Finance Minister Lim Guan Eng today announced that the sales and services tax (SST) rate will be set at 10% for sales and 6% for services, with the bill on the tax expected to be passed in Parliament next month.
In his keynote address at the National Tax Conference 2018 at KLCC today, he said the SST was expected to bring in revenue of RM4 billion.
The government earlier said the SST would replace the 6% goods and services tax (GST) on Sept 1.
It expects to lose RM21 billion in revenue this year after zero-rating the GST on June 1.
However, the reintroduction of the SST, coupled with rising crude oil prices and extra dividends from government-linked companies, is expected to bring in an additional RM14.4 billion in revenue this year.
To fill up the gap left by the GST, Lim added, the finance ministry had identified RM10 billion worth of expenditure saving measures including downsizing and abolishing overlapping and non-urgent programmes.
Exorbitantly priced mega projects will also be cancelled or deferred, he said.
In his speech, he also said the Light Rail Transit 3 (LRT3) project had to be scaled down due to 1MDB and other financial scandals.
He added that there would be no more office raids accompanied by officers with firearms on companies accused of tax evasion.
“No more rough tactics like in the past. Such tactics are only for bad people,” he said.