Could The Malaysian Government Reintroduce GST in 2024?
The Malaysian government is currently facing several economic challenges, including the aftermath of the COVID-19 pandemic. In order to address these challenges, the Federation of Malaysian Manufacturers (FMM) has recommended the reintroduction of the goods and services tax (GST) in the 2024 budget. The GST was originally introduced in 2015, but was suspended in 2018 due to public outcry.
The proposal for the reintroduction of GST suggests that the GST rate be set at 4% and the registration threshold be RM500,000 ($117,000). This would require businesses with a turnover of RM500,000 or more in a 12-month period to register for GST and remit taxes to the Royal Malaysian Customs Department.
One of the main benefits of reintroducing GST is the potential to raise additional revenue for the government. This can help to address some of the economic challenges the country is facing and support the recovery process. In addition, GST can provide a level playing field for businesses of all sizes, as small businesses can benefit from input tax credits for taxes paid on inputs. This can help to reduce their overall compliance costs. Furthermore, by spreading the tax burden across all sectors of the economy, GST can help reduce the burden on taxpayers.
While the reintroduction of GST has the potential to generate additional revenue and reduce the tax burden, it is important for the government to consider the impact it could have on taxpayers and small businesses. To minimize the burden, the government could offer incentives and exemptions to small businesses to reduce their compliance costs. The government could also consider introducing a simplified GST registration process and administrative guidelines to reduce the complexity of compliance.
In order to ensure that small businesses are not negatively impacted by the reintroduction of GST, the government could consider introducing a system of tax credits and rebates. This would help small businesses recover their GST costs, ensuring that they are not adversely affected by the tax. Additionally, the government should ensure that there are sufficient resources available to support small businesses in understanding and complying with the GST regulations.
One important factor to consider when reintroducing GST is the ease of understanding and compliance with the tax system. The government should ensure that the system is simple and straightforward, making it easier for businesses of all sizes to comply. The government could also consider providing training and support to help businesses understand and comply with the regulations.
In conclusion, the reintroduction of GST could provide a valuable source of revenue for the government and reduce the tax burden on taxpayers. However, it is important for the government to consider the potential impact on taxpayers and small businesses, and take steps to minimize this impact. The government should consider offering incentives and exemptions, introducing a simplified registration process, and providing support and resources to help businesses understand and comply with the regulations. Ultimately, the success of GST will depend on the government's ability to balance the need for additional revenue with the need to support small businesses and taxpayers.