Government has no plans to reintroduce GST for now because people’s income still low – finance ministry

Government has no plans to reintroduce GST for now because people’s income still low – finance ministry

The finance ministry has said there are no plans to reintroduce the goods and services tax (GST) anytime soon, reiterating what prime minister Datuk Seri Anwar Ibrahim said in June this year. This is in response to a question from Datuk Seri Dr Wee Ka Siong (BN–Ayer Hitam) on why the government is not reintroducing GST.

According to the ministry, the government has no intention to bring back GST because the income of the people in general is still low for them to be subjected to a broad-based tax system. It added that the current sales and service tax (SST) provides a quicker fiscal impact for the government compared to reintroducing GST, which would require a longer preparation period of up to two years so companies have time to update their systems to be GST-compliant.

“Apart from that, SST is also seen as more progressive compared to GST, as the expanded SST structure is targeted whereby commonly consumed goods and services are generally not taxed,” the ministry wrote in a parliamentary reply.

The ministry also pointed out that after the revised SST system was implemented on July 1, 2025, the total number of items exempted, or rated at 0%, is 1,826. By comparison, 607 items were exempted with the GST system before it was abolished in 2018. It added that the current expansion of service tax covers 70% of services listed under the Malaysia Standard Industrial Classification (MSIC) code, compared to 76% under GST.

“The larger number of exempted goods and the relatively lower percentage of services taxed under SST compared to GST reflect the government’s concern for public welfare while ensuring fiscal sustainability,” it wrote.

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