THE Federation of Malaysian Manufacturers (FMM) welcomes the government’s decision to reintroduce the GST.
This time around, the GST will still be able to lower the government debt ratio and accelerate the pace of fiscal consolidation and will not burden the citizens, it said.
According to FMM president Tan Sri Soh Thian Lai (picture), the GST is more transparent than the Sales and Services Tax (SST) as it provides a fairer tax structure and eliminates cascading and compounding of taxes commonly found in the SST regime.
This is indicated in a survey in May 2022 where a total of 499 companies were in favour of replacing SST 2.0 with GST.
“In addition, prices of Malaysian exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supply chain.
“Moreover, because this broad tax base system would increase indirect taxes, it will give flexibility to the government to reduce direct taxes (personal income tax and corporate tax) to make Malaysia a more attractive business destination,” he said in a statement today.
However, Soh hoped that GST 2.0 would be manageable and should not increase business costs.
It should also not be considered as an isolation but rather a holistic assessment of Malaysia’s tax systems and the country’s fiscal position, he added.
“As the change and transition to GST 2.0 can be challenging, FMM calls for the government to consult all stakeholders for a thorough review process to ensure the success of introducing an effective tax regime.
“While switching back to the previous automated model under the GST Tax Payers Access Point system will not be difficult as GST compliance systems are already in place, based on our May 2022 survey companies have asked for a six-month transition period to change from the current SST to GST 2.0,” Soh said.
FMM’s members have made suggestions to make GST 2.0 more consumer- and business-friendly such as by reducing the GST rate to 4% to boost business conditions.
In turn, these would raise investments and employment opportunities as well as higher disposable income for Malaysians.
The new GST should also reduce the corporate tax rate to 20%, keep all essential goods and services to a rate of zero and maintain the GST registration threshold at RM500,000.
“The GST should minimise delay in refunds especially for exporters and businesses with zero-rated supplies as the long refund period between six to eight months has rendered the GST into an accumulating tax burden.
“It needs to include the provision of interest on late payments and refunds in the GST legislation to ensure strict compliance to the Client Charter and give integrity of the system,” he said.
He also hoped that the government could replace the Approved Trader Scheme and Approved Toll Manufacturing Scheme by creating more efficient schemes as they are deemed complicated and difficult to implement.
Meanwhile, proper mechanisms should be placed to monitor price control and anti-profiteering in the market when the tax system is reintroduced. — by AZALEA AZUAR / pic by MUHD AMIN NAHARUL