Malaysia to retain SST, ruling out GST amid living-cost pressures

Malaysia will retain its Sales and Service Tax (SST) rather than consider the Goods and Services Tax (GST) because of living-cost pressures, Finance Minister II Datuk Seri Amir Hamzah Azizan told Parliament on October 29, 2026.

Speaking during the Finance Ministry’s policy-stage debate on the Supply Bill (Budget 2027), Amir Hamzah said the government would refine SST to limit cascading taxation and make compliance simpler. He said the system allowed the government to target particular goods and services for taxation and leave essentials exempt, taking affordability into account.

The Fiscal Outlook 2027 estimates SST receipts at RM67 billion for 2026, compared with RM55.9 billion in 2025. Revenue is forecast at RM73.3 billion in 2027, representing a two-year increase of RM17.4 billion.

Amir Hamzah said SST currently raises revenue equivalent to three per cent of gross domestic product, matching GST’s share in 2017. Switching systems would not necessarily bring in more revenue, he argued, but would transfer the tax burden entirely to consumers from businesses, including exporters.

He described GST as tending to be regressive because lower-income households spend a greater share of their earnings on consumption. The burden relative to income would therefore be heavier, particularly for the B40 and M40 groups, he said. While acknowledging GST’s collection efficiency, transparency and input tax credits, he said affordability must guide the choice of system.

Compliance costs were another consideration, he said. Nearly 700,000 businesses had GST registrations in 2018, against about 130,000 registered for SST in 2026, meaning GST would require more businesses to incur those costs.