KUALA LUMPUR – The government should implement a clear, concise tax policies that are crucial to revive Malaysia's economy that has been seriously impacted by the Covid-19 pandemic, said a prominent tax expert.
Tricor Malaysia Sdn Bhd chairman Dr Veerinderjeet Singh expect the government to review and fine-tune the tax policies currently in place and announced to form a more solid policy statement.
This following the recent announcement made by prime minister Tan Sri Muhyiddin Yassin that the government will be unveiling further measures to revive the economy following the Covid-19 pandemic.
"This could also mean a simpler tax incentive structure and a better administrative framework with clearer milestones and conditions," he told the New Straits Times.
Dr Veerinderjeet opined that the best tax incentive is low corporate tax rates, which some of our neighbouring countries have already implemented.
"The government could take a bold and riskier step to announce a phase corporate tax rate reduction to about 20 per cent in the next two to three years," he said.
Commenting on renewed calls to re-introduce the goods and services tax (GST), Dr Veerinderjeet believes that GST alone will not be able to turnaround the economy as what the country currently needs is greater demand and supply.
"Introducing the GST is merely a structural change in the consumption of taxes which we have and it does not necessarily mean that it will be easier to comply with," he said.
Dr Veerinderjeet recommends simplifying tax measures such as a presumptive tax system for small businesses (SMEs).
"They should be taxed based on the sales they generated rather than filing tax returns with the accounts and complete tax computations, which have become more and more complex over the years.
"Therefore, the need for simplicity and efficiency in the current tax administration is also an area that must be looked at. We have to also look into the cost of compliance faced by SMEs in meeting their tax obligations," he said.
Given the dip in gross domestic product (GDP) and the growing call to ensure that all pay their taxes that are legally due, Dr Veerinderjeet said a more profound focus by the tax agencies is to stop tax revenue leakages, including managing the shadow economy.
"Take the illegal cigarettes trade, for example. There is currently a large illicit trade in cheaper cigarettes, in which no excise duties or customs duties are paid.
"I believe that introducing a legal cheaper product is an option that should be looked into. Logically, a cheaper product should have a much lower excise duty to be paid.
"Are we interested in cutting down illicit trade or are we only bent on doing what we have been doing all this while, which is tantamount to 'milking the golden goose dry' with higher taxation," he said.
Dr Veerinderjeet commended the measures introduced in the 2021 Budget to tackle the illegal cigarettes trade.
"Nevertheless, we need to know how these measures are being implemented or whether some have been deferred or delayed due to various reasons.
"If all the measures announced are seriously implemented, we will see the leakages being reduced. Again, is there consistency and certainty in what we are announcing and actually implementing?" he questioned.