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DECEMBER 8 — We are one month away from the end of 2022. 2022 is indeed an eventful year. With the gradual opening of borders across the world, we try to compensate our travelling freedom as Covid-19 robbed us of our two year’s worth of time to do so. Catching up with friends and family who reside in other parts of the world with a ticket away is no longer impossible.
Fast forward to the historical 15th General Election which resulted in the appointment of Datuk Seri Anwar Ibrahim as our 10th Prime Minister. We, the Rakyat are gleaming with hope and not to mention, delighted with a public holiday granted on November 28, 2022. It is not an easy task to shoulder and there is no time for the 10th PM to lose as he has many issues to solve with the ultimate intention which is to propel Malaysia to greater heights; to make Malaysia great again!
Of course, to do so, the economy must be revived. Revenue must be collected at various sources without impacting the B40 and M40. Sufficient aids are required to be channelled to curb poverty in rural areas. Although I am a firm believer that you should teach them to fish, rather than giving them the fish. The value and skills instilled could be worth many “fishes” in the future. In order to do so, every Rakyat should at least have the basic necessities covered like access to clean water, electricity and food on the table. Education will be the next necessity to create a better society and everyone should be given opportunities to acquire knowledge and skills.
Budget 2023, as announced by the previous government which was the largest budget to date amounting to RM 372.3 billion with RM 272.3 billion for operating expenditure, RM95 billion for development expenditure and RM 5 billion under Covid-19 fund. The said budget also comprised ample direct cash assistance and welfare to Rakyat. However, to fund this budget or the new budget, the revenue stream must be established to support these expenses but not resulting in the increase in cost of living in Malaysia.
We humbly request Datuk Seri Anwar Ibrahim to consider the following tax viewpoints to restructure the revenue collection of Malaysia. Another plus point to appraise also includes attracting more foreign investors to invest in our country.
1. Schedule 6 Para 28
The old regime of Schedule 6 Para 28 indicates that the income of any person, other than a resident company carrying on the business of banking, insurance or sea air transport, for the basis year for a year of assessment derived from sources outside Malaysia and received in Malaysia is exempted from income tax. Comes January 1, 2022, the Finance Act 2021 amended the Para 28 of Schedule 6 to reflect as follows: “The income arising from sources outside Malaysia and received in Malaysia by any person who is not resident in Malaysia is exempted from income tax”.
This means income derived from overseas which is received in Malaysia from outside Malaysia will be taxable effective 1 January 2022. However, exemption is provided for a period of five years till December 31, 2026 on the following:
i) All categories of foreign sourced income are exempted for individual tax residents of Malaysia.
ii) For tax resident companies in Malaysia, only foreign sourced dividend income is exempted.
We are of the view to reverse the taxation of foreign sources on companies back to the old provision for a period of at least five years. We need funds to come into the country which will indirectly help the economy of our country. Once the economy recovers, the government can reconsider to tax it back in year 2027 based on the current amended Schedule 6 Para 28.
2. To exempt taxes all those who earn RM 6,000 per month and below on their personal tax
The tax savings for such individual who earns RM 6,000 and below would be as follows:
The tax savings ranging from RM3,490 onwards per individual can be used to spend in the economy. This will promote consumer and business spending and spur the economy. The additional purchasing power can be used by the Rakyat to fund on new IT gadgets, meals, entertainment and travelling – Cuti-Cuti Malaysia.
3. Targeted Incentive
New policymakers can consider for targeted tax incentive to be given to all those who invest in Malaysia. The incentive will be granted under Section 127 (3A) with conditions imposed such as there will be requirement for these companies to employ Malaysians, buy Malaysian products and there will be transfer of technology by the investor.
The Ministry of Finance of Malaysia can consider to utilise MDEC to conduct more roadshows overseas to attract Foreign Direct Investment to Malaysia. Special task force can be set up to ensure these FDI are brought in from all Fortune 500 companies which are currently having their head office in Singapore. The ultimate intention is to promote Malaysia as an attractive ecosystem for business purposes.
4. Langkawi as the Next Financial Hub
The cherry on top proposal here would be transforming Langkawi Island into a financial hub as the next Singapore and to be granted with tax haven status. Also, the government can consider to build our very own F1 Circuit in Langkawi. With the tax haven status and presence of F1 Circuit, this will enable Langkawi to become the next Monaco of Asia. Basically, Langkawi will not only be a travel destination, it will also attract Foreign Direct Investment (FDI) to Malaysia. From there on other possibilities might flourish with tourist travelling to other states of Malaysia as well (i.e. Sabah, Melaka, Terengganu). Not only is Malaysia rich with cultural diversity, our beautiful beaches have world ranking and not to mention, we are located outside the Pacific Ring of Fire which is generally considered safe from seismic disaster. There are plenty of opportunities to develop Malaysia into a tourism country where substantial revenue can be generated from tourist spending and creating additional employment opportunities.
5. Reintroduction of GST at 3 per cent
To expand the revenue collection, GST should be reintroduced but at a lower rate which is at 3 per cent Furthermore, all goods and services should be taxed at the standard rate of 3 per cent However, B40 and M40 group will be given tax vouchers to claim on items which are consumed on a daily basis. These vouchers will ease off the burden of the 3 per cent GST tax for the lower and medium income group.
6. Keep the Numbers of Unemployed Fresh Graduates Low
Despite the efforts of Malaysia government to address the unemployment issues, the unemployment rate still remains above 3 per cent. Additional incentives given to companies like special deduction or double deduction can be introduced to further improve Malaysia’s labour market.
On the other hand, policymakers should work together with the Education Minister and Human Resource Minister to ensure graduates will be secured with jobs upon graduation. These ministers can request universities and colleges to come up with student lists for hiring purposes. The minister can then facilitate by sharing these lists with government departments or private institutions for hiring matched with the relevant skills required. Vocational schools should not be exempted as well and should be part of this exercise.
We are positive that with the appointment of the new Prime Minister and his cabinet, we can make Malaysia a developed nation in no time. (Give him some time – As Rome was not built in a day).
* Datuk Harjit Singh Sidhu is chief executive officer of HSS Advisory Sdn Bhd
**This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail