Govt should also take some time to study and prepare the mechanism of the tax as many are still in the dark, says Tricor chairman
by NUR HANANI AZMAN / pic by TMR FILE
ANY intention or proposal to reintroduce the Goods and Services Tax (GST) must not be rushed as the economy should be allowed to rise out of the current downturn.
Tricor Malaysia chairman Dr Veerinderjeet Singh said the government should also take some time to study and prepare the mechanism of the tax as many are still in the dark, despite having had the experience from the previous implementation of the GST.
“There is no rush to introduce the GST. Instead, the government needs to improve the Sales and Services Tax with a wider coverage and the necessary enforcement structure before slowly converting it into GST,” he told The Malaysian Reserve (TMR).
Veerinderjeet, a renowned tax expert, said should the GST be reintroduced, the rate should be lowered to between 4% and 5%.
Malaysian Association of Tax Accountants (MATA) council member Dr Mohd Fairuz A Razak said the reintroduction of GST at a lower rate of 4% is workable as long as the mechanism and enforcement on the ground are tightened.
He also said the authorities need to think through every aspect to avoid any manipulation by unscrupulous parties taking advantage of the GST to increase prices of goods and services, like what had happened previously.
“The best answer will be consumption tax, as it will be for all. We cant squeeze more from the existing taxpayer.
“To be fair, it should be for all to pay taxes with the exception of certain individuals and it will also lower our current individual and corporate tax rates,” he told TMR.
Mohd Fairuz said the GST should only be implemented after the Covid-19 pandemic subsides, but with a lower entry rate, so that the people and businesses could enjoy the savings and incentives.
A report on Nov 23 stated that the Ministry of Finance had established a committee to study various revenue-enhancing measures, including the possibility of reintroducing the GST.
The committee has also been tasked to study other issues including analysis on the weaknesses in the current tax regime and the impact of new taxation on the economy.
The team has also been assigned to look into options for new taxes, such as carbon tax and digital tax.
Veerinderjeet said what Malaysia needs is a sustainable tax structure, as the country cannot just rely too much on other resources, like petroleum for survival and sustenance.
He also said whatever tax structure that is decided should also be announced in due time, with advanced notice and not introduced in a rush, only to be cancelled within a short period as it would turn investors away.
“If you establish a tax like windfall tax only for exceptional profit, I think it is doable.
“You’d make a profit above a certain amount and there’d be a tax, probably another 5%. But, you should not confine it to one sector. Why don’t you apply to all?” he added.
On the other hand, Mohd Fairuz said windfall tax is not a good policy at the moment as it would deter investors from moving into Malaysia.
“Investors or current operators would then go to our neighbouring countries, especially Vietnam, or other South-East Asian countries that do not have windfall tax.
“Now especially, when glovemakers are paying corporate tax of 24% on top of their profits. If windfall tax is to be imposed, it would make them think twice before doing or continuing their businesses in Malaysia,” he added.