At least nine months to reinstate GST after Parliament nod, says Zafrul

PUTRAJAYA: It will take at least nine months before the goods and services tax (GST) can be reinstated after it is approved by Parliament, says the Finance Minister.

Datuk Seri Tengku Zafrul Tengku Abdul Aziz said the process would take time, including conducting a study and engagement.

ALSO READ: No decision yet on reintroducing GST, says Ismail Sabri

"If the study is clear that GST will benefit the country, then we will present it to the Cabinet.

"After that, it will have to be tabled, debated and passed in Parliament.

"From there, it will take at least nine months before it can be implemented," he told reporters at a Hari Raya event here on Wednesday (June 8).

ALSO READ: Malaysians hope new GST will be lower than 6%

Tengku Zafrul said among the issues that need to be addressed is the rate of GST.

"For one thing, the rate has to result in higher (tax) collection.

"We also have to look at exemptions. Exemptions vary from one country to another. Some have a long list of exemptions.

"We have to study what is a fair rate for Malaysia. We don't want to burden the people but we also need to ensure revenue collection for the country's development purposes," he said.

He pointed out that in countries that do not impose GST, tax revenue versus gross domestic product (GDP) would be lower.

For Malaysia, tax revenue to GDP is about 11%.

Prime Minister Datuk Seri Ismail Sabri Yaakob said in a special interview with Nikkei Asia recently that the government was not ruling out the possibility of reinstating the consumption tax as an effective way to increase national income and help combat inflation and the rising cost of living.

GST, at 6%, was introduced in Malaysia on April 1, 2015 by the Barisan Nasional government.

It was suspended on June 1, 2018 and replaced with sales and service tax (SST) on Sept 1, 2018 by the Pakatan Harapan government.

The current rate for sales tax is 5%-10%, while service tax is 6%.

On another matter, Tengku Zafrul said the government will decide on the SST exemption for cars before it expires on June 30.

"There is no decision yet, we are in the midst of discussing," he said.

The exemption was first announced in June 2020 as part of the Penjana stimulus package.

Originally scheduled to end on Dec 31 that year, the exemption was extended to June 30 last year, then to Dec 31, with the latest extension being made to June 30 this year.