News 2013-11-14 16:22
KUALA LUMPUR, Nov 14 (Bernama) -- Implementation of the goods and services tax (GST) is positive for the country's economy as it could help to strengthen the confidence of foreign investors, said Tax and Malaysia Sdn Bhd.
Co-founder and Chairman Dr Veerinderjeet Singh said the GST, also known as value added tax in several countries, has been implemented in developed nations and most external investors are well aware of how the system works.
Speaking to Bernama, he also said the implementation of GST would not "spook investors" or affect the flow of foreign direct investment into the country.
"It's (GST) not something new to them (investors) and they understand it very well.
"We are adopting a system that is understood worldwide, so in that sense it gives them confidence that we're changing to a system that they all know," he said on the sidelines of the Business Times Insight breakfast talk "GST: Are Malaysians Ready?" here today.
Veerinderjeet was one of the panelists at the quarterly event, which was also attended by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.
Replacing the existing sales and service tax, the GST will be implemented on April 1, 2015 at a fixed rate of six per cent.
The single tax regime is a fair and comprehensive tax system that would benefit all Malaysians as well as enable the government to address weaknesses in the current taxation system, said Prime Minister Datuk Seri Najib Tun Razak when tabling the 2014 Budget in the Dewan Rakyat on Oct 25.
Going forward, Veerinderjeet said Malaysia should reduce the corporate tax ate in order to attract more investments and stay competitive with other countries.
"We need to bring down the corporate tax to 20 per cent but it can't happen straight away, it can only happen years down the road.
"We are in a transition where we are trying to move our tax rates lower, but we can't because we need to build our revenue. However, eventually we will," he added.
In the budget, Najib, who is also Finance Minister, said the corporate tax rate will be reduced by one per cent to 24 per cent, with effect from the year of assessment 2016 onward.
This means company tax reduction will be effected only 1.5 years from the date of GST implementation.