,Proposals include GST and corporate tax changes
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KUALA LUMPUR: The government is mulling over various tax reform ideas, including the re-introduction of the goods and services tax (GST) and adjusting the corporate tax at an appropriate time, according to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.
“The timing is not appropriate now, under the present (Covid-19 pandemic) crisis situation. The government has started work at looking at some reforms in the tax system,” he said.
Mustapa was speaking at an online media session after the presentation of the OECD (Organisation for Economic Co-operation and Development) Economic Survey of Malaysia 2021.
He noted that there was some pressure from the business community in recent years “as our neighbours gradually reduce their corporate tax rate.”Mustapa also pointed out that the 12th Malaysia Plan (2021-2025) is due to be tabled in Parliament next month and would outline various strategies to build a prosperous, inclusive and sustainable Malaysia.
“The tax-to-GDP (gross domestic product) ratio is quite low in Malaysia compared to other countries. There are some ideas on the table – GST, corporate tax and improving the tax collection machinery to plug leakages.
“Now is not the time. But there will be a time when the country will have to seriously look at the revenue base to finance development, and promote competition and efficiency,” he added.
Mustapa also pointed out that the 12th Malaysia Plan (2021-2025) is due to be tabled in Parliament next month and would outline various strategies to build a prosperous, inclusive and sustainable Malaysia.
“Among them is to prepare a post-Covid-19 medium-term fiscal strategy, to reduce public debt and contingent liabilities.
“Our fiscal situation has been constrained since last year by economic contraction, a steep decline in revenues and increased expenditure for healthcare and income support programmes.
“When things normalise, we must begin to gradually set economy back on a sustainable fiscal footing,” he said.
Also present were OECD secretary-general Mathias Cormann, and director of country studies (economics) Alvaro Pereira.Cormann said provided that the Covid-19 vaccination campaign advances as planned, the OECD has projected that GDP growth in Malaysia will reach 4.3% in 2021 and 6.1% in 2022.