Malaysia is open to studying ways to incorporate elements of the Goods and Services Tax (GST) into the existing Sales and Services Tax (SST) as part of efforts to build a more progressive and efficient taxation system, Prime Minister Anwar Ibrahim said Tuesday.

Anwar, who is also finance minister, said the government was prepared to consider proposals on how the strengths of both tax systems could be combined while ensuring that the tax burden does not disproportionately affect lower-income Malaysians.

“We need to find a new way to determine a tax system that is more progressive and efficient,” Anwar said in his closing remarks at the Budget 2027 engagement session.

He stressed, however, that the government has no immediate plan to reintroduce the GST in its previous broad-based form, saying such a system could affect all Malaysians, including those in lower-income groups.

Anwar acknowledged that GST has advantages in terms of transparency and efficiency, but said Malaysia needs to examine how those strengths could be incorporated into a system that is fairer to the people.

The government is therefore looking at whether elements of GST and SST can be combined to create a new model in which the tax base is broader but the rate remains low, he said.

Malaysia introduced GST at a 6% rate in 2015, but the tax was reduced to zero in June 2018 and subsequently replaced by SST in September that year following widespread public opposition over its impact on living costs.

The government has since expanded the SST framework to broaden the tax base and strengthen revenue collection, while maintaining a more targeted approach than the broad-based GST.

Anwar’s latest remarks indicate that Putrajaya is considering tax reform rather than a straightforward return to the former GST regime, with the focus on improving efficiency, widening revenue sources and making the system more progressive.