Kuala Lumpur: The Malaysian government will be able to increase its revenue for the country’s spending without bringing back the Goods and Services Tax (GST), by opting to instead hike the service tax to 8 per cent under Budget 2024, tax advisory firms have said.
But the tax consultancy firms also cautioned that the increased service tax rate may result in higher costs for both consumers and businesses.Yesterday, Prime Minister Datuk Seri Anwar Ibrahim in his Budget 2024 speech said the government will expand service tax to cover logistics, brokerage, underwriting and karaoke, and will increase the service tax rate to 8 per cent, but will maintain the 6 per cent rate for services such as food and beverages and telecommunications.
Deloitte Malaysia’s country tax leader Sim Kwang Gek said the service tax rate hike to 8 per cent and widened coverage of taxable services under this tax would broaden Malaysia’s tax base.One of the Malaysian government’s sources of funding or revenue for its RM393.8 billion overall Budget 2024 is indirect tax .
At the same time, Deloitte Malaysia’s global employer services leader Ang Weina commented on Budget 2024’s proposed extension for income tax reliefs for Malaysians and extensions of tax exemptions and incentives that they may enjoy. PwC Malaysia’s tax leader Jagdev Singh said the service tax rate hike seems to be a temporary measure in the absence of a GST-like broad-based consumption tax.
At the same time, Jagdev said the proposed Budget 2024 contains measures that would help ensure Malaysians’ welfare. Farah Rosley, Malaysia Tax Leader at Ernst & Young Tax Consultants Sdn Bhd, last night said it was expected that the Malaysian government would not revive GST in the Budget for next year.
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