KPMG says Budget 2014 must promote growth, cut deficit

Published: Saturday October 12, 2013 MYT 12:00:00 AM 

Updated: Saturday October 12, 2013 MYT 9:15:08 AM

Raslan: ‘The ultimate goal is for Malaysia to attract and retain quality talent.’

KUALA LUMPUR: Audit, tax and advisory services provider KPMG Malaysia expects Budget 2014 to contain substantial fiscal reform measures aimed at spearheading sustainable growth and reducing the deficit.

In a statement yesterday, managing partner Mohamed Raslan Abdul Rahman said tax reform was an important issue that generated global discussions.

“The need to reduce the problem of non-compliance and boost administrative efficiency in our tax system to enhance revenue collection is critical,” he said.

He said the firm hoped that the budget would provide incentives to promote talent development and boost the employment of fresh graduates, particularly in the professional services industry.

Raslan said it was crucial that organisations such as KPMG were encouraged to bridge the gap between the corporate sector and educational institutions for Malaysia to achieve a knowledge-based economy. “In doing so, we not only educate but also instil skills that are much needed in today’s business environment. The ultimate goal is for Malaysia to attract and retain quality talent with expertise to support the country’s key growth areas,” he said.

Meanwhile, KPMG Tax Services Sdn Bhd head of tax Khoo Chin Guan said the budget would touch on the goods and services tax (GST), with a firmer timeline for its implementation. “While we do not expect the reduction of income tax just yet, we view the gradual introduction of the GST as a positive move by the Government. 

“Broadening the tax base is critical to help the Government reduce over-dependence on income tax and oil revenue,” he said in the statement.

He said the GST should not be a burden to the lower- and middle-income groups, as basic necessities such as sugar and rice would be “zero-rated” and reduce the cascading effect of our present sales tax and service tax system.

However, he said, both consumers and businesses required additional educational awareness on the GST.

KPMG Malaysia said while the momentum of economic growth was expected to be sustained in the coming fiscal year, the spectre of public debt projected to reach RM546bil (53% of gross domestic product) by year-end posed a number of economic challenges.

The audit firm said in pursuing the ambition of becoming a high-income nation by 2020, it was essential for Budget 2014 to promote international competitiveness and attract investors into Malaysia, while balancing public expectations and introducing innovative measures to build the equitable and inclusive society the Government was aiming for.

It said this was no mean feat, given the sizeable budget deficit, which might necessitate the implementation of tough fiscal reforms to pave the way for longer-term gains and economic robustness. “While such reforms could potentially be controversial, there is a genuine need to adopt a prudent fiscal budget to safeguard against potential adverse effects from the increasingly volatile global economy,” it said.

Nevertheless, the audit firm viewed positively the possible increases in the real property gains tax and stamp duty for third property purchases. – Bernama