Malaysia urged to reintroduce GST, market situation may improve

Malaysia urged to reintroduce GST, market situation may improve

Malaysia is understood to be following the OECD's recommendations, with Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamad saying policymakers should consider reintroducing the GST at an appropriate time.

The Organization for Economic Cooperation and Development (OECD) recommended at the meeting that the Malaysian government reintroduce the Goods and Services Tax ( GST) as part of the country's medium-term fiscal strategy.

GST is a more efficient tax system than SST, as most businesses can recover GST charged by suppliers through the “input tax credit” mechanism. Therefore , GST mitigates the tax impact of SST and does not increase the cost of doing business.

GST will expand Malaysia’s tax base and increase tax revenue. When the GST system was implemented , the Malaysian government ’s GST collection was about RM40 billion per year on average. The SST system only brought in RM25 billion per year on average .

 

GST will encourage businesses to register for input tax credits on their supplies. Some taxpayers may even prefer to deal with GST-registered suppliers and customers. This will lead to a surge in GST- registered businesses and merchants, and will provide greater transparency in the supply chain .

 

The tax authorities will also have multiple ways to detect tax evasion through GST audits and reconciliations. By using GST to be responsible for value-added tax ( VAT) , Malaysia's tax system is in line with international standards, which will improve international investors' understanding of Malaysia's fiscal environment and situation on the one hand, and strengthen international investors' interest in Malaysia on the other.

 

The successful re-implementation of the GST system will require the support of the public and businesses. At the same time, the timing of the reintroduction will be crucial , and tax system reforms always cause anxiety among entrepreneurs in many aspects .

 

Therefore, the government must ensure that businesses have enough time to prepare for the need to calibrate accounting and reporting systems and to train and improve staff skills. At the same time, the new tax system should allow businesses to make as much use of the systems and knowledge developed during the implementation of the previous tax system as possible to minimize disruption to businesses and application costs .

 

It is not difficult to see that after Malaysia implements the GST system, it will inevitably cause a large number of investors to reconsider, a large amount of capital will intensify, the number of enterprises and consumer demand will surge, and the development prospects will be very good. Perhaps now is the best time to enter the Malaysian market.


Malaysia

Commodity taxes

Service Tax

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