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SHAH ALAM — Dissatisfaction with the Sales and Services Tax (SST) system, particularly the absence of an input tax credit or refund mechanism, could have been among the factors driving some Chinese business communities away from Pakatan Harapan (PH), said Barisan Nasional (BN) and Umno leader Datuk Seri Ahmad Maslan.
Ahmad, who is also Deputy Works Minister said businesses may favour the Goods and Services Tax (GST) because it allows them to claim input tax credits or apply for refunds.
“Input tax credit or GST refund. Businesses prefer that more,” he told Sinar Daily at the Karangkraf Media Group headquarters here today.
Ahmad, who was Deputy Finance Minister under both former prime minister Datuk Seri Najib Razak and current Prime Minister Datuk Seri Anwar Ibrahim, was among the key figures involved in promoting GST’s implementation in 2015.
He said the main difference between GST and SST was the treatment of input tax.
Under GST, businesses could offset taxes paid on inputs against taxes collected or seek refunds, whereas SST does not provide a similar mechanism.
Asked whether GST should be reconsidered given the current economic environment, Ahmad again pointed to the refund mechanism available under GST.
He said while e-invoicing was aimed at improving transparency in business transactions, it did not replace the input tax credit system under GST.
His comments come amid longstanding calls from business groups for a more efficient tax refund process, with some advocating a return to GST.
On delayed refunds, he said the issue was partly due to the Finance Ministry and Customs Department having to exercise caution when processing refunds to prevent fraudulent claims.
However, he said delayed refunds were a relatively minor issue compared with the broader advantages of GST over SST, particularly in terms of transparency, higher tax revenue for the government, reducing the black economy and lowering business costs through input tax credits or a GST refund mechanism.
The Federation of Malaysian Manufacturing (FMM), for instance, has repeatedly highlighted the importance of timely tax refunds, warning that delays could affect business cash flow, particularly for small and medium enterprises and exporters.
In December last year, FMM raised concerns over outstanding GST input-tax refunds, saying more than RM220 million remained owed to about 100 member companies during the transition to SST 2.0.
The federation urged the government to resolve outstanding refunds dating back to the GST era and clarify the treatment of GST credits following the return to SST.
Calls for GST or a more efficient refund mechanism have also come from several business groups, including the Dewan Perniagaan Melayu Malaysia (DPMM), Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), Malaysian Indian Chamber of Commerce and Industry (MAICC), Malaysian International Chamber of Commerce and Industry (MICCI) and FMM.
The groups argued that GST provides greater transparency by allowing businesses to claim input tax at different stages of the supply chain while reducing the risk of cascading taxes associated with SST.