KUALA LUMPUR, Aug 14 – The government is of the view that revenue collection under consumption tax through the Sales and Service Tax (SST) should be continued and can be further improved, as it is an existing tax that is already understood by the industry, traders, and the public.
The Ministry of Finance (MoF) said SST can still be enhanced to generate additional revenue and provide a faster fiscal impact for the government, as it has been in use for over 40 years.
“This is in contrast to reintroducing the Goods and Services Tax (GST), which would require a longer preparation period of up to two years to allow companies time to prepare and update their systems for GST implementation,” it said.
The MoF said this in a written reply published on the Parliament website in response to a question from Datuk Seri Ismail Sabri Yaakob (BN-Bera) who asked about the advantages of the SST system compared to the GST system.
The ministry said that with an expanded scope, SST is projected to generate an additional RM10 billion in revenue annually starting from 2026.
It also said that both GST and SST taxation systems have their respective advantages and disadvantages.
“Under GST, consumption tax is imposed at multiple stages but comes with an input tax credit mechanism.
“Meanwhile, under SST, consumption tax is imposed only at a single stage without an input tax credit mechanism. However, under SST, certain exemptions are provided, making the SST system implementable in a targeted manner,” it added.
