FMM supports GST but must be halved to 3%

Federation of Malaysian Manufacturers (FMM) said the GST rate should be reduced from 6% to 3% to boost business conditions.

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) supports a reintroduction of the Goods and Services Tax (GST) to replace the current Sales and Services Tax (SST) system.

In a statement issued on Thursday, the FMM said the GST rate should be reduced from 6% to 3% to boost business conditions which would lead to higher investments and employment opportunities as well as higher disposable income for the rakyat.

It said it should also be zero-rated for all essential goods and services.

FMM also suggested the government reduce tax compliance burden by increasing the GST registration threshold to RM1mil.

“Minimise delay in refunds especially for exporters and businesses with zero-rated supplies as the long refund period between six to eight months has rendered the GST into an accumulating tax burden.

“Include the provision of interest on late payments and refunds in the GST legislation to ensure strict compliance to the Client Charter and integrity of the system, ” it said.

FMM said for manufacturers, switching back to previous automated model under the GST Tax Payers Access Point (TAP) system will not be difficult as GST compliance systems are already in place.

“We however look forward to be engaged in the study proposed by the government in order to provide manufacturers’ views on the possible reintroduction of the GST system, ” it said.

The FMM was responding to an announcement by Prime Minister Tun Dr Mahathir Mohamad that the government would study the merits of reintroducing the GST to replace the current Sales and Services Tax (SST) system.

FMM has remained a strong supporter of the GST regime as we are of the opinion that the GST is a more transparent and effective tax regime compared to the SST.

Over 170 countries have implemented the GST regime due to its infallible and fair tax structure.

“More importantly prices of Malaysian exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain.

“This strengthens our export industry, helping the country progress even further.

“Given the weak external environment and amid current global tensions, we believe that priority should be given to strengthen the economy and restore more favourable business conditions. Therefore we note this will be the opportune time to reintroduce the GST system, ” FMM said.