Malaysia to introduce sales and service tax after effectively scrapping GST

Malaysia’s finance ministry said the shortfall in revenue will be supported by specific revenue and expenditure measures that will be announced soon, including the reintroduction of the sales and service tax. (Reuters)
Updated 17 May 2018
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Malaysia to introduce sales and service tax after effectively scrapping GST

KUALA LUMPUR: Malaysia said it will introduce a sales and service tax (SST) to partly offset the shortfall in revenue from effectively scrapping a goods and service tax (GST) from June.
The Mahathir Mohamad-led government, which won last week’s general election, said on Wednesday it would lower GST to zero percent from June 1. Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.
In a statement on Thursday, the ministry of finance said the shortfall in revenue will be supported by specific revenue and expenditure measures that will be announced soon, including the reintroduction of the SST.
“Fiscal reform is being implemented. Expenditure reduction will begin with rationalization and efficiency measures and reducing leakages,” the statement said.
It did not say when the sales tax will be introduced.
Brian Tan, a Singapore-based economist with Nomura, said the timing of SST implementation was a concern.
“It is a question of how quickly you can bring (the SST) back. In the intervening period of the removal of GST and the return of SST, there is obviously going to be a gap in revenue. The question is how long and large will that gap be,” he said.
The finance ministry statement also added that rising oil prices will provide short-term fiscal space.
“No doubt (the higher oil price) is helpful but the problem is that it may not be enough. It is important that they bring in the SST soon,” Tan said.


US tariffs trigger WTO spat escalation

Updated 3 min 30 sec ago
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US tariffs trigger WTO spat escalation

GENEVA: China, Russia and the European Union are among a string of countries asking the World Trade Organization to probe new US steel and aluminum tariffs, the world trade body said Friday.
Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries, the agenda for the next meeting of the organization’s Dispute Settlement Body (DSB) showed.
The agenda for the DSB meeting set to be held on October 29 shows that the EU, China, Russia, Canada, Mexico, Norway and Turkey plan to ask for the creation of a panel of experts to review US President Donald Trump’s decision to hit them with tariffs of 25 percent on steel and 10 percent on aluminum.
Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.
The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.
The US is meanwhile planning to request that the DSB create another set of expert panels to review the legality of retaliatory tariffs imposed by China, Canada, the EU and Mexico.
The requests, which follow rounds of failed consultations, mark and escalation in an ongoing showdown at the WTO around Trump’s controversial trade policies.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
“Once the panel is established and composed, the EU is ready to demonstrate that the United States’ import duties are WTO-inconsistent and to obtain a ruling that condemns the US and brings relief to the EU industry,” an EU Commission spokesperson said.
The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.