KUALA LUMPUR: Malaysia may look at a possible implementation of the Goods and Services Tax (GST) in the medium term, likely by 2022 or 2023 to help correct the government’s fiscal position and to boost revenue.
Affin Hwang Capital Research chief economist Alan Tan said it would not be an immediate implementation as various plans and decisions need to be made in terms of rates and tax treatments.
He added that the GST will likely be reintroduced at a revenue neutral rate, which is a lower rate that is more acceptable to the people.
“Similarly, the government will also be looking at the tax treatment in terms of standard rating, zero rating, exemption and looking at the right threshold for businesses to register.
“In the previous GST implementation, one of the issues is really on the refunds, so I think the government will relook at the refund scheme to make it more efficient.
“All these would take some time, therefore the GST implementation will likely be announced in Budget 2022 or rolled out in 2023, ” he told the media during Affin Hwang Capital’s 2021 Malaysia Economic Outlook & Construction Sector briefing.
Tan, who is in favour of the GST regime, said it is beneficial for the long term prospects of Malaysia in making it a more attractive investment destination.
He explained that this was due to the wider base that GST has to offer as compared to the Sales and Services Tax (SST), which will shift the Government’s focus from direct to indirect taxations.
“This provides some flexibility for the government to reduce corporate and personal income tax rates to make us more competitive among other countries and therefore, the ability to attract investments down the road, ” he said..