Budget 2012 may see significant changes in corporate tax

ARKIB : 06/07/2011

KUALA LUMPUR July 5 — Budget 2012, to be tabled in parliament on Oct 7, may see significant changes in corporate tax, says Minister in the Prime Minister”s Department Datuk Seri Idris Jala.

"I don”t want to steal the thunder from the Prime Minister (Datuk Seri Najib Tun Razak), but we may see some initiatives related to corporate taxation to be announced on budget day,” said Idris, who is also Performance Management and Delivery Unit (Pemandu) chief executive officer.

Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, will table the budget.

Companies are paying 25 per cent corporate tax currently.

The budget may also contain a review of pioneer status incentives and various tax deductions, he told reporters at the ETP update seven today.

Deputy Prime Minister Tan Sri Muhyiddin Yassin unveiled six strategic reform initiatives at the event.

Idris said there is a recommendation under the Public Finance SRI to rationalise corporate tax incentives and review deductions offered to corporations, including “step-down” on reinvestment allowance.

He also said there was a proposal for a step-down from full to partial exemption on shipping income.

Meanwhile, the broad-based tax regime will also be reviewed in tandem with personal and corporate taxation by introducing goods and services tax (GST).

"(However), We don”t have a timeline for the implementation but we are in the process of engaging with the public,” he said, adding that 143 countries have implemented the GST.

Idris said the GST will not impact the low-income earners as most of the staple products like food, commodities and services will be exempted or zero-rated.

Idris said the Public Finance SRI is projected to generate a fiscal space of RM13 billion over five years by increasing the government”s revenue and reducing expenditure.

"The bigger the space, the more avenues will be opened for the government to achieve its aspirations,” he said.

He also said the government was looking into tightening its expenditure in four areas, namely rationalising subsidies, procurements, travel expenses and transfer payments to statutory bodies.

In a bid to enhance transparency in the procurement process, he said, the government has reduced the threshold value for quotations and tenders via e-bidding from RM200,000 to RM50,000.

Accrual accounting will also be implemented to ensure a more efficient, transparent and effective fiscal management, which in turn will support the sustainability of the country”s fiscal policies, he added.

— BERNAMA

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