IPOH, May 20 ― Some local firms are already reducing prices before the Goods and Services Tax (GST) is zero-rated, but trade groups told consumers not to expect more like this soon after June 1.
Malaysian International Chamber of Commerce and Industry (MICCI) Perak chairman Datuk Lim Si Boon said businesses need time to adjust and maintain the reporting system.
“Consumers may derive some benefits post-June 1 but for businesses, there is still the compliance cost,” he told Malay Mail.
Lim said among the services that would see immediate effect are legal services and motoring.
“It will depend on the products. We cannot say across the board there will be an immediate reduction in price,” he added.
He said with two weeks to go before the move is implemented, the authorities should engage urgently with businesses to allow them to understand the challenges.
Federation of Malaysian Manufacturers (FMM) Perak chairman Datuk Gan Tack Kong said from now to June 1, consumers may hold back on big purchasers that requires them to pay GST.
“There will surely be market adjustments for at least two months (after June) or until the market has flushed out all GST claims,” he said.
“Companies would need to flush out previous expenditure,” he added.
Real Estate and Housing Developers Association (Rehda) Perak chairman Tony Khoo said the zero rating of GST was a good move as the consumption tax has softened the commercial property market since its implementation in 2015.
“GST has prevented investors from buying commercial units,” he said.
He explained that to invest in a commercial unit, a purchaser must prepare at least 25 per cent of the price.
“This is to cover the deposit, various taxes, legal fees before they can apply for loans. Coupled with stringent loan approval, market has slowed down,” he said, expecting the zero-rated GST to be a boon for commercial property sector.
The Finance Ministry announced on Wednesday that the GST will be zero-rated for all items and services in Malaysia from June 1.
The ministry said the GST will no longer be imposed at a rate of 6 per cent from then on, adding that this will be subject to further notice.
The previous Sales and Services Tax (SST) system will be reintroduced at a later time.
Perak MCA Public Services and Complaints Bureau chief Jimmy Loh said unless and until the federal government abolishes the GST Act, the tax will remain.
“The Pakatan Harapan government said in its manifesto that the tax would be abolished but what is happening now it is only reduced,” he said.
The announcement by the Finance Ministry, added Loh, has caused disarray in the market.
“Traders have bought goods with GST. How they plan to sell the products post June 1?” he asked.
“There is still a lot of uncertainty,” he added.