KUALA LUMPUR: The government’s tax reform committee (TRC) is in the final process of finalising the proposal to enhance tax revenue, according to Prime Minister Tun Dr Mahathir Mohamad.
Dr Mahathir said the proposal will address measures to reduce tax leakages, how to access the underground economy, enhance tax administration and find new sources of revenue.
“We are also rationalising tax incentives for investments, as the current administration and governance structures of investment incentives is highly fragmented, costly, and ineffective,” he said in his keynote address at Invest Malaysia 2019 (IMKL2019) here today.
Dr Mahathir noted that Malaysia currently offers over 130 types of incentives administered by 32 investment promotion agencies (IPAs), with varied roles and responsibilities, and several approving agencies.
“Our proposal entails holistic and simplified tax investment incentives that would be attractive for future investments.”
He added that hat incentives will be granted to desired sectors and types of investment that the country needs, and tie the incentives to specific Key Performance Indices (KPI).
Dr Mahathir stressed that no new tax, besides the already tabled Sugar Tax, will be introduced this year but announced an amendment to the corporate tax rate for small and medium enterprises (SMEs).
“For this year, corporate tax rate will be reduced to 17 per cent from 18 per cent for SMEs with paid-up capital below RM2.5 million and businesses with annual taxable income of below RM500,000. For large companies, while the tax rate is slightly higher, the effective tax rate is less than 10 per cent due to these incentives.”
Separately, the Prime Minister announced that there would be no more appointment of politicians as heads of mission for Malaysia or government-linked companies (GLCs).
"The Ministry of Finance (MoF) is preparing a clear guideline on the criteria in the appointment of chairmen and board of directors in GLCs and subsidiary companies. Only those capable, with integrity and high moral values will be selected to lead these entities.”
The Prime Minister's Office is finalising the guidelines on remuneration of directors and key senior management of government entities.
“We find that some of the remuneration packages are obscenely high. From now on, rewards will be based on performance," he said.
He urged all stakeholders to work together to create an equal society, which if left unchecked will create tension and hostility, and eventually lead to confrontations.
"We noticed that the pay for chief executive officers has been increasing multiple folds, but workers' wages had been slow on the rise if not stagnant. This is not right. Pay your workers better if you make more profits.
"We don't want a thoroughly unequal society where capital owners take too much a chunk of national income, leaving the workers or low-income households with scraps,” Dr Mahathir said.
The 15th edition of IMKL was attended by some 2,300 from various industries inclusive of banking, plantation, automobile, construction, oil and gas, property and telecommunications.