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Thursday, October 31, 2013

BDO: Income tax cut may shift to consumption tax

Published: Monday October 28, 2013 MYT 12:00:00 AM 
Updated: Monday October 28, 2013 MYT 7:20:14 AM

KUALA LUMPUR: A reduction of income tax by 1% for companies and by 1% to 3% for individuals in 2016 and 2015 respectively, may reflect a future trend for Malaysia to gradually shift from income tax to consumption tax, according to BDO Malaysia.

Its head of tax advisory, David Lai, said the introduction of Goods and Services Tax (GST) was a necessary, long-deferred move by the Government. 

“While the GST would have wide-reaching implications on the nation, it is after all one of the six Strategic Reform initiatives under the Economic Transformation Programmeannounced in 2010,” he said in a statement on Saturday.

The increase in the Real Property Gains Tax (RPGT) would further curb speculation and control property prices, he said. 

“The top rate for RPGT is now 30% on gains on real property disposals within three years while disposals in the fourth and fifth years would be at 20% and 15% respectively. 

“The increase in RPGT would likely have a greater impact on the property market despite it representing a small portion of the government’s revenue,” he said.

In a separate statement, C.H. Williams Talhar and Wong Sdn Bhd (WTW) said RPGT should be equally applied to Malaysians and foreigners at the same rate. 

“For foreigners, the RPGT rate will be 30% for all five years. After five years, there is no change in the existing rates. 

“Considering that foreign investments in Malaysian properties have been consistently encouraged, RPGT should be equally applied,” it said.

On the GST, WTW said the exemption of the sale, purchase and rental of residential properties from the GST was a prudent measure to facilitate the achievement of first-time home ownership by many Malaysians. – Bernama

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