SST to stay, govt to adopt ‘good’ GST features

Deputy Finance Minister Liew Chin Tong announced that the Malaysian government will retain the existing sales and service tax (SST) while adopting beneficial aspects of the goods and services tax (GST). The SST, in place for over 50 years, is preferred for its simplicity and the government seeks to maintain it as it minimally disrupts the majority of businesses.

Liew highlighted the GST's potential to incorporate measures to avoid cascading and double taxation. However, he questioned the necessity of the GST, pointing out that it would require nearly 500,000 tax-collecting entities compared to the current 80,000 under the SST.

The proposal aims for a system that does not disturb most businesses while protecting them from cascading taxes. The government is seeking a balanced approach to ensure consumer stability and business protection. This response came after questions from opposition leader Hamzah Zainudin about the government's stance on retaining the SST or introducing a new system combining both taxes.

The debate began when Prime Minister Anwar Ibrahim suggested the government would consider proposals combining elements of the GST and SST, particularly efficient tax features.

The GST, a multi-stage consumption tax, was initially introduced in April 2015 and replaced the SST in September 2018. Despite the initial shift, the government has consistently rejected reinstating the GST, deeming it only feasible when Malaysia's median wage surpasses RM4,000.