The stage is being set for Budget 2020, and the Finance Ministry has made it clear that there will be no introduction of any new taxes.
According to Lim Wai Yin, Executive Director of Corporate Tax for KPMG Tax Services Sdn.Bhd, this is a welcome move as in the last year, businesses and investors have had to deal with the newly introduced Sales Tax and Service Tax, Digital Service Tax, Soda Tax, changes to the Labuan tax regime and the newly introduced Earnings Stripping Rules.
"The government's promise of no new taxes in the upcoming Budget 2020 will provide businesses with the much needed certainty that there will be no more 'new surprises' at least in the coming year and
alleviate concerns over rising cost of doing business. Whilst we do not expect to see any reduction in corporate income tax rates come Budget 2020, it would be a boost to businesses if the reduction of corporate income tax rate by 1% to 4% for incremental chargeable business income which was applicable for years of assessment 2017 and 2018 could be further extended," says Lim.
At the same time, Lim suggests that the government should look at simplifying tax policies and providing greater certainty on tax treatment to help local businesses. From a tax policy perspective, if the tax treatment can be converged with accounting treatment, the tax filing process would significantly be simplified. To ease cashflow constraints, Lim suggests that MSMEs should be allowed to pay tax instalment payments on a quarterly instead of monthly basis due to the volatility in the overall global economy as a result of the US-China trade war, fluctuating oil prices and currency pressure.
She also urged the government to continue with its efforts in providing more attractive incentives to investors to encourage private equity, venture capital funding and crowd-funding for MSMEs.
"Clear guidelines to qualify for such incentives should be issued quickly once the incentives are announced in the Budget as investors are unlikely to commit unless there is clarity. Undoubtedly, digitalization is the way forward for all businesses, including MSMEs. They need guidance and resources to move towards digitalization," says Lim.
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This news article is published in "Malaysia SME Magazine".