GOVT EXPECTED TO GENERATE RM3.45 BLN ADDITIONAL REVENUE FROM SERVICE TAX

KUALA LUMPUR, March 6 (Bernama) -- The government is expected to collect additional revenue amounting to RM3.45 billion from the expansion of the scope of service tax and the increase in the service tax from six per cent to eight per cent, according to the Finance Ministry.

The ministry said this in a written reply posted on the Parliament website today in response to a question from Ahmad Fadhli Shaari (PN-Pasir Mas) regarding the increase in national revenue when the new service tax rate comes into effect on March 1.

The government has announced in Budget 2024 an increase in service tax excluding services such as food and beverages, telecommunication services and vehicle parking space provision services.

The government also announced the expansion of the scope of service tax 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 the tax measures of Budget 2024, contributed by higher tax revenue collection and better economic growth.

According to the ministry, tax revenue remains the main contributor to the federal government's revenue which is 79.5 per cent of the total revenue, equivalent to 12.57 per cent of the Gross Domestic Product (GDP) rate.

The amount also covers non-tax revenue representing 20.5 per cent which is equivalent to 3.24 per cent of GDP.

“The government enacted the Fiscal Responsibility Act (FRA) 2023 with effect from Jan 1, 2024 to strengthen the country'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 step will be realised through the implementation of the Medium Term Revenue Strategy to ensure that medium term tax planning is more organised and appropriate with spending," it said in reply to a question from Datuk Dr Nik Muhammad Zawawi Salleh (PN-Pasir Puteh) regarding the government's measures to ensure that there is an increase in the rate of tax revenue collection exceeding the rate of 12 per cent of GDP so that more economic recovery programmes can be accelerated.

-- BERNAMA