Malaysia's new government on Wednesday said it would reduce a goods and services tax to zero from June 1, effectively abolishing it, a move that is likely to spur spending in the Southeast Asian nation but put pressure on its fiscal position.
The Finance Ministry, announcing this in a statement today, said the change goes into effect nationwide and will remain until further notice.
"At the same time, businesses must ensure that prices of goods and services comply with the Price Control and Anti-Profiteering Act 2011 at all times", it added. At the moment, Malaysian prepaid users get instant GST refund after topping up however the 6% tax is still applicable for postpaid mobile and broadband users.
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But others are more sanguine, noting that GST was introduced in part to make up for the the significant fall in oil prices in recent years. Najib's government had planned to collect 43.8 billion ringgit ($11.05 billion) in 2018 in GST, about 18 percent of total revenue. "The government will subsidise if there are insufficiencies", he added.
We will try our best to update readers on the new price list once they are available from the official distributors and franchise holders.
As recently as Monday, Edaran Tan Chong Motor's sales and marketing director Christopher Tan said that auto prices might actually go up slightly if the previous 10% sales tax (which was superseded by GST) is reinstated without changes.
"No longer up and down, the present (market) rate will stay".