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What can Malaysia’s new SST learn from GST?

Stanley-Smith, JoeInternational Tax Review; London (Jul 12, 2018).

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Malaysia will bring in a sales and services tax (SST) in September 2018 to replace the unpopular goods and services tax (GST). Tax practitioners expect a “hybrid” SST regime that retains some GST features.

Malaysia will bring in a sales and services tax (SST) in September 2018 to replace the unpopular goods and services tax (GST). Tax practitioners expect a "hybrid" SST regime that retains some GST features.

Details around the new SST, which will be implemented on September 1 2018, are thin, but it is safe to assume it will be similar to the regime which preceded the GST, which was implemented on April 1 2015.

In addition, Malaysia's tax authority, the Inland Revenue Board of Malaysia, might abandon ongoing GST cases.

What can the new SST learn from GST?

"GST wasn't a failure," said Saravana Kumar Segaran, partner at Lee Hishamuddin Allen & Gledhill, with a sigh. "It contributed MYR 44 billion ($11 billion), it broadened the tax base, in ensured proper tax compliance. In this sense it was a success."

Indeed, given the fall in oil prices shortly after Malaysia introduced the tax in 2015, GST can be regarded as having safeguarded government finances at a crucial time. However, given that the new government has been able to half the budget for the Prime Minister in less than a month, the public may be less convinced of such an argument.

"From a political perspective, though, it was a failure," said Segaran. "There is a new government and whether you like it or not, we have to support it. We have to sink or swim together for the next five years, and they've done a lot in the last month. There is cause for optimism."

While it is safe to say that GST is gone for good under the...