Selangor Journal
The Finance Ministry complex in Putrajaya. — Picture by BERNAMA

Govt expected to generate over RM3 bln in additional revenue from service tax

KUALA LUMPUR, March 6 — The government is expected to collect RM3.45 billion in additional revenue from expanding the service tax’s scope and increasing the service tax from six per cent to eight per cent, said the Finance Ministry.

It was responding to Pasir Mas MP Ahmad Fadhli Shaari’s query via a written reply posted on the Parliament website today. He had asked about the increase in national revenue when the new service tax rate took effect on March 1.

During Budget 2024’s tabling last year, the government announced an increase in service tax, which excludes services like food and beverages, telecommunication services, and vehicle parking space provision services.

It also announced expanding the service tax scope to include logistics services, brokerage, guarantee sponsors, and karaoke.

In the meantime, the ministry said the Federal government’s revenue in 2024 is projected to increase to RM312.159 billion after taking into account Budget 2024’s tax measures, contributed by higher tax revenue collection and better economic growth.

Tax revenue remains the main contributor to the Federal government’s revenue at 79.5 per cent of the total revenue, equivalent to 12.57 per cent of the Gross Domestic Product (GDP) rate.

This also covers non-tax revenue, representing 20.5 per cent and equivalent to 3.24 per cent of the GDP.

“The government enacted the Fiscal Responsibility Act (FRA) 2023 with effect from January 1 this year to strengthen Malaysia’s fiscal governance and discipline, increase revenue mobilisation measures, broaden the tax revenue base, improve and review the tax structure and legislation, as well as the provision of tax incentives.

“This will be realised by implementing the Medium Term Revenue Strategy to ensure medium-term tax planning is more organised and appropriate with spending,” it said.

The ministry was responding to Pasir Puteh MP Datuk Nik Muhammad Zawawi Salleh’s query regarding the government’s measures to ensure an increase in the tax revenue collection rate which exceeds 12 per cent of GDP, so more economic recovery programmes can be accelerated.

— Bernama

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