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True to its pre-14th General Election manifesto, the new Pakatan Harapan government is carrying out its pledge to abolish the Goods and Services Tax (GST) and replace it with the Same Sales Tax (SST). While it awaits approval from the parliament to legalise SST in Malaysia again, the nation has been given what the government calls a ‘tax holiday’, whereby the previous six per cent GST has been set to zero per cent. As Malaysia enjoys its zero per cent GST while the PH government makes preparation for the implementation of SST, BizHive Weekly explores how this might affect different sectors in Malaysia: “In 2017, GST revenue was RM44.3 billion or 3.3 per cent of GDP. Unless the government introduces other offsetting measures at least over the next one to two years, the GST’s removal will have a net negative effect on government revenue, even accounting for some budgetary cushion from higher oil prices. Beyond 2018, the reintroduction of the SST will create a revenue shortfall of 1.7 per cent of GDP if the GST remains at zero. The ministry of finance said it will announce specific measures that will cushion the shortfall.” Anushka Shah, Moody’s Investors, vice president and senior analyst “So we know from the starting point that it has been decided, there’s no question about it. The issue is how it is going to be accomplished. Do we zerorise it? So, from six per cent it becomes zero per cent. The ultimate objective is to put more purchasing power in the hands of the people, especially the lower and middle income groups.” Tan Sri Zeti Akhtar Aziz, member of Team of Eminent Persons “Apart from assessing the immediate change to the current business operations, companies should also start planning on how the change will affect their short term and long term business plans. Major business transactions may be impacted by this change which can then impact on cashflow. There must also be interim measures in place in the event a replacement law is enacted, in the near future. Changes are happening very quickly and businesses must adapt to remain compliant and competitive.” Ng Sue Lynn, KPMG Malaysia, Indirect Tax Practice executive tax director