Just reinstate 'efficient, fair' GST, MCA veep tells govt amid SST expansion
MCA has urged the government to reintroduce the Goods and Services Tax (GST) instead of expanding the current Sales and Services Tax (SST) to cover more products and services.
'The government's approach of continuously widening the SST tax net, without addressing underlying issues, will increase the burden on businesses and consumers, without solving the core problem of a weak national tax base.
'Rather than continually introducing new or 'refined' taxes, it would be more sensible to...
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The Star
3 hours ago
- The Star
Reintroduce flat-rate GST in Sabah, urges accountants association
KOTA KINABALU: The government is being urged to consider reintroducing a simplified Goods and Services Tax (GST). This proposal arises from concerns that the upcoming expansion of the Sales and Services Tax (SST) could burden businesses and consumers, especially in Sabah. The Sabah Association of Professional Accountants (SAPA) suggested a flat-rate GST set at 3% to offer a fairer, more transparent, and efficient taxation model that could ease administrative burdens and reduce cost layering across industries. "We believe a modern GST system, with basic exemptions and simplicity, would better serve Malaysia's fiscal goals while protecting the vulnerable," stated SAPA president Datuk Tan Kok Liang on Thursday (June 12). SAPA expressed concern that the SST expansion, effective July 1, could disproportionately impact Sabah's fragile economy. The inclusion of construction services and commercial property leases under SST could lead to higher project and rental costs, particularly in rural and semi-urban areas. "In Sabah, infrastructure gaps and higher logistics costs already affect businesses. Adding tax pressure in areas like construction and shoplot rentals will further discourage investment and growth," said Tan. He noted that small and medium-sized enterprises (SMEs), considered the backbone of the state's economy, risk bearing the brunt of these changes, with higher costs likely passed down to tenants and consumers. Tan acknowledged positive elements in SST, welcoming exemptions such as residential property rentals, basic goods like rice and medicines, and the exclusion of private healthcare for Malaysian citizens. "These are thoughtful measures that protect lower- and middle-income groups from unnecessary financial strain," said Tan, adding that such exemptions demonstrate the government's effort to balance revenue and social protection. The association argues GST offers advantages over SST, including input tax credits that avoid cascading costs, better audit trails, and stronger alignment with international tax standards, crucial for boosting investor confidence. Tan said a simplified GST system could be tailored to Malaysia's needs and implemented without affecting essential goods and services. "A well-designed GST would be more equitable and sustainable in the long term, likely less burdensome to consumers than the current dual-rate SST," he said. SAPA also raised concerns about mandatory e-invoicing, noting many businesses, NGOs, and religious institutions in Sabah may lack the technical capacity or infrastructure to comply. Tan mentioned that a reintroduced GST would incorporate invoice tracking, making a parallel e-invoicing system redundant for compliance purposes. The group urged policymakers to adopt a more inclusive and consultative approach in tax reform discussions, especially considering regional disparities between Peninsular Malaysia and East Malaysia. "We are ready to work with the government through technical consultations to ensure Sabah's unique economic circumstances are properly represented," Tan said.
Borneo Post
3 hours ago
- Borneo Post
Stagger SST rollout for SMEs, young entrepreneurs, Dapsy S'wak chief urges MOF
Hee says while Sarawak's youth are ready to contribute to national development, they 'need space to breathe, grow, and recover'. MIRI (June 12): The Ministry of Finance should apply a staggered rollout of the Sales and Service Tax (SST) expansion to allow time for young entrepreneurs and small businesses in Sarawak to adapt, said Peter Hee. The Democratic Action Party Socialist Youth (Dapsy) Sarawak chief argued that unlike places like the Klang Valley, the state's business ecosystem is not tax-ready as many small and medium enterprises (SMEs) still rely on manual systems, especially in smaller towns and rural districts. 'As many businesses are yet to adopt digital invoicing or have access to accounting support, pushing them into a complex tax system overnight would be unfair and likely to cause non-compliance through confusion rather than intent. 'Tax reform must be fair – not just administratively efficient. If the government's intention is to increase revenue, it must not do so by pushing young and small entrepreneurs out of business,' he said in a statement. He said while Sarawak's youth are ready to contribute to national development, they 'need space to breathe, grow, and recover'. 'Let's not tax away their future before it begins,' he added. The Ministry of Finance has announced that the expansion of the SST effective this July 1, covering a wide range of services including private healthcare, education, financial services, construction, leasing, and personal care. According to Hee, the announcement has raised serious concern among youth entrepreneurs and small business owners in Sarawak. He said while Dapsy Sarawak supports responsible tax reform, it must be fair, inclusive, and sensitive to the realities on the ground, especially in Borneo. 'Sarawak's young entrepreneurs are showing remarkable initiative by venturing into business. Many are self-employed, running cafés, mobile salons, creative services, and online shops. 'However, they are already operating under pressure of rising electricity and rental costs; a weak ringgit affecting imports; as well as higher labour costs and compliance overheads, all while still in the process of post-pandemic recovery.' Hee believes that introducing a broader SST at this stage could be a tipping point as these small businesses would either have to raise prices – potentially losing customers – or absorb the cost and risk shutting down. Instead of targeting micro-enterprises, he said Putrajaya should focus on addressing tax avoidance by high-income individuals, corporate loopholes and monopolistic sectors that contribute less than their fair share to the government's coffers. 'It sends the wrong message when small local traders are taxed while mega-profits go untaxed.' He said Dapsy Sarawak is proposing the government exempt SMEs with under RM500,000 in annual revenue from the initial SST rollout; create a tax transition fund to support SMEs in system upgrades and tax literacy; and establish a youth enterprise relief scheme offering a three-year SST exemption for entrepreneurs under the age of 30. 'Sarawak should also be included in national tax policy conversations through an East Malaysia Tax Advisory Council,' he said. DAPSY Finance Ministry MoF Peter Hee SST
Malaysian Reserve
3 hours ago
- Malaysian Reserve
FMM urges govt to delay SST expansion, warns of cost and inflation risks
THE Federation of Malaysian Manufacturers (FMM) has urged the government to defer the expanded Sales and Service Tax (SST) set to take effect on July 1, 2025, warning that the move is too soon, too broad, and risks pushing up costs and inflation. 'The untimely implementation of the expanded scope of taxes will exert inflationary pressure… businesses already grappling with rising costs may have no choice but to pass these additional burdens on to consumers,' said FMM president Tan Sri Datuk Soh Thian Lai. The new sales tax orders will subject 4,806 tariff lines to a 5% tax, including machinery, equipment, and technical tools used in manufacturing. Only 359 Harmonised System (HS) codes remain exempt or zero-rated – meaning about 97% of goods will be taxed. FMM warned that taxing capital goods like machinery will raise investment costs and delay industrial upgrades. Although no penalties will be imposed until Dec 31, businesses have under three weeks to adjust systems and pricing. The expanded 8% service tax now covers leasing, construction, education, healthcare, and financial services. FMM estimates this could increase annual costs by RM24,000 to RM60,000 per rented premise. 'Clearer guidelines and a broader exemption list are urgently needed,' said Soh, adding that manufacturers offering mixed goods and services face implementation uncertainty. FMM also reiterated its call to reinstate GST, calling it a more transparent and efficient tax model that avoids the cascading cost effect of SST. 'Instead of widening a narrow and cascading tax system… GST offers a more efficient, transparent and broad-based solution,' Soh said. –TMR
