Business · Malaysia Bureau
FMM urges GST-style features in SST framework to ease tax burden
Malaysia's manufacturers' association has called for integrating goods and services tax mechanisms into the existing sales and service tax system to reduce cascading levies and lower business costs.
LSN Malaysia ·
The Federation of Malaysian Manufacturers (FMM) has advocated for incorporating GST-style components into the current SST structure as a means to mitigate the compounding effect of embedded taxes throughout the supply chain. The proposal seeks to address inefficiencies in the existing tax system that manufacturers argue inflates production costs and reduces competitiveness.
According to the industry body, GST mechanisms—which typically allow input tax credits and work on a value-added basis—could significantly streamline Malaysia's tax collection framework. By reducing the layering of taxes at different stages of production and distribution, manufacturers contend that businesses would face lower operational expenses that could be passed on to consumers or reinvested in expansion and innovation.
The FMM's position reflects broader concerns within the manufacturing sector about tax complexity and the cumulative burden of levies that are not fully recoverable under the current SST system. Industry representatives argue that aligning selected GST principles with SST administration could enhance transparency and efficiency while maintaining government revenue objectives.
The proposal comes amid ongoing discussions about optimising Malaysia's tax framework to support economic growth and industrial competitiveness in the region. Policymakers have previously indicated openness to reviewing the tax system to address business concerns while safeguarding fiscal stability.