Forcing telcos to absorb GST sends wrong signal to investors, says Shabery Cheek

Telecommunication companies should not be forced to absorb the GST, says the communications and multimedia industry minister. – The Malaysian Insider file pic, May 20, 2015.

Putrajaya cannot force telecommunication companies (telcos) to absorb the goods and services tax (GST) as it will discourage foreign investors from setting up shop in Malaysia, Communications and Multimedia Industry Minister Datuk Seri Shabery Cheek told the Dewan Rakyat today.

He said the public must understand that the underlying principle of the GST was that it was a consumption tax, so companies should not be ordered or expected to absorb it on behalf of consumers.

“Will it be a practice in the country, to send a signal to the international world that to do business in Malaysia, to invest in Malaysia, GST must be absorbed by the companies? That is not the signal we want to send out,” Shabery said during question time.

He said this in response to Datuk Johari Ghani (BN-Titiwangsa), who had asked why the telcos could not absorb the 6% GST, when in the past, they had absorbed the now-abolished 6% sales and service tax (SST).

Shabery said it was unfair for the public to demand telcos absorb the GST on that basis.

“Companies like Mydin recently announced it will absorb the GST for one or two months. Surely we cannot tell them, before this you could absorb it, so you must continue to absorb it?

“That is not the signal we want to send to industries,” said Shabery.

But he added that to balance out the effects of the GST, telcos have been told to lower their airtime rates.

“When mobile prepaid cards were first introduced, consumers paid RM2.40 for a minute, but after it was reduced, now it’s 5 sen or 3.3 sen a minute.

“That’s why to balance out the GST, we are requesting that they reduce their rates further. So that the airtime they get is more or the same as before (GST was introduced).”

- TMI