Published: Friday July 11, 2014 MYT 12:00:00 AM
Updated: Friday July 11, 2014 MYT 8:35:23 AM
Updated: Friday July 11, 2014 MYT 8:35:23 AM
Treasury will rely less on direct taxes with GST
BY ISABELLE LAI
Tax book: (from left) Tax Advisory and Management Services Sdn Bhd executive director Yong Poh Chye, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah, Bernama GM Datuk Yong Soo Heong and chairman Datuk Abdul Rahman Sulaiman after the launch of the National GST Conference 2014. — Bernama
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KUALA LUMPUR: The additional revenue brought in by the goods and services tax (GST) will further reduce the Treasury’s dependence on direct taxes, said Datuk Seri Ahmad Husni Hanadzlah.
The Second Finance Minister said that with less direct tax burden on the people and businesses, there would be greater investment and even consumption within the domestic economy.
“The strategic impact would be that Malaysia, in percentage terms, will be less dependent on the external sector, on exports,” he said in his keynote address at the National GST Conference in Kuala Lumpur yesterday.
He said the Finance Ministry had already begun the process of reducing dependence on direct taxes, whereby personal and corporate income taxes had been lowered gradually over the years from 30% and 40%, respectively, to 26% and 25%. For SMEs, it has been lowered to 20%.
Husni said the GST, which would be implemented on April 1, 2015, would also simplify the tax system, encourage compliance and reduce administrative and business costs.
“It is essential that an efficient tax regime is provided for them (private sector). An unwieldy tax regime is expensive to manage and costly to administer,” he said.
As its implementation will cover three quarters of 2015, he said the Government was looking at earning roughly RM2.5bil in addition to the revenue secured under the sales and service tax.
He said this would jump to RM8bil in 2016 and keep increasing as more and more companies came onboard.
Husni said the Government was also intensifying efforts to promote the adoption of industrial design into exports, especially from the manufacturing sector, so that it could justify higher sales prices and edge its gross domestic product higher.
However, he said such efforts to upgrade this across Malaysia’s economy required money, pointing out that every tax incentive introduced by the Treasury was money spent despite incurring no immediate cash outlay.
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