PUTRAJAYA: The expansion of the Sales and Service Tax (SST) can generate the necessary revenue to raise national coffers, says Finance Minister II Datuk Seri Amir Hamzah Azizan.
Reintroducing the previous Goods and Services Tax (GST) system would require a transition period of up to two years for new industries that were created during the SST implementation, he said.
“The industries must be coached on how to do it and new systems need to be installed. It is not just a matter of turning on and off again,” said Amir Hamzah in an interview with Sunday Star.
The GST was repealed by the then Pakatan Harapan government in 2018.
It was implemented in April 2015 under the administration of then prime minister Datuk Seri Najib Razak.
MPs have since called for the revival of the GST, arguing it is a more effective taxation system than the current SST as it tackles the shadow economy where billions are lost in tax leakages.
Amir Hamzah said the SST has been around for over four decades and it is a much more familiar system for local businesses.
“Reintroducing GST means educating the whole system. For SST, we can expand the scope because it is just a small expansion each time. The gazettement and all are easy to administratively manage,” he said.
He said the expansion of the SST scope announced in Budget 2025 is expected to generate an extra RM5bil in revenue for the nation.
He added that the expanded SST will generate the necessary revenue to enhance the fiscal space of the government.
“Fiscal balance is important because if we have fiscal balance, then we can start investing in the right things that the economy and the rakyat need,” he said.
In December last year, Deputy Finance Minister Lim Hui Ying said the list of services subject to SST will be announced in early 2025 before its implementation on May 1.
Last month, the Finance Ministry said the finalised SST scope of expansion and the review of the SST rates will be gazetted through subsidiary legislation in the first quarter of 2025 after the engagement process with ministries and industry stakeholders are completed.
The Finance Ministry and the Customs Department are actively conducting engagement sessions with the relevant parties to finalise the scope and tax rate.
In a written parliamentary reply, the Finance Ministry said that Putrajaya will propose to maintain 0% tax rates on essential goods, while the rates of 5% and 10% will be extended to non-essential goods, high-value, imported and processed goods.
