Not exciting for taxpayers: KPMG
Published on: Sunday, October 23, 2016
Kuching: Small and medium enterprises (SMEs) form 97 per cent of all businesses in the country and expectations were that there would be targeted tax measures to support SMEs towards transformation by innovation to improve productivity and be globally competitive to support domestic growth. The disappointment in the lack of these in the budget is somewhat made up by the proposal to reduce the income tax rate of SMEs by 1pc (from 19pc to 18pc) for the first RM500,000 of chargeable income, said KPMG Executive Director Regina Lau.Non-SMEs have something to cheer for in the form of a tiered reduction in the income tax rate based on the percentage increase in their chargeable income over the immediately preceding year.
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Hence, non-SMEs will be looking at a tax reduction of 1pc for a minimum increase in chargeable income by 5pc to a tax reduction of 4pc for an increase in chargeable income by at least 20pc," she said.Individuals, however, are greatly disappointed that their income tax rates remain status quo. Many had hoped for some reduction since GST is now in full force. It is equally disappointing that some reliefs long overdue for review, such as that for EPF and life insurance premiums, remain status quo."While a new relief of up to RM2,500 is introduced for lifestyle, it is in fact a combination of the existing reliefs for purchase of reading materials, computer and sports equipment which total up to RM4,300 if one qualifies to claim for all the reliefs.
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"Although the new relief means that the relief for purchase of computer is no longer restricted to once in every three years, still, in consolidating the three existing reliefs to one, effectively the amount that one can claim is reduced," she said.Regina noted that since lifestyle relief will only be given up to the actual amount incurred capped to a maximum of RM2,500, the Government should consider giving it as a standard relief (like personal relief) without the need to substantiate the claim with invoices/official receipts.
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"After all, the lifestyle expenses which the relief purports to cover are what one would actually spend on in this day and age. In addition, it will help reduce compliance costs for taxpayers," she said.She said one notable proposal which helps working parents is the new tax relief of RM1,000 for enrolling their children aged up to six years old in registered pre-schools and nurseries. "While we welcome the new tax relief of up to RM1,000 every two years for the purchase of breastfeeding equipment by mothers, more individuals especially in the M40 group would benefit if the Government had chosen to revise the EPF/life insurance premiums relief instead."She said generally, the budget wasn't exciting for taxpayers. Stay up-to-date by following Daily Express’s Telegram channel.
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