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Malaysia's new govt says GST to be effectively scrapped from June 1

GST would be zero-rated from June 1, the Ministry of Finance said

Reuters  |  Kuala Lumpur 

Mahathir Mohamad
Malaysia Prime Minister Mahathir Mohamad

Malaysia's new government on Wednesday said it would reduce a to zero from June 1, effectively abolishing it, a move that is likely to spur spending in the Southeast Asian nation but put pressure on its fiscal position.

Mahathir Mohamad, who won last week's general election, had vowed during the campaign to get rid of the 6 percent to address the rising cost of living.

Ousted leader Najib Razak had introduced the tax in 2015 amid lower oil prices.

would be zero-rated from June 1, the Ministry of Finance said in a statement on Wednesday.

Mahathir had also promised to reintroduce fuel subsidies, which along with the removal, could widen Malaysia's

Ratings agency Moody's said this week that the removal of GST would be credit negative for as it would cut off a significant revenue source for the government.

Najib's government had planned to collect 43.8 billion ringgit ($11.05 billion) in 2018 in GST, about 18 percent of total revenue.

Zeti Akhthar Aziz, a senior adviser to the Malaysian government, said on Tuesday would be able to reduce the by controlling expenditure in the absence of GST.

Zeti, a former long-serving central bank governor, said the government will re-prioritise projects, increase efficiency and reduce wastage in the public sector.

Malaysia's new govt says GST to be effectively scrapped from June 1

First Published: Thu, May 17 2018. 00:45 IST
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