Politics · Malaysia Bureau
Malaysia retains sales tax with goods-services model adjustments
Malaysia will keep the Sales and Service Tax (SST) with structural modifications designed to reduce cascading tax effects, Parliament was informed. The country's tax collection reached RM129.6 billion in the current year, marking a nine percent increase.
LSN Malaysia ·
KUALA LUMPUR — The Malaysian government has decided to maintain the Sales and Service Tax system while implementing adjustments modelled on goods-and-services tax principles to minimise cascading taxation, lawmakers heard this week.
The move comes as the country's tax revenue performance strengthens, with total collections reaching RM129.6 billion year-to-date, representing a nine percent rise compared to the same period previously. Officials attributed the growth to improved economic activity and enhanced tax compliance measures.
The proposed refinements to the SST framework are intended to address longstanding concerns about the cumulative tax burden on goods and services as they pass through supply chains. By adopting elements from GST-style structures, authorities aim to create greater efficiency in tax administration while maintaining the revenue base.
The government had previously considered alternative tax arrangements but ultimately concluded that modifying the existing SST system offered the most pragmatic path forward. The adjustments are expected to be implemented through regulatory amendments rather than legislative overhaul.
Business groups have indicated support for clarifications to the tax mechanism, though some have sought guarantees that the modifications will not increase their overall tax liabilities.