GST complexities in Malaysia: views from tax experts

Abstract

Purpose

The Goods and Services Tax (GST) implementation in Malaysia had raised various responses from many parties involved when the new tax was introduced in 2015 until its abolishment in 2018. GST complexity has been stated as part of the reasons for its resistance and abolishment. The purpose of this paper is to identify causes of GST complexities during its implementation in Malaysia.

Design/methodology/approach

This paper draws on causes of tax complexity from previous studies and conducted semi-structured interviews with tax experts. The respondents comprised of subject matter experts in GST and the findings are based on their numerous years of experiences handling clients with diverse backgrounds.

Findings

Findings from this study are categorised into legal complexity and declarative complexities. Almost all the causes of complexities from prior studies were encountered by Malaysian businesses. This study concluded that the most likely reasons for the abolishment of GST in Malaysia are: numerous rules and exception to the rules (e.g. 35 tax codes, gifts rules, 21-day rules), frequent changes of GST rulings and guidelines, GST computations that were too difficult for mixed supply and process of GST refund that were onerous and lengthy.

Research limitations/implications

Limitations of this paper include reliance on the respondents’ ability to accurately and honestly recall details of their experiences, circumstances, thoughts or behaviours that are being asked.

Practical implications

Despite the abolishment of the GST in Malaysia, it is pertinent to identify the causes of GST complexities that can be learnt by the relevant authorities. Measures can be formulated to mitigate the identified GST complexities to ensure high compliance among businesses with other existing taxes or new taxes (if any) to be introduced in the future. This includes addressing the competency of RMCD officers and businesses on the rules and regulations, minimal rules and exception to the rules, a simplified GST computations for mixed supply and a systematic refund process.

Originality/value

The research method used is a flexible and powerful tool to capture the voices and the ways respondents make meaning of their experience dealing with the GST matters. The findings reveal a deep understanding of the issues from the views of the experts in the field.

Citation

Nutman, N., Isa, K. and Yussof, S.H. (2022), "GST complexities in Malaysia: views from tax experts", International Journal of Law and Management, Vol. 64 No. 2, pp. 150-167. https://doi.org/10.1108/IJLMA-02-2021-0046