KUALA LUMPUR, Oct 11 — The Finance Ministry (MoF) said the Sales and Services Tax (SST) is forecast to register at least RM28.3 billion in tax collection next year.

According to the MoF's Fiscal Outlook and Federal Government Revenue Estimates 2020 report, the amount comprised about 1.8 per cent of Gross Domestic Product (GDP), is a result of higher consumption, Visit Malaysia 2020 programmes and other international events.

“The government has set a target of 30 million tourist arrivals and RM100 billion in tourist receipts in 2020,” it said briefly.

The report said the forecast SST collection — which falls under the indirect tax revenue category — was an increase of 5.6 per cent from 2019’s target of RM26.8 billion.

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Breaking down the SST further, sales tax collection is projected to increase to RM16.3 billion from 2019’s target of RM15.5 billion due to high demand in the automobile industry, in particular machines and spare parts as well as sales of vehicles.

“According to the Malaysia Automotive Association report, four wheel drive (4WD) and sports utility vehicles’ sales for the first half of 2019 increased 77.4 per cent compared to the corresponding period in 2018,” it said.

Similarly, service tax collection is estimated at RM12 billion from 2019’s target of RM11.3 billion, largely contributed by higher demand in the food and beverage sector followed by telecommunications and insurance sector.

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The SST was reintroduced in August 2018, following the abolishment of the unpopular Goods and Services Tax (GST) after it was implemented by former prime minister Datuk Seri Najib Razak in April 2015.

Earlier this month, Najib insisted that the unpopular consumption tax he introduced in 2015 has been acknowledged to be more transparent and beneficial to Malaysia’s economy.

The Pekan MP claimed the revival of the SST replacing the GST had resulted in a RM24 billion a year loss to the government.