Malaysia spoke it will introduce a sales and service tax (SST) to partly offset the shortfall in yield from effectively scrapping a goods and service tax (GST) from June.
The Mahathir Mohamad-led domination, which won last week’s general election, said on Wednesday it purposefulness lower GST to zero percent from June 1. Ousted superior Najib Razak had introduced the tax in 2015 amid lower oil prices.
In a communiqu on Thursday, the ministry of finance said the shortfall in revenue will be supported by unambiguous revenue and expenditure measures that will be announced soon, categorizing the reintroduction of the sales and services tax.
“Fiscal reform is being implemented. Outgoings reduction will begin with rationalisation and efficiency measures and diminishing leakages,” the statement said.
It did not say when the sales tax will be introduced.
Brian Tan, a Singapore-based economist with Nomura, predicted the timing of SST implementation was a concern.
“It is a question of how quickly you can bring (the SST)back. In the horn ining period of the removal of GST and the return of SST, there is obviously going to be a gap in revenue. The cast doubt is how long and large will that gap be,” he said.
The finance ministry expression also added that rising oil prices will provide short-term pecuniary space.
“No doubt (the higher oil price) is helpful but the problem is that it may not be adequately. It is important that they bring in the SST soon,” Tan said.