The Federation of Malaysian Manufacturers (FMM) has welcomed the possible reintroduction of the Goods and Services Tax (GST), saying it would bolster industry growth. FMM president Tan Sri Soh Thian Lai said the federation also agrees with the Malaysian Institute of Economic Research’s (MIER) recommendation to set the GST at a lower rate of three per cent. “Reduce GST rate from six per cent to three per cent to boost business conditions, which would lead to higher investments and employment opportunities as well as higher disposable income for the people,” he said in a statement.
He added that FMM looks forward to being engaged in the government’s study to provide manufacturers’ views on the reintroduction of the GST. FMM highlighted the fact that over 170 countries have implemented the GST regime due to its infallible and fair tax structure. It said prices of Malaysian exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while the GST incurred on inputs can be recovered along the supply chain. “This strengthens our export industry, helping the country progress even further. Given the weak external environment and amid current global tensions, we believe that priority should be given to strengthen the economy and restore more favourable business conditions. “Therefore, we note this will be the opportune time to reintroduce the GST system,” he added.
FMM also proposed zero-rating all essential goods and services to make the GST regime more consumer- and business-friendly. It also recommended reducing the tax compliance burden by increasing the GST registration threshold to RM1 million and minimising delays in refunds especially for exporters and businesses with zero-rated supplies, saying the long refund period of between six to eight months has made the GST an accumulating tax burden. “Include the provision of interest on late payments and refunds in the GST legislation to ensure strict compliance to the client charter and integrity of the system,” it added.