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| Mohamed Raslan Abdul Rahman |
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| Khoo Chin Guan |
KUCHING: KPMG Tax Services Sdn Bhd (KPMG) believes the Budget 2014 will touch on the goods and services tax (GST) with a firmer timeline for implementation.
Whilst the firm does not expect the reduction of income tax just yet, KPMG head of tax Khoo Chin Guan viewed the gradual implementation of GST as a positive move by the government as broadening the tax base is critical to help the government reduce over-dependence on oil revenue.
“When GST is implemented, it will not have a burdening impact on the lower and middle income group as ‘basic necessity’ such as sugar and rice would be ‘zero-rated’ and will reduce the cascading effect of our present sales and service tax system,” he added.
If the GST bill is implemented, Malaysia will join the 146 countries which have already implemented GST or value added tax (VAT) by 2015.
Khoo further commented, “It is our belief that both consumers and business still require additional ‘educational awareness’ on GST and the macro benefits to economic growth to cushion the actual implementation of GST.
“The general trend among governments worldwide is to reduce corporate tax rates and UK for example is moving towards a rate of 20 per cent by 2015.”
Malaysia may perhaps start to look into lowering corporate taxes to 20 per cent although government incentives for specific business development such as research and development, innovation and sustainability programmes does push down corporate tax payments.
“It would be constructive to work towards developing a comprehensive strategy on lowering personal and corporate tax with the implementation of GST as an additional tax generator.”
On the matter of property, KPMG Malaysia views the possible increase in Real Property Gains Tax (RPGT) and increase in stamp duty for third property purchase positively.
The application of such measures will assist government revenue and cushion varied incentives that could cover affordable housing for first-time home buyers.
As a firm within the financial services sector, KPMG Malaysia also hopes that Budget 2014 will provide incentives to promote talent development and boost the employment of fresh graduates, particularly in the Accounting industry, highlights managing partner Mohamed Raslan Abdul Rahman
“It is crucial that organisations such as KPMG are encouraged to bridge the gap between the corporate sector and educational institutions in order for Malaysia to achieve a knowledge-based economy,” he said.
“Finance talents are required to have the breadth and depth of finance expertise and capabilities to support more matrix, complex and virtual business structures as more organisations focuses on finance transformation as a priority.
“The ultimate goal is for Malaysia to retain and attract quality talent with expertise to support the country’s key growth areas,” Mohamed Raslan remarked.
The country’s 12 National Key Economic Areas (NKEA) ranging from Oil and Gas to Financial Services were designated to propel the country towards a high-income economy.
KPMG Malaysia expects that Budget 2014 will continue to focus on private investment growth and incentives for high growth industries such as the financial services, healthcare and ICT sectors, thus contributing to overall economic growth.
Raslan added, “As the federal debt level inches to 55% of the GDP, finding ways to fix the debt issue and ensuring that proper system and governance is in place would be crucial.
“While honest discussions towards forward-looking tax reforms would be a silver lining to the federal debt issue, firm approaches to tax reform is required. One example is looking at funding of major infrastructure projects beyond just foreign direct investment.
“Creating public private partnerships to fund such large scale projects is a policy which is easier to implement as organisations with strong cash bank has the capacity to affect positive outcomes.”
With stronger financial infrastructure coupled with good corporate governance, sustainability and transparency, KPMG believes Malaysia will be able to attract more foreign direct investment.
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