KUALA LUMPUR (Sept 3): Malaysian manufacturers are urging for a break from new taxes in the upcoming Budget 2027 while asking the government to consider replacing the tax regime.
The current sales and services tax (SST) continues to create “cost and competitiveness concerns”, the Federation of Malaysian Manufacturing said following the release of the latest business conditions survey. The trade body is asking the government to prioritise cost relief and support for investment.
“No more new taxes by the government in the new budget,” Tan Sri Soh Thian Lai, president emeritus of the federation, pleaded at a press conference on Thursday.
Malaysia's SST framework was broadened in 2025 to cover selected non-essential goods and additional service categories. However, the expansion coincided with an increase in minimum wage and electricity tariffs, leading to a surge in cost of doing business.
The outbreak of the Iran War this year has added to the cost worries amid disruption to supply of key raw materials and energy inputs.
Manufacturers are calling for the goods and services tax (GST) to be reintroduced under Budget 2027 at a lower rate of 3%, which would be more manageable for businesses and consumers than the previous rate of 6%, said the federation’s current president Jacob Lee Chor Kok.
“We feel that a reasonable 3% will be more acceptable to the market,” he said at the same event on Thursday.
Prime Minister Datuk Seri Anwar Ibrahim has previously said the country was not ready for a broad, consumption-based GST though the government is open to incorporating some of its features into the existing tax regime.
Anwar, who is also the finance minister, said the SST would remain the foundation of the national tax system for now.
If GST is not reintroduced, manufacturers prefer input tax credits or offsets to address cascading taxes and embedded production costs, Lee said. “We still insist on that because we feel that GST is a better tax scheme,” he added.