Extract of Budget Speech 2010
Strengthening Management of Government Finance
The Government is currently at the final stage of
completing the study on the implementation of goods and services tax (GST),
particularly to identify the social impact of GST to the rakyat. The purpose of
this study is to ensure that if GST needs to be implemented to stabilize
Government finance, it will not burden the rakyat. If the Government implements
GST, it will replace the current sales tax and service tax as well as exemption
will be granted to the low-income group. The GST rate to be imposed will be
lower than the current sales tax and service tax rates.
YAB Dato' Sri Mohd Najib Tun Abdul Razak
Prime Minister of Malaysia
Cum Minister of Finance Malaysia
23 October 2009
Extract of Budget Speech 2005
Review of Taxation System
The Government will continue to ensure the taxation system
is more efficient, equitable and business friendly, as well as capable of
generating a stable source of revenue. Towards this end, the Government proposes
to establish a Taxation System Review Panel comprising representatives from the
public and private sectors. This Panel will review the tax system, including the
provisions of the Income Tax Act 1967. The focus of this review is to ensure
that tax provisions remain relevant. Existing provisions will be amended to
improve clarity and transparency of tax administration.
Another aspect of taxation which will be reviewed is the
consumption tax. The consumption tax, in its present form, consists of sales tax
and service tax. Sales tax is levied on goods at the point of import or at the
manufacturer's level. Service tax, on the other hand, is imposed on selected
services, including those provided by professionals, as well as operators of
hotels and restaurants. The Government proposes to replace both these taxes with
a single consumption tax, known as the Goods and Services Tax (GST), will be
more comprehensive, efficient, transparent and effective, thereby enhancing tax
compliance. Given that, under the new system, companies need to keep orderly
accounts, the Government's revenue collection is also expected to increase.
The Government proposes to implement this new tax on 1
January 2007. The introduction of the new tax will provide the Government with
the opportunity to reduce corporate and individual income tax rates. The
Government will also ensure that the low-income group will not be burdened by
the implementation of GST. In this regard, goods and services considered as
basic needs will either be zero-rated or exempted. In addition, small businesses
will also be exempted from this tax.The Government will provide opportunities
for public and private organizations to participate in the discussions toward
the implementation of GST.
YAB Dato' Seri Abdullah bin Ahmad Badawi
Prime Minister of Malaysia
Cum Minister of Finance Malaysia
10 September 2004
Extract of Budget Speech 1993
Integration of the Existing Taxes on Consumption
The structure of the present consumption taxes contains
several weaknesses that make it inefficient. Furthermore, the revenue yield does
not commensurate with the growth in the economy. I therefore intent to integrate
and restructure the existing sales and service taxes into a consolidated tax to
be called the Sales and Service Tax or SST. This integration will help overcome
several weaknesses such as tax pyramiding, transfer pricing, bias towards
imports and other abuses. As this tax is imposed on consumption, and not on
capital, it will stimulate greater savings and investments.
This tax will not burden the lower income groups. Several
essential goods and services as well as small businesses will be exempted from
the tax. The rate of the proposed SST will be below 10% which is lower than the
existing rate of Sales Tax. However, before this proposal is implemented, the
Ministry of Finance will consult all relevant parties. This is necessary in
order to avoid any possible misunderstanding that this proposal is merely based
on the reforms of other countries. We must be convinced that our tax system is
efficient and appropriate for us. However, we will continue to introduce changes
to make it more relevant to our needs. Meanwhile, the administrative machinery
of the Royal Custom and Excise Department will be strengthened and modified to
increase its efficiency accountability and ability to cope with additional
responsibilities.
YB Dato' Seri Anwar Ibrahim
Minister of Finance Malaysia
30 October 1992
Extract of Budget Speech 1989
Value Added Tax (VAT)
The reduction in direct taxes I am proposing will lead to
substantial losses in revenue, and with the increases in expenditure, there is
no other alternative but to strengthen our sources of revenue. In this context
the sales tax in its existing form is limited in scope and has a number of
inherent weaknesses which has resulted in the Government losing revenue. To
overcome such weaknesses, there is merit in considering a Value Added Tax (VAT),
which is a broad-based and equitable tax and which, in fact, has been adopted by
some 39 countries. The rate and scope of the tax can be structured in such a way
that it does not have a major impact on prices of consumer goods. Specific
provisions can also be made to ensure that the lower income groups and small
scale enterprises are not adversely affected by the tax. However, there are
implications related to a VAT which need to be studied further before it can
replace the existing sales tax.
YB Tun Daim Zainuddin
Minister of Finance Malaysia
21 October 1988