The economic challenges faced by businesses and Royal Malaysian Customs due to changes of consumption tax policies

Consumption tax is an indirect tax that becomes a source of income to the country. Good and Services Tax (GST) and Sales and Services Tax (SST) is a consumption tax that has been implemented in Malaysia. The GST Tax System was implemented on 01 April 2015 to replace the SST Version 1.0 tax system that has been implemented since 1972. On September 01, 2018, the GST tax system has been abolished and replaced with the SST 2.0 tax system. Both of these taxes are borne by the consumer upon the occurrence of the supply of taxable goods and services to them. The implementation of the tax policy for both consumption taxes are involved the businesses and Royal Malaysian Customs Department (RMCD). Businesses registered as a registrant for this consumption tax will act as tax collectors for their customers (consumer). The Royal Malaysian Customs Department is the authority that has been given the responsibility to ensure consumption tax policies compliance can be implemented and realized successfully. In this regard, the main objective of this study is to understand economic challenges faced by businesses and RMCD in Kota Bharu due to changes of consumption tax policies. The study also seeks to identify the suitable approach should be taken by the government if it is to implement different types of consumption tax policies in Kota Bharu. In conclusion, the change in consumption tax policies provides economic challenges to businesses and RMCD in Kota Bharu as there are differences in tax collection mechanisms between GST and SST tax systems.