This article first appeared in The Edge Financial Daily on October 4, 2019
KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) says this is a good time to reintroduce the goods and services tax (GST) as Malaysia’s export industry could use some help amid a weak external environment. The federation said Malaysian exports can become more competitive internationally as no GST is imposed on exported goods and services, while the GST incurred on inputs can be recovered along the supply chain.
“Given the weak external environment and amid current global tensions, we believe that priority should be given to strengthen the economy and restore more favourable business conditions.Therefore, this will be the opportune time to reintroduce the GST system,” it said in a statement.
FMM also suggested the government make the tax more friendly for consumers and businesses by taking these five steps:
- Cut the GST rate from 6% to 3%;
- Zero-rate all essential goods and services;
- Reduce tax compliance burden by increasing the GST registration threshold to RM1 million;
- Minimise delays in refunds for exporters and businesses with zero-rated supplies;
- Include the provision of interest on late payments and refunds in the GST legislation to ensure strict compliance with the client charter and integrity of the system.
FMM added it would not be difficult for manufacturers to switch back to the previous automated model under the GST taxpayers access point system as the compliance system already exists.
“We look forward to be engaged in the study proposed by the government in order to provide manufacturers’ views on the possible reintroduction of the GST system,” it said. FMM added that the GST is a more transparent and effective tax regime compared to the sales and service tax, with over 170 countries using this “infallible and fair tax structure”.