Malaysia Government has No Plans to Reintroduce GST; Says Report

The Government of Malaysia has no intentions of bringing back the goods and services tax (GST) as an alternative to eliminating RON95 petrol subsidies, according to state news agency Bernama, quoting a government spokesperson.

“The government has no intentions to implement a broad-based consumption tax, particularly the goods and services tax (GST), as an alternative to withdrawing subsidies for RON95 petrol”, said Communications Minister Fahmi Fadzil.

Malaysia’s Minister of Communications, Fahmi Fadzil briefly stated, “No, there were never discussions”, in response to reporters’ questions after attending the full dry-run session of the 2024 National Day Celebration at Dataran Putrajaya on Thursday.

Fahmi was responding to a report given by a media outlet that claimed that Malaysia is considering reintroduction of a broad-based consumption tax rather than adopting subsidy cuts for RON95 as the government seeks to strengthen its finances.

In the media’s article, which cited sources familiar with the matter, the Cabinet discussed this measure, arguing that reinstating GST would be politically easier than removing petrol subsidies for RON95, given that Malaysia is an oil producer and many Malaysians regard affordable petrol as essential.

Separately, Economy Minister Rafizi Ramli has allegedly stated that Malaysia is not interested in restoring the GST to generate revenue, as advised by the Organisation for Economic Cooperation and Development (OECD).

“There are numerous ways to achieve financial strengthening, with different groups offering varying perspectives,” Rafizi said earlier this week.

RON95 refers to gasoline with a Research Octane Number (RON) of 95 or above. RON is a measure of gasoline quality and performance; a higher RON indicates that the fuel can endure greater compression before detonating. RON95 is typically appropriate for daily vehicles with ordinary engine performance.