As of 1st June 2018, the Malaysian standard VAT rate is reduced to 0% from 6%.
This is a result of the 9th May 2018 Malaysian general election, which brought in the first change of government since 1957. As part of its manifesto, the then opposition party had pledged to abolish the vastly unpopular GST system if elected and reinstate the Sales and Services Tax.
The new government published six orders on 16th May 2018, which as well as reducing the standard rate also repealed several GST Orders. The finance ministry further issued a statement telling registered businesses that they are still bound by the current GST regulations including those that apply to auditing and the penalties regime.
Reducing the standard VAT rate to zero is a helpful interim measure because it enables businesses to recover the input tax they incur on their supplies before 1st June 2018. However, it remains to be seen if parliament will completely dismantle the Malaysian GST system, in effect since 2015, by repealing the Malaysian GST Act 2014.
If the impending changes impact your business or indeed, if you have any questions on the above, please do contact us.