The Government is studying a hybrid taxation system that combines the current Sales and Service Tax (SST) with the Goods and Services Tax (GST).
That raises a simple question. If SST needs GST to work better, why not seriously consider bringing back GST properly?
At least 176 countries now use GST. There is no equivalent international count for Malaysia-style SST. More importantly, there is no country using the exact SST-GST hybrid now being considered for Malaysia.
The logic is straightforward. Keep the tax credits limited, and tax-on-tax remains. Extend the credits widely, and the system starts to look and work more like GST.
Once manufacturers, service providers, wholesalers and retailers are allowed to claim back tax already paid, the government will need rules on qualifying claims, invoices, refunds, audits and adjustments. The wider the system becomes, the closer it moves towards GST.
Malaysia expects to collect RM59.6 billion from SST in 2026. Before creating a new hybrid, the government must show Malaysians the numbers.
How much of the RM59.6 billion will be claimed back by businesses? How much will have to be refunded? How quickly will refunds be paid? How much revenue will the government actually keep? Which sectors will still face tax-on-tax? And how much extra compliance will businesses have to bear?
These are not small details. They determine whether the new system will actually be simpler, fairer and more effective than what we have today.
If the answer to SST’s weaknesses is to combine GST into SST, then the government should also be prepared to consider a properly designed GST, with stronger safeguards, faster refunds and targeted assistance for lower-income Malaysians.
Tax policy should be about what works, not what we call it. Do not build a complicated hybrid just to avoid the GST name. If GST works better, bring it back properly.