No more new tax for this year: pm
Published on: Wednesday, March 20, 2019
KUALA LUMPUR: There will be no new tax for this year, except for sugar tax which was announced during the 2019 Budget, Prime Minister Tun Dr Mahathir Mohamad (pic) announced Tuesday.
“(However), it (implementation) is delayed a bit as we want to ensure that the mechanism is effective to primarily meet our health objectives,” he said at the Invest Malaysia 2019 here.
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The excise tax of 40 sen per litre on sweetened beverages which supposed to start on April 1, 2019, however, has been postponed to July 1, 2019.
Finance Minister Lim Guan Eng announced in his Budget 2019 speech last year that the sugar tax would be on beverages that contain sugar exceeding 5 grams per 100 millilitres, as well as juices that contain more than 12 grams per 100 millilitres.
The Prime Minister also said that beginning next year, the government will use the revenue collected from this tax to provide free and healthy breakfast programme for all primary school children.
“We want our kids to be strong and healthy to perform in school,” he said.
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On other development, Mahathir said the tax reform committee (TRC) are also in the final process of finalising the proposal in enhancing tax revenue.
The proposal will address measures to reduce tax leakages, how to access the underground economy, enhancing tax administration and finding new sources of revenue, he said.
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“We are also rationalising tax incentives for investments, as the current administration and governance structures of investment incentives is highly fragmented, costly, and ineffective.”
He said Malaysia currently offers over 130 types of incentives administered by 32 Investment Promotion Agencies (IPAs), with varied roles and responsibilities, and several approving agencies.
“Our proposal entails holistic and simplified tax investment incentives that would be attractive for future investments,” he said.
Mahathir said incentives will be granted to desired sectors and types of investment that the country needs, and tie the incentives to specific Key Performance Indices.
Agencies involved in granting and approving tax incentives will also be streamlined.
The corporate tax rate in Malaysia is already competitive, he said.
For this year, the corporate tax rate will be reduced to 17 per cent from 18 per cent for Small and Medium Enterprises (SMEs) with paid capital below RM2.5 million and businesses with annual taxable income of below RM500,000.
For large companies, while the tax rate is slightly higher, the effective tax rate is less than 10 per cent due to these incentives, he explained.
Meanwhile, Malaysia is committed to friendly economic ties with all its partners especially those with whom the country has the strongest and closest links, he said.
While the government would like to see the private sector plays a bigger role in contributing towards the economy, he said it would also continue to welcome foreign investment from all countries.
“The focus is not about which country the investment originates from, but it is about the value proposition of the ventures which have to bring balanced benefits to both sides,” he said.
Fundamentally, he said the ventures must be commercially and economically sound and provide strategic advantages to the country.
“We may have differences of views - as with Singapore and China - but we see them as close partners. They are our top two key trading and investment partners. With mutual respect we will always find ways to benefit from mutual interest,” he added.
Later in the question and answer session, the Prime Minister said that the government would not be unfriendly to China as it is a big country and a big market to trade with.
“The relation is good, we do have problems but we are solving these in a professional way, I hope we can eventually reach agreement on many of the issues that we had. I’m going there specifically to learn more about this One Belt One Road (Obor) project,” he said.
On the effort to further strengthen Malaysia’s economic fundamentals, the Prime Minister said industrial upgrading through the adoption of technology is vital, in line with the national policy on the Industrial Revolution 4.0 launched last year.
“The government is also encouraging local companies to enhance their capabilities in these areas, by collaborating with multinational companies to become global and regional champions.
“These businesses are increasingly becoming borderless and we need to look at the building scale, which can only be achieved through collaborations within the country and with others outside,” he said.
Meanwhile, Tun Mahathir said that the Ministry of Finance is preparing a clear guideline on the appointment of chairman and board of directors of government-linked companies (GLCs) and its subsidiaries.
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