KUALA LUMPUR: Malaysia's tax debate should focus on enhancing revenue collection rather than choosing between the Sales and Service Tax (SST) and the Goods and Services Tax (GST), said an expert.
KPMG Malaysia senior advisor on tax policy Dr Veerinderjeet Singh said Malaysia already has the relevant taxes in place, with the key challenge being to ensure they perform effectively and deliver the intended revenue.
"I am not a proponent of introducing new types of taxes… we already have all the relevant types of taxes.
"Our challenge is to ensure that the taxes we have, whether income tax, SST or various duties, are performing effectively and generating the intended revenue, and extracting more revenue from the taxes we have," he said in a panel discussion titled "Post-Budget 2027 Debate", organised by the Malaysian Economic Association here today.
Veerinderjeet said the plans to incorporate elements of GST into the existing SST framework would be almost impossible, particularly due to the absence of a legal provision for an input-output tax mechanism.
While the government could explore ways to improve SST by adopting certain GST features, the two systems differed in key areas, including tax invoicing, input-output tax mechanisms and refunds, he said.
"We have already crossed the tax invoicing element. The e-invoicing system can effectively replace the tax invoice used under the GST system. The next issue is whether we have an input-output mechanism. That is the most difficult part, as there is no legal provision under SST legislation to allow for it.
"The third element is refunds. We do have certain refund mechanisms under the sales tax system, whereby eligible businesses can apply for refunds or drawbacks of duties if they meet specific objectives or conditions," he said.
Veerinderjeet said that Malaysia should strengthen the efficiency of its tax collection agencies, particularly the Inland Revenue Board (IRB) and the Customs Department, to maximise revenue from existing taxes.
He said the IRB had access to various tools, including data analytics, technology and data scientists, to improve tax collection, although questions remained over how effectively and efficiently these resources were being utilised.
-- BERNAMA
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