Prime Minister Anwar says Malaysia is considering consumption tax reform
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Malaysian Prime Minister Anwar Ibrahim announced on August 18, 2026, that his government was considering a reform of the nation's consumption tax regime to improve efficiency and progressivity. Anwar stated that the current sales and services tax (SST) had systemic weaknesses and that the government was evaluating a hybrid model that might incorporate aspects of a broad-based goods and services tax (GST). This consideration follows the 2018 repeal of the previous 6 percent GST, which had been abandoned due to public concern regarding rising living costs. The government currently faces the dual challenge of meeting fiscal targets while mitigating the financial impact on the poorest segments of the population.
Consequences
The government is expected to present its 2027 budget in parliament on October 9, which will address cost-of-living pressures and fiscal strategy. Given that targeted fuel subsidies have already generated 15.5 billion ringgit (US$3.8 billion) in annual savings, the upcoming budget will likely further refine these fiscal measures to manage the government's subsidy bill amidst ongoing energy cost fluctuations.
Sources
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