KUALA LUMPUR: Taxi services in the country should be made zero-rated to lighten the burden of taxi drivers upon the implementation of the Goods and Services Tax (GST) in April next year.
A chartered accountant, whose clients include taxi firms, said under the current guidelines, public transportation services are exempted from the new tax.
While the existing guidelines were in favour of the consumers, it would be a burden to the taxi drivers, especially those under the hire-puchase scheme, given that their monthly instalments of the taxis would be subjected to GST, the accountant, requesting anonymity, told Bernama recently.
Zero-rated refers to taxable supplies that are subject to a zero rate, which means, businesses are eligible to claim input tax credit in acquiring these supplies, and charge GST at zero rate to the consumer.
Exempted goods, on the other hand, are non-taxable supplies that are not subjected to GST and businesses are not eligible to claim input tax credit in acquiring these supplies, and cannot charge output tax to the consumer.
The scheme is a system of acquiring goods on credit whereby the seller of the goods is regarded as the dealer, the purchaser is regarded as the hirer and the financier as the owner. Under the agreement, the hirer, in this context the taxi driver,will pay the monthly instalments to the financier, which are the taxi companies.
He suggested that the public transportation services industry be made zero-rated so the tax imposed on the monthly rentals could be claimed as input tax.
“In addition, the drivers had to bear the cost of fuel or gas which are also subjected to GST. This is a burden to drivers as they cannot increase the taxi fares to the passengers as the fares are fixed by the Land Public Transport Commission (SPAD),” he said at the National GST Conference 2014 recently.
Prime Minister Datuk Seri Najib Tun Razak, who is also the Finance Minister, when tabling Budget 2014, announced the implementation of the GST at six per cent to replace the Sales Tax and Service Tax on April 1, 2015. — Bernama