GST reintroduction still being studied – Tengku Zafrul

The government says it is still studying all tax systems around the world, including the goods and services tax (GST), to decide whether or not to reintroduce GST in the country. If it does eventually come about, it won’t be anytime this year.

According to finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, the study was at the engagement stage. “If the study finds that the GST benefits are clear, we will take it to the cabinet. The final decision is not for the government to make, it’s for the parliament,” he said.

He added any process to reintroduce the GST would take some time as the tax had been abolished, and the fastest it could be reintroduced is about nine months after it gets the green light from the parliament, as Bernama reports.

Tengku Zafrul said the government was looking for an alternative to improve the existing sales and services tax (SST) which had been rendered inefficient and caused many countries to introduce the GST. He said among the issues being studied was to ascertain a fair rate for the tax regime.

Asked about the fair rate of GST, he said whatever it is, it should be able to generate a higher revenue than the existing tax system. “There should be a study on the fair rate so as to generate revenue for the country’s development, while at the same time ensuring that it will not burden the people and the business community,” he said.

The GST, which is a value-added tax where tax is paid at every stage of the business transaction versus SST’s one-time tax that is paid by the manufacturer/importer, was introduced in April 2015 at a rate of 6%. It was abolished in favour of SST again in September 2018 when Pakatan Harapan came into power.

Last week, the Federation of Malaysian Manufacturers (FMM) said it supported the move to reintroduce GST, but suggested that the implementation be done at a rate of 4%. Doing so would promote conducive business conditions and also provide higher disposable income for the rakyat, the association said.

Car prices are expected to be affected by a switch in the tax regime. According to an AmInvestment Bank analyst, car prices in Malaysia are anticipated to increase by 1% to 3% should the government switch back to the GST, which is the opposite of what happened when the SST was implemented back in 2018.

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