07.06.22

Planning to reintroduce GST to replace SST

The Malaysian government implemented GST in 2015, replacing the existing SST system, as part of its tax reform program to enhance the capability, effectiveness and transparency of tax administration and management. GST was, however, abolished in 2018 when the Pakatan Harapan government took over the reins, due to the public widely views GST as having contributed to a spike in living costs. The country has since returned to the SST system.

In a recent interview, current Prime Minister Datuk Seri Ismail Sabri Yaakob revealed the intention to reintroduce GST as the country has lost RM 20 billion (Est 4.5 billion $) in revenues when the GST was abolished and replaced with the old SST. he explained that the government is aware of the perception of GST however has limited options for replenishing the country’s coffers.

The Prime Minister reassured the nation that the GST reintroduction would be handled carefully. The government will aim for a GST rate that is not so high as to burden the people, nor too low that it “defeats the purpose of expanding tax revenue”, and to formulate ways to educate the public on the importance of GST and transparent tax collection.