The Finance Ministry has said that the government is still in the midst of reviewing the suitability of reintroducing the Goods and Services Tax (GST), and the usage of other taxation models.

Responding to queries from members of the Parliament, the ministry reiterated that the study on this matter needs to take into consideration various aspects, before a decision can be made. These include the weaknesses of the Sales and Services Tax (SST) – which is currently in place – versus those of the GST. “The study being carried out also covers the impact on the economy, cost of living, cost of goods, as well as ability to address the shadow economy (or black market),” it shared.

To explain, the SST is a single-tier consumption tax system that imposes tax only on either the manufacturer (sales tax) or consumer level (services tax). In contrast, the GST is a multi-stage tax system, with tax imposed on every level of distribution, such as manufacturers, wholesalers, retailers, and customers. The Malaysian government had been utilising the SST since the 1970s, but eventually switched over to GST in 2014. It then switched back to SST again in September 2018.

The ministry further added that if the government does decide to implement the new tax system, it must be easily manageable and will not increase the cost of doing business. This is on top of ensuring that it is able to strengthen the nation’s fiscal position, especially as Malaysia is still recovering from the economic impact of the Covid-19 pandemic.

Back in 2020, former Prime Minister Tan Sri Muhyiddin Yassin had said that the government may consider bringing back the GST to replace the current SST due to strong criticisms against the latter tax system. He also stressed that an in-depth study must be carried out first, with input and proposals to be provided from various parties, including industry players, academicians, and members of the public.

(Source: The Sun Daily)

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• Goods And Services Tax
• GST
• Sales and Services Tax
• SST