Published: Thursday November 7, 2013 MYT 12:00:00 AM
Updated: Thursday November 7, 2013 MYT 7:21:23 AM
BY DANIEL KHOO
KUALA LUMPUR: Malaysia’s taxation rate has put the country at a disadvantage against the likes of Vietnam and Thailand where the rate is much lower, according to tax experts.
They say the Government needs to further reduce personal and corporate income taxes to ensure the country’s macro competitiveness vis-a-vis the neighbouring countries as an investment destination.
“Almost every other country has lower tax rates. Hopefully by 2020, both personal and corporate tax rates would be at 20% for the top-end (personal),” Taxand Malaysia chairman Veerinderjeet Singh said yesterday.
“We are competing with the likes of Vietnam and Thailand and we are at a disadvantaged position at the moment against these countries. Thailand has already announced a 20% tax rate while Vietnam is moving to 20% as well. So this is not good for us,” he added.
Malaysia’s corporate tax rate is 25% while the personal tax is up to 26%.
He noted at the Malaysian Institute of Accountants-Malaysian Taxes and Accountants Society’s 2014 Budget Seminar that the introduction of the goods and services tax (GST) would give enough room for the Government to reduce both corporate and personal taxes.
Deloitte Malaysia managing director Yee Wing Ping said that there was a “great need” to ensure the country’s tax system was “very competitive.”
“At the moment, we are not competitive enough. Many investors who come to the country will look at the tax rates. And even Malaysians are looking overseas to countries that are more business friendly with a lower tax regime,” Yee said.
“In Singapore, the (maximum) individual tax rate is 20% while in Hong Kong it is 17%. We have to lower (tax rates) even as we try to keep talent to stay at home here and also attract the best talents from outside to work here,” Yee added.
Meanwhile, Finance Ministry’s senior deputy secretary Khodijah Abdullah said that the introduction of a broad-based tax regime needed to be complemented with some reduction in both personal and corporate tax rates.