An SME boss asked me.
“GST was only 6%. SST can be 10%. So SST is more expensive, right?”

I replied.
“Not necessarily.”

He looked confused.
“Boss, 10% is bigger than 6%. Even my calculator knows that.”

I laughed.
“Your calculator is correct. But your understanding of tax may not be.” 😂

Let me explain.

FIRST. THE OLD GST SYSTEM.

Malaysia introduced GST at 6% in 2015.
Imagine a product passing through three businesses.

Factory.
Wholesaler.
Retailer.

Factory sells for RM100.
GST = RM6.

Wholesaler sells for RM150.
GST = RM9.

Retailer sells for RM200.
GST = RM12.

Some people will say.
“Wah! Government collects RM6 + RM9 + RM12 = RM27!”

Wrong lah. 😂

Under GST, eligible businesses could claim back GST paid on purchases.

Assuming no input GST at the factory:

Factory pays RM6.
Wholesaler pays RM3.
Retailer pays RM3.
Total GST collected = RM12.
Final customer pays RM212.

Not RM227.
This is called the input tax credit system.

GST. THE GOOD SIDE.

Businesses can recover eligible input GST.
Tax is more transparent.
Less tax-on-tax effect.
Broader tax base for government revenue.

GST. THE BAD SIDE. 👎

More compliance and paperwork.
More businesses may need to register.
Delayed refunds can hurt cash flow.
More goods and services may be taxed.

SECOND. HOW SST WORKS.

Malaysia replaced GST with SST in September 2018.

SST means two different taxes.
Sales Tax.
Service Tax.

Let’s start with Sales Tax.

Factory sells a taxable product for RM100.
Assume Sales Tax is 10%.
Sales Tax = RM10.
Wholesaler pays RM110.
But unlike GST, the wholesaler generally cannot claim back that RM10 through an input tax credit system.
That RM10 becomes part of the purchase cost.

The wholesaler sells to the retailer.
Retailer sells to the customer.
Normally, no additional Sales Tax is charged on these resales.
But the original RM10 may already be built into the final price.

Customer checks the receipt.
No Sales Tax shown.
“Good. No tax!”
Not necessarily, boss. 😂
Sometimes the tax you cannot see is already inside the price.

And remember.
SST is not automatically 10%.

Sales Tax may be 5%, 10%, a specific rate or exempt.
Service Tax is generally 8%, with 6% and other specific rates applying to certain services.

SST. THE GOOD SIDE. 👍

More selective taxation.
Many essential goods are exempt.
Generally fewer businesses need to register.
Less compliance for some SMEs.

SST. THE BAD SIDE. 👎

No general GST-style input tax credit.
Tax may become a business cost.
Costs may be passed to customers.
Different rates and exemptions create confusion.

SST is not necessarily simple anymore.
Since July 2025, Malaysia has expanded the scope of taxable goods and services.

We thought SST would be simple.
Customs said, “Surprise!” 😂

THIRD. SO WHICH ONE IS BETTER?

GST is more transparent and allows eligible input tax recovery.
But it covers more transactions and creates more compliance work.

SST is more selective and exempts many essential goods from Sales Tax.
But some taxes become hidden business costs.

GST 6% does not automatically mean cheaper prices.
SST 10% does not automatically mean higher prices.
It depends on exemptions, business costs and pricing decisions.

TODAY IS BUDGET 2027 DAY.

While everyone waits for the government’s announcement, I have one question.

Forget politics for a moment.
Think like a consumer.
Think like an SME boss.
Think about your own pocket. 😂

If you could choose, which system would you prefer?

A. GST. More transparent, input tax credits, but more compliance.
B. SST. More selective, but some taxes are hidden in prices.
C. Rojak. Take the good parts of GST and SST. Leave the headaches behind.

I have experienced both systems as an auditor and tax agent.
Now I want to hear from Malaysians who actually pay the tax.
A, B or C? And WHY?