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IMF Supports GST In Malaysia

by Mary Swire, Tax-News.com, Hong Kong

19 December 2013


The International Monetary Fund's (IMF) Mission Chief for Malaysia, Alex Mourmouras, said at the conclusion of discussions for the 2013 Article IV Consultation that he welcomes the country's decision to introduce a Goods and Services Tax (GST).

Malaysia's 2014 Budget confirmed that the country will introduce a GST on April 01, 2015, replacing the sales and services taxes currently in place. The tax will have a headline rate of six percent, the lowest among the Association of Southeast Asian Nations (ASEAN) countries. Indonesia, Vietnam, Cambodia, the Philippines and Laos impose GST at 10 percent, while Singapore and Thailand impose it at seven percent.

The GST is intended to remove the double taxation faced by businesses under the present regime, improve the competitiveness of Malaysian exports, and remove the distortion to supply chain decisions caused by gross-based taxation.

Mourmouras led an IMF team on a visit to Kuala Lumpur and Penang between December 04 and 16 to carry out discussions for the 2013 Article IV Consultation with Malaysia. He said that GST implementation should not be delayed or compromised.

He also commended Malaysia's decision to include in its 2014 Budget an increase in real estate taxes coupled with support for low income home buyers.

"The mission commends the authorities for their adept economic management in the context of a difficult external environment for Malaysia in 2013," Mourmouras said in his official statement. He noted that the federal government aims to have a fiscal deficit of four percent of gross domestic product in 2013 and 3.5 percent of GDP in 2014.

TAGS: VAT rates | tax | value added tax (VAT) | property tax | International Monetary Fund (IMF) | goods and services tax (GST) | Malaysia | services | Tax

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