Malaysian GST implementation to miss 2014

Mon 21st Oct 2013

Plans to introduce a Goods and Services Tax (GST) in Malaysia look destined to miss the latest timetable of 2014.

The 2014 Budget, due to be presented to Parliament this week, will probably not include details of the GST, which is due to replace the existing Sales and Service Tax of 10% and 6% respectively.

Malaysian GST much needed tax reform

Malaysia has long planned to update its antiquated indirect consumption tax, which is complex and can lead to double taxation.  It has similar problems to the Indian VAT reform, with many missed attempts to overhaul the tax for an OECD-based VAT-like regime as applied in Europe, Australia, Canada and elsewhere.

Whilst many economists have stated that 4% revenue neutral is the best rate for the new tax, government sources have indicated that 6% is the more likely.  The government is concerned that it maintains its current rating with the credit agencies.