This article was written by Jason Tan Jia Xin.
When the goods and services tax (GST) was first introduced to replace the general sales tax and service tax regimes in 2015, the overarching concern for businesses was the implementation and administrative aspect. As companies scrambled to understand the rules and procedures in order to facilitate the rollout of GST, many, if not all, would have neglected or overlooked the fact that this transition would trigger a double collection of taxes for goods still held as stock across both tax regimes.
The general sales tax was payable upon manufacturing or importation of the goods. Consequently, all stock still held by businesses in Malaysia as of the cut-off date (1 April 2015) would have been subject to sales tax. Provided that such stock was not part of the zero-rated or exempt supplies, they would also be subject to GST. This is a classic instance of double taxation.