The Federation of Malaysian Manufacturers (FMM) welcomes the authorities’s name to reintroduce the goods and services tax (GST) at a rate that won’t burden the rakyat but nonetheless assist widen the authorities’s income base. Earlier this week, prime minister Datuk Seri Ismail Sabri Yaakob stated the country was deliberating the move, which might increase its income base and assist relieve the heavy monetary burden the authorities was going through.
In a press release issued at the moment, FMM stated that GST is a extra clear and efficient tax regime in comparison with the gross sales and providers tax (SST), which it changed in April 2015. The GST didn’t final lengthy, being abolished in favour of SST once again in September 2018 when Pakatan Harapan got here into energy.
According to FMM president Tan Sri Soh Thian Lai, a survey carried out two years in the past by the federation on the attainable reintroduction of GST confirmed that its members have been beneficial to such a transfer. “A total of 499 companies which responded to the survey strongly supported GST replacing SST,” he stated.
This, Soh stated, was as a result of GST gives a fairer tax construction and eliminates cascading and compounding of taxes generally present in the SST regime. He added that Malaysian exports would additionally develop into extra aggressive on the world stage as no GST is imposed on exported items and providers, whereas GST incurred on inputs could be recovered alongside the provide chain.
Soh stated as the broad tax base system would improve oblique taxes, it will supply flexibility to the authorities to cut back direct taxes – comparable to private revenue tax and company tax – to make Malaysia a extra enticing enterprise vacation spot.
However, he known as on the authorities to seek the advice of all stakeholders for a radical assessment course of to make sure the success of introducing an efficient tax regime. This contains having an enough allowance for the change to be made easily.
“While switching back to the previous automated model under the GST tax payers access point (TAP) system will not be difficult as GST compliance systems are already in place, companies have asked for a six-month transition period to change from SST to GST, based on our May 2020 survey,” he stated.
Soh additionally instructed that the implementation of the GST be performed at a 4% rate (in comparison with 6% beforehand). Doing so would enhance conducive enterprise situations, resulting in greater investments and employment alternatives, he stated. The proposed rate would additionally present greater disposable revenue for the rakyat.
He added that the authorities must also zero-rate all important items and providers, keep the GST registration threshold at RM500,000 and minimise delay in refunds, particularly for exporters and companies with zero-rated provides. Lastly, he stated that it was essential to make sure that a correct mechanism is in place to observe value management and anti-profiteering in the market when the tax system is reintroduced.
