“The new tax regime in place will also help address the issue of black market or underground economy.”

GST can contribute additional 0.3pc to GDP

PUTRAJAYA: The country’s gross domestic product (GDP) will grow an additional 0.3 per cent in the first 12 months of the implementation of the goods and services tax (GST) on a back of the expectation that exports will increase.

Deputy Finance Minister Datuk Ahmad Maslan said exports are expected to increase by an extra 0.5 per cent by then as goods to be exported will be zero-rated.

“So our exports will be competitively priced and highly marketable in the overseas markets,” he told a media conference, here, yesterday.

The six per cent GST system will be implemented on April 1 2015.

Ahmad Maslan said having the new tax regime in place will also help address the issue of black market or underground economy.

He said in the emerging economies, the underground economies — where goods or services are traded illegally — typically constitute 30 per cent of these economies’ GDP.

While for the developed economies, the figure stood between 10 and 15 per cent.

“Imagine Malaysia’s GDP of RM1 trillion and 30 per cent of that is RM300 billion. That is a huge amount and we hope once we attain the developed nation status, we can halve the amount of lost revenue in the black market.”

Ahmad Maslan pointed out that the government anticipates to collect a net revenue from GST collection of RM3.7 billion in 2015 and RM9.09 billion in 2016.

While the government conceded that there will be some impact on the prices of goods in the initial stage of the GST implementation, within a few months, prices will stabilise because GST is able to reduce the cost of doing business, he said.

He added unlike the current sales and services tax, with the GST, consumers will not experience the compounding or cascading effect as producers or manufacturers will only be taxed once, of which they can later apply for tax refund.

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