PETALING JAYA: Budget 2018 could see a reduction in corporate personal income taxes in the wake of rising cost of living.
The Socio-Economic Research Centre (SERC) executive director Lee Heng Guie opined that the government’s priority would be addressing the higher cost burden, which not only affects the people but also businesses.
As the regional countries are moving towards a more competitive tax structure, he is hoping that the government could lower the corporate tax.
Associated Chinese Chambers of Commerce and Industry of Malaysia’s (ACCCIM) SMEs and Human Resource Development Committee chairman Koong Lin Loong concurred, saying that the tax rate on chargeable income up to the first RM500,000 should be reduced to 17% from the current 18%.
Moreover, he said the RM500,000 threshold is too low and that it should be increased to RM1 million or RM2 million.
Koong stressed that Malaysia should follow the regional countries’ steps in reducing the corporate tax aggressively.
“The Asian countries are very aggressive. They have lowered it down to almost 20%. Can we have a 1% reduction per year?”
Lee opined that the 1% to 4% tax rate reduction for companies with significant increase in taxable income announced in the last budget was insufficient to address the businesses’ needs.
“It will be more impactful and cost savings if the government can provide outright reduction.”
On personal income tax, Lee is of the view that “it is not much” to ask for 1% to 2% as the people will have more disposable income for daily expenses.
“We know the government will still allocate money for capex, but if you can give direct tax rebate and tax reliefs or even tax cut into the pockets of households, I think it is more direct and the people can spend it.”
Koong also pointed out that the top range of 28% for personal income tax is too high, which will discourage foreign direct investments and the inflow of expatriates.
He said the ideal top range rate should be 26%, the level before it was raised to 28% a few years ago.
“Those days personal income tax is similar to corporate tax, but now it is the other way round. Corporate tax is reducing, but they (the government) increased the personal income tax.
The government need to readjust this, otherwise foreign investors see the Malaysian tax is too high.”
Meanwhile, Koong also hopes the personal relief of RM9,000, will be increased to RM12,000 to RM13,000.
“This RM9,000 relief has been stagnant for the past five to six years, it’s time to increase to address the high cost of living. We also expect higher tax relief for children, currently is about RM2,000 per child, so we think it should double. Let the parents to have more disposable income.”
Source : The Sun Daily