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Malaysia to remove GST for consumers on Jun 1

16 May 2018

In press release by the Finance Ministry today, the ministry said the measure to impose GST at zero rate will take effect starting June 1, 2018 and applies to the while country until further notice.

Goods and services listed in the GST Exempt Supply Order 2014 remain exempted from GST.

"Businesses also have to ensure that prices of goods and services are in compliance to Price Control and Anti-Profiteering Act 2011 at all time", it added. At the moment, Malaysian prepaid users get instant GST refund after topping up however the 6% tax is still applicable for postpaid mobile and broadband users. Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.

This proposal however has raised economists' concern as the government may have difficulty in finding new sources to match the GST revenue collection, which stood at 44 billion ringgit in 2017.

As such, the reduction in prices may not be the full six percent, at least for existing inventory in which GST has already been paid along the chain by the manufacturer and distributor - unless these companies can reclaim from the government the tax they have paid. This is because the government has collected more than necessary, he added.

We've also reached out the Ministry of Finance for comment, and will update this piece with information as we receive it. Tan Sri Zeti Akhtar Aziz, who is one of the five-member Council of Eminent Persons had mentioned that the decision to abolish GST is final and work is in progress towards abolition.

"No longer up and down, the present (market) rate will stay".

Malaysia to remove GST for consumers on Jun 1