BY MUZLIZA MUSTAFA
OCTOBER 26, 2013
The 1% corporate tax cut announced in Budget 2014 was not sufficient to enhance foreign investment in the country, the Federation of Malaysian Manufacturers (FMM) said yesterday.
In a statement, FFM said the tax cut following the implementation of the GST (Goods and Services Tax) was not sufficiently aggressive considering the current corporate tax rates in neighbouring countries.
It said while the economic forecast is relatively positive, the feedback gathered from the manufacturing sector showed there was some slowing of economic activities at company level.
The GST implementation will also impose a heavy compliance burden on manufacturers, especially the small and medium enterprises (SMEs) that constitute 98.5 % of businesses.
The federation also requested that the rate of 6% GST be maintained for not less than 5 years from the date of implementation as the rate is higher than expected.
For comparison it said that Singapore, for instance, took nine years to increase its GST rate from 3% to 4% and another four years to 7%.
FMM was also concerned about the government’s capacity to implement the tax scheme and to disburse GST-related facilities and grants to SMEs.
It would also seek to clearly understand the mechanism, especially on timely refunds on input GST which would be a main concern for exporters.
Meanwhile, Datuk Seri Stanley Thai, group managing director of the world’s second largest producer of rubber gloves, Supermax Corporation, said the GST was fair as there would be a wider pool of tax contributors to the government coffers.
Thai said there was no mention whether GST would be imposed on the material supplied to manufacturers but hoped Putrajaya would exempt the Exempt Export Services from paying GST to ensure products made in Malaysia remain competitive globally. – October 26, 2013.