KUALA LUMPUR: There are no plans to reintroduce the Goods and Services Tax (GST) anytime soon in order to protect the interests of the people and businesses, says the Finance Ministry.
The ministry said this is because the current general income level is too low, leaving people financially vulnerable if subjected to a broad-based tax like GST.
It added that continuing with the current Sales and Service Tax (SST) system provides a quicker fiscal impact for the government compared to bringing back GST.
“Bringing back GST would require a much longer preparation period—up to two years—to allow companies to update their systems and prepare for GST compliance.
“SST is also more progressive compared to reinstating GST, as the expanded SST structure is targeted, and commonly consumed goods and services are generally not taxed,” the ministry said in a parliamentary written reply dated August 25.
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The ministry added that the current expansion of service tax covers 70% of services listed under the Malaysia Standard Industrial Classification (MSIC) code, compared to 76% under GST.
There are 1,826 items exempted from SST, compared to 607 items exempted from GST before it was abolished in 2018.
“The larger number of exempted goods and the relatively lower percentage of services taxed under SST compared to GST reflect the government’s concern for public welfare while ensuring fiscal sustainability.
“The government remains committed to strengthening the nation’s fiscal position while safeguarding the people’s welfare,” the ministry said.
The ministry was responding to a question from Datuk Seri Dr Wee Ka Siong (Barisan Nasional–Ayer Hitam) on why the government is not reintroducing GST.
