The political scene in Malaysia has taken a very dynamic turn and it serves as a timely call for all international and local companies operating in the country to wake up and review their operations there.

The winning of the general elections in May by the new Alliance of Hope (Pakatan Harapan) coalition government saw the dramatic return to power of now Prime Minister Dr. Mahathir. One of their key promises was to abolish the Goods and Services Tax (GST) and reintroduce updated Sales and Services Taxes (SST) within his first one hundred days in office. Malaysia had the the SST for 40 years before it was replaced by the GST in 2015.

On 1 June 2018 the new Prime Minister issued an Order that lowered the GST rate to zero; this does not cover supplies that are already exempted. All GST registrants will continue to be subject to all other GST requirements, including the filing of GST returns, bad debt adjustments, claiming of input tax credits where applicable and issuance of tax invoices.

The Order effectively removes GST in Malaysia, but abolishing it would require Parliament's approval.

The Bill for the Goods and Services (Repeal) Act 2018 is expected to be passed within the next few days.

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