Posted on 7 November 2013 - 05:38am
Ee Ann Nee
 |
| Dr Veerinderjeet Sigh (Co-Founder & Chairman, TAXAND Malaysia Sdn Bhd.) Writer : Ann Nee Pix by : Qistina |
KUALA LUMPUR (Nov 7, 2013): Malaysia's corporate income tax rate and maximum personal income tax rate are both projected to be reduced to 20% by 2020, with the goods and services tax (GST) potentially going up to 10% by then, said Taxand Malaysia chairman Dr Veerinderjeet Singh.
The current corporate income tax rate is at 25% while the maximum tax rate for personal income tax is 26%. It was announced in the recent Budget 2014 that with the implementation of a 6% GST rate in 2015, corporate income tax rate will be reduced to 24% in 2016; while personal income tax rates will be reduced by one to three percentage points effective 2015.
"A 20% corporate tax rate is a good rate to have but possibly in 2020, we might see a 10% GST rate. This will be a good balance and will make it more competitive in terms of how we compare ourselves with Asean countries," Veerinderjeet told reporters at the Malaysian Institute of Accountants and Malaysian Association of Tax Accountants 2014 Budget Seminar here yesterday.
He said with the corporate income tax rate down to 20% by 2020, the top range of the personal income tax should also drop to 20%, assuming that the economy is well.
"It (income tax reduction) is important from a competitive point of view, because we're competing with the likes of Vietnam. Every other country is lowering their tax rates eventually and we have to do the same. We're at a disadvantage at the moment if compared with Vietnam and Thailand," he said.
Thailand has brought down its corporate tax rate to 20% while Vietnam is moving to a 20% tax rate from 25% by 2016.
"In terms of competitiveness and bringing in investors, we need to be in line and 20% is a good rate for us," explained Veerinderjeet.
He said as consumption tax is of a wider base, it can have a lower tax rate. On the other hand, income tax is of a narrow base due to various exemptions, hence rates have to be higher to collect a specific amount.
"With a wide base, we don't need a 15% to 20% GST rate, a 10% rate will fit in well," he justified.
He added that GST is essentially a consumption tax which a low income nation can also introduce with sufficient exemptions or zero-ratings to cover the essentials, not to mention that it is also prevalent in many countries.
"It's not a tax that only developed nations introduce. In the long term, this (GST) would be the main tax in the country and income tax will go down."
The first step is to understand the basics of federal taxes, including ways to save. Simply put: The more deductions you can claim, the less you'll pay out-of-pocket (or the more you'll get back) at the end of the fiscal year.
ReplyDeleteLondon tax specialist