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Malaysia PM Defends Introduction Of GST

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

27 November 2017


Prime Minister Najib Razak has defended the Government's decision to introduce a goods and services tax, claiming that the levy "saved" Malaysia from the fall in oil prices.

Malaysia introduced the GST on April 1, 2015, to replace the Sales and Service Tax. The system has a six percent headline rate, one of the lowest in the Association of Southeast Asian Nations (ASEAN).

"What appears to be a new tax – even though it simply replaced an old one – can seem to be a disruption. We knew it wouldn't be popular. But it would have been irresponsible not to have brought in GST," said Razak, speaking at the 13th World Islamic Economy Forum in Borneo on November 21.

"It's not just that we needed to widen the tax base, which is one reason why over 160 countries around the world have a form of GST. It is also that with the plunge in the price of oil, GST saved us."

He said that critics of the tax were deploying "fantasy economics" and that without GST Malaysia would lose its competitive edge and be overtaken by other countries.

"We cannot–and must not–allow that. We knew that if we are to achieve our goal of becoming a high-income status nation by 2020, we had to make changes. That is true leadership," said Razak.

TAGS: tax | economics | value added tax (VAT) | goods and services tax (GST) | Malaysia | services | Economy | Tax

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