Malaysia: Return to previous tax regime could lower production costs for furniture makers

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The president of the Malaysian Furniture Council (MFC) has said the repeal of the Goods and Services Tax (GST) and the re-introduction of the Sales and Services Tax (SST) will not unduly impact the domestic furniture industry as exports are not taxed under the SST.

In terms of domestic demand, if the SST is reintroduced at 10% then there would be little change in retail prices for furniture. The up-side to the return to the previous tax regime is that production costs could fall as the SST is not applied to labour inputs.

The MFC expects Malaysia's furniture exports to expand around 5% from the RM10.14 billion recorded in 2017 on the back of firming demand in the US, China and the Philippines.

According to data from the Malaysia External Trade Development Corporation, the US remained the main furniture export market in the first four months of this year. In the same period furniture exports to China jumped over 50% year on year to RM92 million.

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