KUALA LUMPUR, Feb 4 — The government is likely to announce the re-implementation of the Goods and Services Tax (GST) at a rate of lower than six per cent in Budget 2022, and roll out the tax regime in 2023, says Affin Hwang Capital.
Its chief economist, Alan Tan said a key factor supporting the possible re-introduction of the GST was that the tax regime would give the government more flexibility to reduce the corporate and personal income tax rates, and hence, make Malaysia a more attractive investment destination.
“One thing that 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 be looking at supplies issue, 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, touching on the labour market in the country, Tan said Affin Hwang Capital projected that the unemployment rate will likely improve to 4.0-4.5 per cent by end-2021 from 4.8 per cent registered in November 2020.
He said the expectation is based on the economic situation in 2021, following the Covid-19 vaccine roll-out, favourable external environment and pick-up in private investment in the country. — Bernama
