KOTA KINABALU: The government is being urged to consider reintroducing a simplified Goods and Services Tax (GST).
This proposal arises from concerns that the upcoming expansion of the Sales and Services Tax (SST) could burden businesses and consumers, especially in Sabah.
The Sabah Association of Professional Accountants (SAPA) suggested a flat-rate GST set at 3% to offer a fairer, more transparent, and efficient taxation model that could ease administrative burdens and reduce cost layering across industries.
"We believe a modern GST system, with basic exemptions and simplicity, would better serve Malaysia's fiscal goals while protecting the vulnerable," stated SAPA president Datuk Tan Kok Liang on Thursday (June 12).
SAPA expressed concern that the SST expansion, effective July 1, could disproportionately impact Sabah's fragile economy.
The inclusion of construction services and commercial property leases under SST could lead to higher project and rental costs, particularly in rural and semi-urban areas.
"In Sabah, infrastructure gaps and higher logistics costs already affect businesses. Adding tax pressure in areas like construction and shoplot rentals will further discourage investment and growth," said Tan.
He noted that small and medium-sized enterprises (SMEs), considered the backbone of the state's economy, risk bearing the brunt of these changes, with higher costs likely passed down to tenants and consumers.
Tan acknowledged positive elements in SST, welcoming exemptions such as residential property rentals, basic goods like rice and medicines, and the exclusion of private healthcare for Malaysian citizens.
"These are thoughtful measures that protect lower- and middle-income groups from unnecessary financial strain," said Tan, adding that such exemptions demonstrate the government's effort to balance revenue and social protection.
The association argues GST offers advantages over SST, including input tax credits that avoid cascading costs, better audit trails, and stronger alignment with international tax standards, crucial for boosting investor confidence.
Tan said a simplified GST system could be tailored to Malaysia's needs and implemented without affecting essential goods and services.
"A well-designed GST would be more equitable and sustainable in the long term, likely less burdensome to consumers than the current dual-rate SST," he said.
SAPA also raised concerns about mandatory e-invoicing, noting many businesses, NGOs, and religious institutions in Sabah may lack the technical capacity or infrastructure to comply.
Tan mentioned that a reintroduced GST would incorporate invoice tracking, making a parallel e-invoicing system redundant for compliance purposes.
The group urged policymakers to adopt a more inclusive and consultative approach in tax reform discussions, especially considering regional disparities between Peninsular Malaysia and East Malaysia.
"We are ready to work with the government through technical consultations to ensure Sabah's unique economic circumstances are properly represented," Tan said.
