There will be no new taxes including the reintroduction of the goods and services tax (GST) in Malaysia until the country’s economic recovery is firmly on track following the impact of movement restrictions due to the Covid-19 outbreak which began in early 2020, according to the Ministry of Finance’s (MOF) deputy secretary general of treasury Datuk Johan Mahmood Merican on Wednesday (June 8).
“For clarity, I want to make sure I start off by saying that no decision has been made on the reintroduction of GST. No new taxes are envisioned until [Malaysia’s economic] recovery is firmly on track,” he said at the two-day Invest ASEAN 2022 conference, which began on Wednesday.
Although no decision has been made on GST reintroduction, Johan said that in line with the MOF’s mission of consolidating the nation’s fiscal position, the reintroduction of GST is on the cards.
“As you know, we are obviously looking to consolidate our fiscal position. Certainly GST is something we are looking at,” he said.
Looking back, Malaysia announced a GST of 6% beginning April 1, 2015 before the sales tax and service tax scheme was reimplemented in the country on Sept 1, 2018 to replace the GST.
On Wednesday, Johan said the MOF’s commitment to fiscal consolidation is not centred around the introduction of new taxes, but more of a consolidation and improvement of existing taxes.
“We are committed to a gradual fiscal consolidation. It is not just about strengthening revenue but also about moving efficiency of our expenditure.
“When you talk about revenue, it is not necessarily new taxes, but improving our existing taxes. It is now more about how we can be more targeted,” he said.
In line with Malaysia’s fiscal consolidation, Johan said the country’s proposed Fiscal Responsibility Act — slated for the end of 2022 — aims to broaden the nation’s tax base, improve tax compliance and administration towards boosting tax collection.
“We plan to introduce the Fiscal Responsibility Act. This is something targeted by the end of this year,” he said.
Earlier on Wednesday, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the MOF is looking at introducing the Fiscal Responsibility Act by tabling the bill at the Malaysian Parliament’s next session — scheduled to start on July 18 — to boost tax collection, which will be crucial to replenish the nation’s coffers to finance the nation’s developmental and longer-term reform plans.
Tengku Zafrul, who officiated at the Malaysian Institute of Accountants (MIA) International Accountants Conference 2022, which is held virtually on Wednesday and Thursday, said the proposed Fiscal Responsibility Act aims to “broaden our tax base — including taxing the shadow economy — and improve tax compliance and administration towards helping boost tax collection”.
– The Edge Markets