Economy

GST effectively scrapped with 0% rate from June

GST effectively scrapped with 0% rate from June”

We've also reached out the Ministry of Finance for comment, and will update this piece with information as we receive it.

In a statement released by the Ministry, the reduction of the rate from the current six per cent to zero per cent will be implemented nationwide until a further announcement is made.

The Ministry of Finance Malaysia has just announced that the Goods and Services Tax (GST) will be set at zero per cent beginning 1st June 2018. This excludes goods and services that are now GST exempted.

"Accordingly, all registered traders are required to comply with the latest zero rate imposition".

So what does this mean to the rest of us?

Ratings agency Moody's said this week that the removal of GST would be credit negative for Malaysia as it would cut off a significant revenue source for the government. An industry source told us that buyers can not expect to simply remove six percent from current selling prices, as carmakers have paid GST all along the production and distribution process, and the tax isn't just charged to the customer in one lump sum.

All this comes in the wake of Pakatan Harapan's win in the recently concluded GE14, where in their pre-election manifesto they pledged to completely do away with GST within a 100 days should they win, and return the Sales and Services Tax which the GST replaced in 2015. Zeti Akhthar Aziz, a senior adviser to the Malaysian government, said on Tuesday Malaysia would be able to reduce the fiscal deficit by controlling expenditure in the absence of GST.

Will this affect your current purchase decision?



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