or the Set of 3 with Gold Coin inside, and the cheapest with most mintage quantity is the Nordic Gold.

For this latest issued coin, the Set of 3 only have 500 set and the Single Gold only have 750 pieces circular in the market, while the Nordic Gold type have a whopping 25,000 pieces in circular.

But for the Nordic Gold coin which sold by BNM at RM10, the after market price is able to sell at RM15 to RM20 even on the same day of the coin issue date, that represent a 50% to 100% gain for the first owner. But for the Single Gold which cost RM1,800/piece I think it is not so easy to find a fast buyer for a 10% gain of value.

But just like share market, those Single Gold with only 750 pieces circular in the market, the growth of value may more sustainable than those with 25,000 pieces in circular, once all the genuine collector holding with it, may be price will be shouting high without any seller in the market.