KUALA LUMPUR – The government is likely to announce the reimplementation of the goods and services tax (GST) at a rate lower than 6% in Budget 2022 and roll out the tax regime in 2023, said Affin Hwang Capital.
Its chief economist, Alan Tan, said a key factor supporting the possible reintroduction of the GST is that the tax regime will give the government more flexibility to reduce corporate and personal income tax rates, making Malaysia a more attractive investment destination.
“One thing for which we are supportive of the GST is that it takes revenue from indirect taxation rather than direct taxation, where the government has the flexibility to reduce corporate and personal income tax rates to make Malaysia a more attractive location for investment,” he told a virtual media briefing today.
Tan also agreed that the GST is a broader tax base compared with the current sales and services tax (SST).
According to him, while rolling out the GST, the government would also look at supply issues, such as standard-rated supplies, zero-rated supplies, exemption supplies, as well as setting the right ratio for businesses to register.
“As we know, tax refunds became one of the major issues in the previous GST regime, so we believe the current government will also look at the refund scheme to make it more efficient (this time around),” he said.
Meanwhile, on the labour market in the country, Tan said Affin Hwang Capital projects that the unemployment rate will likely improve to 4.0-4.5% by end-2021 from 4.8% registered in November last year.
He said the expectation is based on the economic situation so far this year, following the Covid-19 vaccine roll-out, favourable external environment and pick-up in private investment in the country. – Bernama, February 4, 2021
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