Malaysia weighs GST input tax credits for manufacturing and construction sectors

Nurhisham Hussein, economic adviser to the Prime Minister’s Office, indicated that the government is evaluating GST input tax credits for industries such as manufacturing and potentially construction, where multi-stage production creates a cascading tax effect. The discussion surfaced during a podcast on the 2027 budget, but no specific rollout date or scope was provided. Former Bangi MP Ong Kian Ming cautioned that a mixed SST-GST system could become a compliance nightmare and distort fiscal projections.

Earlier, a government spokesman confirmed a full study on GST-SST integration, drawing lessons from the former GST regime and current SST issues, though no deadline was set. Deputy finance minister Liew Chin Tong reiterated that the SST will stay in place while useful GST features may be added to avoid double taxation. The GST, introduced in 2015 at 6%, was zero-rated in 2018 and replaced by the SST later that year.