KUALA LUMPUR (Oct 3): The Federation of Malaysian Manufacturers (FMM) has said this is a good time to reintroduce the Goods and Services Tax (GST) as the country's export industry could use some help amid the weak external environment and current global trade tensions.

In a statement today, the federation said Malaysian exports can become more competitive internationally as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain.

"This strengthens our export industry, helping the country progress even further," it said.

"Given the weak external environment and amid current global tensions, we believe that priority should be given to strengthen the economy and restore more favourable business conditions.

"Therefore we note this will be the opportune time to reintroduce the GST system," it added.

FMM suggested that the government make the tax more friendly for consumer and businesses by taking these five steps:

Reduce GST rate from 6% to 3% to boost business conditions which would lead to higher investments and employment opportunities as well as higher disposable income for the rakyat.

Zero-rate all essential goods and services.

Reduce tax compliance burden by increasing the GST registration threshold to RM1 million.

Minimise delay in refunds especially for exporters and businesses with zero-rated supplies as the long refund period of between six and eight months has rendered the GST into an accumulating tax burden.

Include the provision of interest on late payments and refunds in the GST legislation to ensure strict compliance to the Client Charter and integrity of the system.

FMM added that it would not be difficult for manufacturers to switch back to the previous automated model under the GST tax payers access point (TAP) system as the compliance system already exists.

"We however look forward to be engaged in the study proposed by the Government in order to provide manufacturers' views on the possible reintroduction of the GST system," it said.

The federation had come out with the statement to laud Prime Minister Tun Dr Mahathir Mohamad's announcement that the government would study the merits of reintroducing the GST to replace the current Sales and Services Tax (SST) system

FMM noted that the GST is a more transparent and effective tax regime compared to the SST and pointed out that over 170 countries use this "infallible and fair tax structure".

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