Malaysia's Retail Industry to Record a Higher Growth due to a Three-Month Tax Holiday

Updated on Wednesday 18th July 2018

A three-month long tax holiday is expected to increase the retail industry growth this year from 4.7 percent to 5.3 percent. The Malaysia Retailers Association released an adjusted forecast for the GST-exempt period during which spending patterns are very likely to change. This tax holiday is possible during the transition period between the Goods and Services Tax and the Sales and Services Tax.

A positive evolution for the Malaysian retail sector

The latest quarterly adjustments made by Retail Group Malaysia talk about a positive change in the overall growth of the retail business sector in 2018. According to a recent statement, the March estimate of 4.7 percent was revised to 5.3 percent.

This positive change was possible because of the GST exemption that takes place between June 1st and August 31st. During this time, the goods and services tax, usually applicable in the retail sector, will not be collected. What’s more, retail sales were also encouraged by Father’s Day, the start of the school holidays, the Raya festive period and the recently-finished World Cup. In light of these holidays and the GST exemption, many types of companies are practicing important discounts in an effort to attract clients. Experts believe that tourists will also play a role in the total expenditure.

Experts expect that the bulk of the retail sales will end in August, however, the predictions for the final quarter of 2018 remain optimistic as the expected growth rate s through to be around 3.5 percent.

Taxation in the retail industry in Malaysia

The so-called “tax holiday” is, in fact, the transition period from the Goods and Services Tax (GST) to the Sales and Services Tax (SST). Before the latter is introduces, clients in Malaysia enjoy a period of discounts because of the zero percent goods and services tax. 

Our team of lawyers in Malaysia can give you more information about the retail market and how to open a company in this business field but also about the most recent legislative changes. Contact us for complete legal advice.