M'sia needs goods and services tax to attract more foreign direct investments

Published: Friday November 1, 2013 MYT 12:00:00 AM 

Updated: Friday November 1, 2013 MYT 9:14:44 AM

BY DANIEL KHOO

“Increasingly, governments around the world are trying to attract FDI
into their countries. There is every pressure on our government to ensure
our corporate and personal tax rates are competitive,” Khoo said yesterday
at KPMG’s press conference.

PETALING JAYA: The introduction of the goods and services tax (GST) in the recent budget has been described as a “necessary move” to increase foreign direct investments into the country, said KPMG Tax Services Sdn Bhd executive director and head of tax Khoo Chin Guan.

“Increasingly, governments around the world are trying to attract FDI into their countries. There is every pressure on our government to ensure our corporate and personal tax rates are competitive,” Khoo said yesterday at KPMG’s press conference.

“While one could argue that foreign investors would take into account other considerations such as political stability and availability of skilled labour, to name a few, the corproate tax rate has always remained an important criterion in the decision making,” he added.

Managing partner Mohamed Raslan Abdul Rahman said with the implementation of the GST, both corporate and personal tax rates were expected to go down.

“As announced, corporate taxes will start going down from 25% to 24%, and later on, it is expected to go down further because we want to be competitive with our neighbours. Both corporate taxes and personal tax rates are expected to go down within this five years as GST (nett collection) eventually goes up,” Raslan said.

Khoo said Malaysia was in third place among Asean countries, behind Singapore and Indonesia, in terms of FDI inflows at the recently released Economic Report 2013/2014.

“While both Singapore and Indonesia registered an increase of FDI inflows from 2011 to 2012, Malaysia registered a 17.4% drop from US$12.2bil (RM38.6bil) in 2011 to US$10.1bil (RM31.93) in 2012,” Khoo said.