Tengku Zafrul: Govt still studying all tax system, including GST 

The government is still studying the various tax systems and whether to reintroduce the goods and services tax (GST), says finance minister Tengku Zafrul Aziz.

He said 175 countries had introduced GST because it contributed to their gross domestic product and because government tax revenue would be relatively low without GST revenue.

Tengku Zafrul said reintroducing GST would take quite some time because the tax had been abolished.

“If the study finds that the GST benefits are clear, we will take it to the Cabinet. The final decision is not for the government to make, it’s for Parliament,” he said as reported by Bernama.

Tengku Zafrul said if approved by Parliament, it would take about nine months to reintroduce the GST.

The GST was introduced in 2015 at a rate of 6% before it was abolished in 2018 by the then ruling government.

Last week, the Federation of Malaysian Manufacturers (FMM) said it supported the move to reintroduce GST, but suggested that the implementation be done at a rate of 4%. Doing so would promote conducive business conditions and also provide higher disposable income for the rakyat, the association said.

However, according to an AmInvestment Bank analyst, car prices in Malaysia are anticipated to increase by 1% to 3% should the government switch back to the GST, which is the opposite of what happened when the SST was implemented back in 2018.

Tengku Zafrul said the study was now at the engagement stage and one of the issues was to ascertain a fair rate of 3-4% or 7-8%.

It was looking for an alternative to improve on the existing sales and services tax (SST), which had been described as inefficient and caused many countries to opt for GST.

When asked about a fair GST rate, Tengku Zafrul said whatever it was, it should be able to generate a higher revenue than the existing tax system.

He said some countries had even imposed a higher rate because they were able to give many exemptions, like in Saudi Arabia, which imposed a GST of 15% due to the high oil revenue.

“There should be a study on the fair rate to generate revenue for the country’s development, while ensuring that it will not burden the people and the business community,” he said.