Malaysia: US tax exemption not a precedent for future deals

Tax exemptions granted to the US in recent trade negotiations should not be viewed as a blanket precedent for other foreign countries to seek the same benefit from Malaysia, said Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz.

"Any consideration of similar exemptions for other countries would depend on negotiations, reciprocal offers, and whether such arrangements bring tangible benefits to Malaysia," Zafrul told Parliament during his winding-up speech during the debate on the 13th Malaysia Plan on Tuesday.

He also stressed that the sales tax exemptions granted to the US was a result of multiple rounds of discussions that were finalised on the basis of mutual benefit.

He was responding to a question from opposition MP and former education minister Datuk Dr Mohd Radzi Md Jidin (PN-Putrajaya), who asked if the government was prepared to face similar demands for tax exemptions from other countries.

The minister added that all exemptions, even those justified on grounds of national security or public interest, remain subject to interpretation and dispute resolution, as stipulated under international trade mandates.

The minister emphasised that the usual international legal mechanisms and "rights protection" (in this case, the rights of other member states to a level playing field) are not suspended just because a domestic government justifies its actions on grounds of national security or public interest. The exemption remains subject to the established legal framework for international trade.

He also addressed the broader global trade landscape, noting that Malaysia is not alone in dealing with complex dynamics that have forced many countries to move away from the principles of multilateralism under the World Trade Organisation (WTO).

"Many countries are moving away from WTO multilateralism to safeguard their economic and political interests. This is largely due to measures by the US, which are seen as creating a new global trade model aligned with current geopolitical and geoeconomic shifts," Zafrul said.

Source: The Edge Malaysia