The Sales and Services Tax (SST) is no longer fit for a rapidly growing and economically progressive economy such as Malaysia and it is imperative for the country to expand and diversify its tax base.

Prime Minister Datuk Seri Najib Razak said Malaysia needs a more effective and equitable tax system that would help the country to secure its future.

Speaking at the International Seminar on the Goods and Services Tax (GST) in Malaysia here today, Najib said Malaysia cannot sustain its growth and development based on current revenue streams alone.

"Only one in 10 Malaysians pay personal income tax and 40 per cent of the government's revenue comes from oil and gas, a resource which we know is finite," he said.

That is why in April 2015 the government is reforming the the tax system and replacing the SST with the GST, Najib said.

Najib said the GST is a modern tax which would eliminate the inherent weakness in the current tax.

"For example, the GST has cross checking elements that would increase tax compliance and promote saving and investment," he said.

He said that as an important initiative under the Economic Transformation Programme, the GST is a strategic reform aimed at modernising our taxation system to ‎make it more effective, efficient and business-friendly.

Najib also reiterated that GST would make businesses more competitive in the global marketplace and they also would benefit from the lower cost of doing business.

"Taxes will be applied fairly among all businesses, making it a more than just tax. Put simply, it would be good for business," he added.

Najib said a lot of measures have been taken to ensure that the rakyat, especially in the lower and middle income groups, would not be burdened by the GST.

"We don't want the GST to have an adverse impact on the rakyat. That is why many goods and services wi‎ll be exempt, such as water and basic foodstuffs, transportation, education and healthcare services," he said.

Najib also stressed that price gouging would not be tolerated.

The government has strengthened enforcement action through the National Pricing Council and the distribution of a shopper's guide showing prices before and after the GST, and in addition the Price Control and Anti Profiteering Act 2011 would be used against those that break the law.

Najib appealed to all Malaysian companies to avoid the "classic Malaysian syndrome" of last-minute registration.

"The sooner you prepare, especially for the inevitable, the better," he said.

Earlier, Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar said 35,998 companies have registered for the GST with Customs as of yesterday since June this year.

The ministry targets 123,000 companies to register for the GST by year-end.