‘Malaysia needs time to adjust to SST’

21-Jul-2018 Intellasia | New Straits Times | 6:32 AM Print This Post

Malaysia will take two to four years to adjust to the new Sales and Services Tax (SST) system.

Finance minister Lim Guan Eng said this while conceding that there will be an impact.

“The Pakatan Harapan (PH) government does not deny that the SST will still impose some financial impact on the rakyat, but there is no doubt that the impact from the SST will be less than the Goods and Services Tax (GST) by almost half (RM44 billion collected by GST vs RM21 billion by SST).

“I am also not denying that it was a more effective (collection system),” he said, referring to the GST, in a press conference in Dewan Rakyat today.

Lim however said the issue with GST was with its delays in refunds.

“The problem is when the refunds are not paid on time it compounds the effect and leads to increase in price of goods and cost of living.

“The delays caused them to factor the costs into their goods and services, this was why prices have escalated all the way. And this has burdened the people.”

Lim also argued that the SST is a more transparent taxation system compared to the GST, as it is easier to collect the right amount of taxes.

“All we need is to ensure compliance. I’ve spoken to the Customs director-general and he said we must improve on collection and enforcement,” he said.

On ensuring proper enforcement once the SST takes effect in September, Lim urged the Domestic Trade, Cooperatives and Consumerism Ministry to put in place a proper system.

On the impact the transition would have on businesses, Lim said the Customs Department had been instructed to take appropriate measures.

“Please complain to Customs if there are issues with software providers such as them leveling exorbitant charges to do the switch,” he added.

Meanwhile, Lim expressed shock by Pekan MP Datuk Seri Najib Razak’s statement that people would be burdened by SST as the “facts and figures do not support the allegations”.

“So far, the former prime minister has not responded, how could the SST burden the people more than the GST when the expected collection from the SST is estimated at RM21 billion for a full year, while the GST had expected to collect RM44 billion in 2018? “The rakyat have not yet received any response as to how GST is better for the rakyat than the SST, when GST collects RM23 billion more in taxes,” he said.

He further said that SST is a single-stage tax, a sales and services tax imposed on manufacturers and not on end-users.

GST, explained Lim, is a multi-stage tax where tax is payable by all parties in the supply chain.

“For instance, if a teddy bear needs to pass through 5 suppliers before being sold, then GST would have been imposed on each stage before the customer gets served,” Lim added.

He however said that SST is only imposed once on manufacturers.

Noting that each supplier can technically claim back GST as an input tax from the government, Lim said this still causes a huge problem with operating cashflow for many businesses as he claimed the government had been ‘notoriously slow in refunding GST claims’.

“This has resulted in higher costs, and ultimately the end customers would have to bear the cost with higher prices for goods and services.

“I will expose at a later date the real cause of the failure of the previous government to repay refunds to the rakyat promptly,” Lim had elaborated in a written statement.

Lim also said that by implementing an improved SST, the new PH government has ‘returned’ an estimated RM23 billion to the rakyat which would have been collected in GST.



Category: Malaysia

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