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Malaysian government is studying reintroducing GST

The Malaysian government is still studying reintroducing GST according to an announcement by Malaysian Finance Minister, Tengku Datuk Seri Zafrul . This includes whether or not to reintroduce the Goods and Services Tax (GST) in the country. The study also includes other tax systems in the world. Tengku Zafrul was speaking to reporters after attending a Hari Raya open house organized by the Putrajaya Media Club on Wednesday, 8th June.

Tengku Azfrul said 175 countries had introduced the GST as it contributed to the country’s Gross Domestic Product (GDP). The Malaysian government’s tax revenue would be relatively low without the GST revenue.

He added that the process to reintroduce GST would take some time as it has been abolished before.

Parliament to decide on GST reintroduction

“If the study found the GST benefits 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.

Tengku Zafrul said the fastest the government could reintroduce GST is about nine months. This would be only after it gets the green light from the Parliament.

Tengku Zafrul said the study is now at the engagement stage. One of the issues was to ascertain a fair rate of three to four or seven to eight percent. He also stated that they are looking for an alternative to improve the existing Sales and Services Tax (SST). Many have dubbed the SST as archaic and inefficient.

Reporters also quizzed Tengku Zafrul on what would be a fair rate of GST. The minister said it should be able to generate a higher revenue than the existing tax system.

He said some countries had even imposed a higher rate as they were able to give so many exemptions. He cited Saudi Arabia as an example. Saudi Arabia imposed 15 percent GST due to the high revenue from higher oil prices.

“There should be a study on the fair rate so as to generate revenue for the country’s development. However, at the same time it will not burden the people and the business community,” he said.

The previous Barisan Nasional (BN) Government under former PM Najib Razak introduced a GST of 6 percent in 2015. However, the Pakatan Harapan (PH) government that defeated BN in the 2018 general election abolished the GST in 2018.

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