The implementation of the Goods and Services Tax (GST) has reduced reliance on oil-related revenue and cushions the impact of lower crude oil prices. According to the Economic Report 2015/2016, the share of oil-related revenue to the country's total revenue has declined from 41.3 per cent in 2009 to 30 per cent in 2014, though average crude oil prices remained high at USD95 per barrel during the period.It said the share was expected to further decline to 19.7 per cent of total revenue this year due to a sharp drop in crude oil prices.
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On the other hand, the share of non-oil revenue has increased from 58.7 per cent in 2009 to 70 per cent in 2014, and is expected to further increase to 80.3 per cent in 2015.The report said oil-related revenue was estimated to register 3.8 per cent while non-oil revenue, at 15.4 per cent in 2015. The GST, which was implemented on April 1 this year to replace the Sales and Services Tax (SST), has also contributed to the increase in the share of non-oil revenue.
This year, the Federal Government revenue is expected to increase to RM222.5 billion while its share to Gross Domestic Product (GDP) is projected to sustain at 19.2 per cent amid lower collection from oil-related revenue and non-tax revenue.Indirect tax is forecast to surge by 42.2 per cent to RM53.3 billion, driven by the introduction of GST, with the number of registered companies having increased to 390,378 as of September this year in comparison to a lower initial estimate of 146,000 companies.
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The report said the higher number of registrants would lead to improved tax compliance among companies. In 2015, GST collection is estimated at RM27 billion as compared to the original projection of RM21.7 billion.It said the introduction of GST was an important tax reform as it was a fair and efficient tax system, and broadened the tax base, and added that the GST was implemented with minimal disruption due to close cooperation between the government and businesses, as well as wider public acceptance.
