In the run up to formulating Budget 2023, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said in June, improvements will be made from the aspect of the efficiency of the refund process if the government decides to reintroduce the Goods and Services Tax (GST).
He added, besides improving the overall governance of the GST, efforts will also be made to avoid any confusion in the classification of goods as taxable or non-taxable, Zafrul said.
Grant Thornton, one of the world’s leading organisations of independent assurance, tax and advisory firms said any move towards GST reimplementation in Malaysia presently, under the purview of the upcoming Budget 2023 will be a false move by the government.
Agreeing that a proper implementation of GST has its positive points compared with the present Sales and Service Tax (SST) structure, it is not the right time for it due to the present economic conditions in Malaysia.
Speaking to BusinessToday recently, Grant Thornton Malaysia PLT country managing partner Datuk N. K. Jasani said once GST is brought in there has been clear instances where the general price levels increase by about 2% across the board. This has occurred previously in Malaysia as well as in countries like Singapore and India.
“And, at a time where resources are scarce, cost of living is seen to be rising and the present position of the Ringgit, the nation cannot afford it now as the final cost of the tax is passed on directly to the consumer. This will cause further problems,” he said.
He added, the government should learn from the past and iron out the details before bringing back GST, especially on the classifications of what is taxable, and the refund process, which is included in as total revenue collected. This gave a very wrong picture on the nation’s finances then.
“Implementing GST now will be disruptive to the economy. If the government is looking into it, fine, but it should be deferred by about two to three years in future once conditions stabilise, provided a proper mechanism is devised and the compliance issue is addressed completely,” said Jasani.
Echoing this sentiment, Grant Thornton Malaysia Senior Executive Director-International Tax & Global Mobility Services Daniel Woo told BusinessToday: “The government must start now to look into making certain changes to the present SST structure by incorporating some elements of the previous GST into it. The reimplementation of GST needs a sufficient lead time to remedy the shortfalls and reintroduce it successfully, and this is unlikely to happen in 2023.”
