KUALA LUMPUR: Malaysia’s corporate tax, which is among the highest in the region at 24%, is likely to reduce if the Goods and Services Tax (GST) is revived, says Datuk Seri Dr Wee Ka Siong.
“The absence of GST causes our corporate tax rate to be one of the highest.
“Foreign companies that intend to open a business will run to countries with lower corporate tax rates,” said Dr Wee (BN-Ayer Hitam) when debating Budget 2024.
He said Singapore’s corporate tax was 17%, Brunei (18.5%), Cambodia (20%), Vietnam (20%), Thailand (20%) and Indonesia (21%).
Dr Wee said that in 2016, the US corporate tax was at 35% but this had gone down to 21% now.
“Malaysia kept the same corporate tax rate of 24% in 2016 and now,” he added.
Dr Wee said the GST was previously implemented in 2015 so that Malaysia could reduce its corporate tax rate to be on par with Singapore.
The GST, he said, was meant to attract new investments and reduce the loss of profits through the transfer mispricing method often done by companies intending to evade or reduce taxes by transferring their profits from countries with high corporate taxes to countries with low corporate taxes.
“The conclusion is that only with the re-implementation of GST, can corporate taxes be lowered and Malaysia be more business-viable.”
He said that he had been consistent in his view that GST was a more efficient and appropriate tax that would ultimately benefit businesses and people in the country.
If the GST is revived, businesses will not be subjected to Putrajaya’s plans to gradually enforce the e-invoicing system next year, he added.
“To me, e-invoicing is absolutely unnecessary because the GST system is inclusive of e-invoicing.
“Why is e-invoicing implemented? It is a subset of GST. Now we spend money for the purchase of e-invoicing software, but if one day we are forced to return to GST, we may have to spend a second time to do the same thing. This is a waste,” he said.
On another matter, Dr Wee sought further explanation from Putrajaya on the definition of high-value items in its new tax for luxury goods.
(Budget 2024 outlined the government’s plan to have a new legislation to implement a High Value Goods Tax at a rate of 5% to 10% on certain high-value items such as jewellery and watches based on the threshold value of the goods price.)
“I would like an explanation on the definition of high-value items. Are there other items that would be defined as high-value items?” he said.
“How will the government determine high-value items based on the threshold value?”
Apparently, he said, the threshold value is RM10,000 for watches, RM20,000 for jewellery and RM200,000 for cars.
“Is this value finalised?”
He asked if electric vehicles would be subjected to the high-value goods tax if it was to be imposed on vehicles.
Dr Wee also said that the Capital Gains Tax (CGT) on unlisted shares could lead to protests by SME entrepreneurs.
This was because public-listed shares, whether domestic or foreign, are not subjected to the CGT.
“Local companies have been sacrificing and working hard to pay taxes to the country. On top of that, they are required to pay corporate tax every year,” said Dr Wee.
