KUALA LUMPUR (May 18): Ernst & Young Malaysia (EY) has hailed the Malaysian government's move to zero-rate the goods and services tax from June 1 as a "good" interim measure, as it allows a more gradual transition from a full GST regime, to the sales and services tax (SST).

"This [move] also allows time for the government to gather views, as it formulates the new SST. It is hoped that the introduction of the new SST will be done in a manner that is sensitive to business operations and mindful of resource and costs associated with change," the tax advisory and audit agency said in a statement today.

As to whether there will be other tax changes, EY anticipates a few more policy shifts in due time. 

It expects a "comprehensive review of tax policies and framework, as the government considers how it can implement and fund social and development plans, while keeping tax rates competitive".

Potentially, new taxes may even be considered.

Meanwhile, EY's Asean tax managing partner Yeo Eng Ping said the company is also anticipating refinements of tax incentives to encourage the right investments in Malaysia to make the country a more attractive investment destination and spur its transformation into a new economy. 

EY thinks there may be a focus on helping particular sectors such as the small and medium businesses, and an assessment of tax enforcement and audits, to ensure the approach is one that encourages cooperative compliance, where enforcement is pursued with reasonable measure.

"The transition from GST to SST, likely in a relatively short time frame, will require careful management.

"Organizations need to deploy sufficient focus and resources to ensure a smooth transition, avoiding pitfalls and seizing new opportunities," Yeo added.