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Malaysia's GST Declared A Success

by Mary Swire,, Hong kong

16 December 2015

Malaysia's Prime Minister, Datuk Seri Mohd Najib Razak, has said that the Government was right to introduce goods and services tax (GST) this year, after the Customs Department announced that it had collected MYR30bn (USD7bn) in GST revenue.

Malaysia introduced its six percent GST on April 1, 2015, after several months of intensive preparations. This was despite much hostility from some parts of the business community, which feared that the tax would impose a disproportionate administrative burden on small firms. However, despite earlier warnings that many businesses would refuse to comply with the new tax, the Customs Department has revealed that revenues from the tax have exceeded its expectations.

The GST, which replaced the Sales and Service Tax, was sold to taxpayers by the Government as a simplification measure as much as a revenue-raising reform.

Commenting on the Customs Department's figures, Razak said that, without these new revenues, Malaysia's public finances would otherwise be in trouble, and so would its economy.

"In this context, it is unimaginable if we did not have the political courage to implement GST; the Government's fiscal balance of the current account would record a deficit of RM10.6 billion," he was quoted by The Malaysian Reserve as saying at a gathering of United Malays National Organization, the country's largest political party. "The implications would be the collapse of our economy, investments would be affected and job opportunities would be limited," he added.

According to the Customs Department, around 400,000 companies have registered for GST, and around 90 percent of these filed their GST returns on time.

TAGS: tax | investment | business | value added tax (VAT) | goods and services tax (GST) | Malaysia | services | Tax

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