KUALA LUMPUR: The proposed one-off "Cukai Makmur" (prosperity tax) announced in 2022 Budget is in support of the government's initiative that those prospering in such trying times assist those adversely affected in the spirit of Shared National Prosperity.
Deloitte Malaysia tax leader Sim Kwang Gek said instead of introducing windfall tax on companies that benefited from the pandemic and enjoyed super profits, the budget proposesd a one-off 33 per cent tax on taxable profits above RM100 million.
Sim said this is an increase of nine per cent compared to the current headline tax of 24 per cent.
"This measure should be easier to implement compared to the proposal to impose windfall profit levy on certain sectors where market price may be lacking. It also covers all businesses that have prospered from the pandemic," he said in a statement.
Sim said the total tax revenue that can be generated from this measure remains to be seen as more than 90 per cent of total business establishments in Malaysia are small and medium enterprise (SMEs).
He said there may not be many companies having taxable profits (which is net of deductible expenses and allowances) above RM100 million.
"Considering that SMEs make up more than 90 per cent of business establishments in Malaysia, it remains to be seen how much additional tax can be collected from companies having more than RM100 million taxable profits," he said.
Ernst & Young Tax Consultants Sdn Bhd's Malaysia tax markets leader Farah Rosley said the 2022 Budget's most significant impact to large corporations is the announcement of the "Cukai Makmur.
"Chargeable income of up to RM100 million will continue to be taxed at 24 per cent. This is in line with recent international trends such as the Organisation for Economic Cooperation and Development's move to impose higher taxes on larger and more profitable companies from the year 2023," she said.
Meanwhile, PWC Malaysia tax leader Jagdev Singh said given the challenging circumstances, the 2022 Budget turns to measures other than the Goods and Services Tax and capital gains tax to expand the tax base.
Jagdev said the expansion of excise duties to cover premixes and e-cigarettes/vape products is in line with the government's goal of encouraging a healthier lifestyle, whilst increasing revenue collection.
"What is perhaps unexpected, but certainly represents a bold move by the government to increase tax revenues in the short term, is the increased 'one-off' tax rate of 33 per cent on the portion of chargeable income in excess of RM100 million for the year assessment 2022," he said.