Kuala lumpur: The government is of the view that revenue collection under consumption tax through the Sales and Service Tax (SST) should be continued and can be further improved, as it is an existing tax that is already understood by the industry, traders, and the public.

According to BERNAMA News Agency, the Ministry of Finance (MoF) stated that SST can still be enhanced to generate additional revenue and provide a faster fiscal impact for the government, as it has been in use for over 40 years. The ministry highlighted that this is in contrast to reintroducing the Goods and Services Tax (GST), which would require a longer preparation period of up to two years to allow companies time to prepare and update their systems for GST implementation.

The MoF conveyed this in a written reply published on the Parliament website today, responding to a query from Datuk Seri Ismail Sabri Yaakob (BN-Bera) regarding the advantages of the SST system compared to the GST system. The ministry emphasized that with an expanded scope, SST is projected to generate an additional RM10 billion in revenue annually starting from 2026.

The MoF also discussed the respective advantages and disadvantages of both GST and SST taxation systems. Under GST, consumption tax is imposed at multiple stages but includes an input tax credit mechanism. Meanwhile, under SST, consumption tax is imposed only at a single stage without an input tax credit mechanism. However, certain exemptions are provided under SST, making the system implementable in a targeted manner.