KUALA LUMPUR, May 12 – Deputy Finance Minister Datuk Chua Tee Yong has refuted allegations that there was a plan, discussions or suggestion by the government to increase the Goods and Services Tax (GST) rate from six per cent currently. Speaking to reporters at the Southeast Asia Venture Capital and Private Equity Conference 2016, he said: “There are no discussions to increase the GST rate as of now.
“As such, I hope people won’t spread the wrong news or misinformation.” He was responding to news circulating on social media that the government would increase the GST rate to eight per cent effective June 1, 2016. He also said news that the government would increase the GST after the Sarawak state election, has proven false. Chua also denied speculation that the government was looking to reduce the number of GST-free and GST-exempt items currently.
“During the recalibration of the 2016 Budget, there was a suggestion in terms of reducing the number of GST-free or GST-exempt items. One such item has always been RON 95 petrol. There was a suggestion to remove it (GST exemption). However, the government realised the impact (to the consumer) especially on inflationary pressure, and as such, it was not done,” he added.
On another issue, Chua denied a rumour on the possible reduction of the limit on annual sales to RM300,000 from RM500,000, for a business to be registered for the GST. Meanwhile, he said the government would engage with 1Malaysia Development Bhd (1MDB) on the commercial dispute between it and the Abu Dhabi state-owned International Petroleum Investment Co (IPIC).
IPIC, on Wednesday, demanded the government and 1MDB compensate the firm US$1.2 billion, plus accrued interest. This was after it paid US$52.4 million in interest on 1MDB’s 5.99 per cent bonds that it guaranteed. In April, 1MDB had stated that it attempted to meet all its obligations to IPIC, whereas the latter, had publicly denied receipt or knowledge of various financial transactions or guarantees entered into between the parties.
It in a statement said, accordingly, whilst 1MDB has the funds to have made the interest payment, it is 1MDB’s position, as a matter of principle, that it was IPIC’s obligation to do so. It said until IPIC accepts that all obligations have been met, 1MDB is obliged to withhold payments and will seek legal recourse and resolution. However, Chua said the dispute would not affect the government’s fiscal deficit target for this year. He said they are maintaining the fiscal deficit at 3.1 per cent for 2016.