It’s official: Malaysia to zero-rate 6% GST effective 1 June 2018


Malaysia’s goods and services tax (GST) will be zero-rated starting 1 June 2018, as officially announced by the finance ministry today. The announcement fulfills the 14th Malaysia General Election campaign promise by the new coalition government – Pakatan Harapan (PH).

The zero-rating of GST does not include the goods and services listed in the Goods and Services Tax (Exempt Supply) Order 2014, which will remain exempted from GST.

Businesses registered for GST must comply with the Price Control and Anti-Profiteering Act 2011 at all times.

Led by premier Tun Mahathir Mohamad, the new government has pledged to abolish GST within 100 days of coming to power. It does plan to reintroduce the sales and services tax (SST) at a later time.

The unpopular six percent tax has been blamed for the people’s rising living costs since it was imposed by the Najib administration in 2015.

The previous government earned MYR43.8 billion in revenue from GST last year, or 18.3 percent of tax income.

Economists and credit ratings companies have expressed concern over the abolishment of the tax as it would cut government income and may widen its budget deficit.

Former central bank governor Zeti Akhtar Aziz, who is now part of the five-member Council of Elders to assist the new PH government, had earlier said that Malaysians should not expect the GST removal to happen overnight.

She added that the government has sufficient revenue even it were to abolish the GST.

Header photo: AFP/Mohd Rasfan via ChannelNewsAsia



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