20th September 2022 - 2 min read
Global financial services firm Ernst & Young Tax Consultant Sdn Bhd (EY) has forecasted that the goods and services tax (GST) will stand at a rate of between 4% to 6% if it were to return under Budget 2023. This is following an assessment of the potential revenue that the government can obtain via GST to support its spending.
EY’s tax managing partner, Farah Rosley noted that GST – as a broad-based consumption tax – will contribute to Malaysia’s revenue collection. However, the government must ensure that its reintroduction will not burden Malaysians. The implementation and compliance process, too, has to be simplified so that it will cause minimal disruption to businesses.
“Communication with stakeholders, including businesses, is key while expediting GST refunds and (having) a simplified and transparent system are also paramount to the successful reintroduction of the GST. Adequate time must be given for businesses to prepare for the implementation,” Farah further said in an email interview.
The suggestion to reintroduce the GST was first brought up by former prime minister Tan Sri Muhyiddin Yassin back in 2020, in response to strong criticisms against the current sales and services tax (SST). Following that, the Finance Ministry emphasised that in-depth studies are required for the reintroduction of the GST. More recently, current prime minister Datuk Seri Ismail Sabri Yaakob also expressed a keenness to eventually reintroduce the GST with improvements, although Deputy Finance Minister I, Datuk Mohd Shahar Abdullah said that it will not be done at this point in time.
Aside from commenting on the GST, Farah also discussed other tax matters, such as the possible renewal of the prosperity tax (Cukai Makmur) in Budget 2023 and the implementation of the global minimum tax on certain multinational companies (MNCs) in 2023. She further stressed the necessity of a thorough study and public consultation prior to introducing any new taxes.
Furthermore, Farah suggested that the government could consider releasing a tax roadmap that highlights potential key changes to the tax regime in the country. It should include key details, including a timeline for consultation and an estimated introduction date, as well as the rationale for the introduction of the new taxes.
(Source: The Star)
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