The introduction of the zero-rated Goods and Services Tax (GST) would help attract more investments and increase job opportunities, said tax expert Senthuran Elalingam.
Senthuran, who is Deloitte Malaysia Indirect Tax Partner, said the move would also reduce the costs of operations, especially for foreign multinationals.
"Malaysia is an export-driven economy that focuses on manufacturing, and with the GST being zero-rated, this will help manufacturers reduce their costs which will benefit the people in the long run.
"As the costs have been reduced, revenue will increase and from there, new businesses will be able to be created, hence creating more jobs and attract foreign investments into the country," he told Bernama.
On July 11, 2017 Prime Minister Datuk Seri Najib Razak announced that the government has agreed that four more services would be treated as zero-rated supply for the purposes of GST.
The services are prescribed services performed in connection with goods for export where the services are supplied to overseas customers and prescribed services supplied in the Free Zones, including licensed manufacturing warehouses to overseas customers.
The other two services are research and development services provided to overseas customers and non-recurring expenditure incurred as engineering expenses, including tools and machinery used in the manufacturing process of goods.
Besides that, Senthuran said, the move was a good example for the industry players and authorities to cooperate which would be beneficial to the economy.
Under the previous ruling, foreign companies faced various problems, including unable to register for GST which led to problems in claiming their input tax.
"This issue was previously raised by industry players particularly. Hence, from economic standpoint, this ruling will help the manufacturing sector especially in the long run.
For this year, the government, via the Royal Malaysian Customs Department expects to collect RM42 billion in terms of GST revenue as compared with RM41 billion in 2016.
-- BERNAMA
Bernama
Tue Jul 18 2017
He said the move would also reduce the costs of operations, especially for foreign multinationals.
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