Insight - OECD recommends that Malaysia reintroduce the GST

Jalbir Singh Riar: The GST is a more efficient tax system than SST. Under the GST regime, most businesses are able to fully recover the GST charged by their suppliers through an “input tax” mechanism. Hence, the GST is borne by the ultimate consumer, mitigates the tax-cascading impact of the SST regime, and does not add to the cost of doing business.

THE Organisation for Economic Co-operation and Development (OECD) has recommended that the goods and services tax (GST) be reintroduced in Malaysia, as part of the country’s medium term fiscal strategy. GST was replaced with the sales and service tax (SST) regime in September 2018.

Following the OECD’s recommendation, Minister in the Prime Minister’s Department (Economy), Datuk Seri Mustapa Mohamed, indicated that policy makers should consider re-introducing the GST in Malaysia when the time is right to do so.