Malaysia to review tax regime

Malaysian Prime Minister Ismail Sabri Yaakob (Photo: Reuters)

Kuala Lumpur (VNA) – The Malaysian government will target a goods and services tax (GST) rate that does not burden the people but is not so low that it “defeats the purpose of expanding tax revenue”, Prime Minister Ismail Sabri Yaakob has said.

Malaysia is facing inflationary pressures due to rising food prices and cost of living.

The central bank of Malaysia forecasts that inflation will be between 2.2 percent and 3.2 percent this year. Earlier this month, the bank announced unexpectedly raised key interest rates to cool down inflation pressure.

The government has adopted price controls, but the cost of subsidies has placed a heavy burden on the state budget.

The country is projected to spend 28 billion ringgit (7 billion USD) on fuel subsidies in 2022 alone, more than double the 11 billion ringgit of last year, in addition to subsidies for cooking oil, sugar and flour .

In 2015, the leadership of the United Malays National Organisation (UMNO) party proposed the application of a new GST, however, three years later Mahathir Mohamad's administration rejected it after voters blamed the 6 percent consumption tax for rising cost of living./.