The annual threshold is fixed at RM500,000 to ensure that the small businesses are GST-free and are not required to bear the costs of registration (start-up cost and compliance cost) under the GST.

Based on studies, it is estimated that about 78% of the total business establishments will not fall within the GST system.  As such the consumers has the choice of making their purchases of basic needs from the businesses which do not charge the GST. Indirectly, the consumers especially the rakyat residing in the rural areas will not be burdened by the GST.