Malaysia To Introduce GST In Bid To Improve Revenues
Malaysia’s Prime Minister, Abdullah Ahmad Badawi has announced that the government will be introducing a Goods and Services Tax in an attempt to reduce the nation’s growing budget deficit.
In his first budget speech to parliament, Mr Abdullah stated that the new tax will operate in a similar fashion to a value added tax (VAT), and is intended to improve revenue collection. The new GST levy will replace the existing sales and services tax.
The rates at which the new tax will be imposed have yet to be decided, as the government intends to consult public and private sector organisations before it is implemented in January 2007.
While Mr Abdullah’s 2005 budget did not contain any cuts in corporate or income taxes, he suggested that these may be cut in the years ahead if GST is successfully implemented and the resulting revenues are healthy.
Malaysia's budget deficit for this year is expected to equal 4.5% of gross domestic product, falling to 3.8% in 2005.
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