No decision yet if GST will apply to petroleum products in Malaysia

File photo: Night view of Petronas Twin Towers

KUALA LUMPUR - The decision on whether the goods and services Tax (GST) will apply to petroleum products will very much depend on the projected savings that could be derived from the Government's subsidy rationalisation programme, said deputy Finance Minister Datuk Ahmad Maslan.

"We are carrying out a study on the subsidy rationalisation headed by the Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar, and when it is completed, we will be able to see how much we could save," he told reporters on the sidelines of the International Seminar on GST 2014 here yesterday.

If the savings from the reduction or removal of petroleum product subsidies prove to be substantial, then there is more wiggle room for the Government when it comes to imposing GST.

"If the savings is enormous, the Government may even decide not to impose GST on RON 95 and other petroleum products. But as of now, there is no decision yet," said Ahmad.

On the impact of GST on the real estate sector, Ahmad said prices would only increase between 1.5 per cent and 2 per cent, and not between 3 per cent and 4 per cent as claimed by certain quarters.

"When GST is implemented on April 1, 2015, the one-off increase of 1.5 per cent will be based on an already stable situation. Don't look at current prices and then add 1.5 per cent to it.

"Besides, the Government may announce new measures to control escalating prices in Budget 2015 which will be tabled on Oct 10," he added.

Earlier during the conference, the Finance Ministry's tax division undersecretary Datuk Siti Halimah Ismail hinted that fuel would likely attract GST as the item has yet to be included in the list of GST-exempt or zero-rated items so far.

According to Siti Halimah, some of the items that are zero-rated or exempt so far are the first 300 units of electricity for domestic use, foodstuff, agriculture products, poultry and eggs, seafood, treated water for domestic use, as well as exported goods and services.

Items that are exempt include public transport, expressway toll, private health and education services, land for general use, and financial services.

Siti Halimah had also said that the list will be put up for gazette this week, but Ahmad clarified later that this wasn't the case.