MCA welcomes study on GST, says mechanism should be improved first

MCA welcomes the Ministry of Finance (MOF)’s ongoing study on the suitability of re-implementing the Goods and Services Tax (GST) and the usage of other taxation models.

That being said, we also urge MOF to address inadequacies and improve upon the system based on its prior implementation to ensure a smoother and more optimal experience for everyone.

This is in line with MCA’s stance that GST is a more superior tax system owing to its effectiveness, fairness, and transparency.

At present, 160 out of 195 nations worldwide are using the GST system or a similar model.

In practice, the GST system ensures that tax is paid fairly by all relevant parties, which is an important factor to building a healthy, competitive commercial market.

During GST’s first implementation, the issue of slow GST refunds was a major hitch, resulting in traders facing low cash liquidity.

Hence, we must improve the relevant mechanisms to ensure such problems do not repeat if GST is re-implemented. Below are a few practical suggestions:

1. Reduce GST rate to 3%, while keeping 0% GST for necessities as it was done previously;

2. Implement anti-profiteering mechanisms to prevent irresponsible businesses from using GST as an excuse to raise prices;

3. Allow reuse of old GST systems to prevent disruption and incurring extra costs for businesses; and

4. Tax refund mechanism must be quick and simple, or even adopt a “pay first, check later” policy.

In addition, the government should educate the citizens on how GST tax collection works to prevent misunderstandings and undue resistances towards it.

The government should also share how the tax revenue can be used in nation-building projects so that the people understand that GST will ultimately benefit them in return.

Saw Yee Fung

MCA spokesperson