Govt needs to look at widening tax base, broad-based taxes -- Tax expert

By Sharifah Pirdaus Syed Ali

KUALA LUMPUR, Oct 10 (Bernama) -- There is a need to look at broadening the tax base and broad-based taxes like the Goods and Services Tax (GST) to fill in the gap in revenue collection, according to Chartered Tax Institute of Malaysia council member Harvinder Singh.

He said the government cannot be always going back to the “usual suspects”, namely the corporate taxpayers, but has to look at increasing revenue collection by widening the tax base.

“Based on the announcements made by the government, they will review it (reinstating GST) probably in the next budget if there is a need, depending on the economic condition of the country as well,” he said on Bernama TV’s The Brief programme today.

He noted that in Budget 2023, the government announced that it will be implementing two measures to widen the tax base -- e-invoicing and Tax Identification Number (TIN).

E-invoicing, he said, is a measure that has been introduced in several countries such as Japan, Taiwan and many others and it is planned to be introduced in stages in Malaysia.

“The whole idea is that anybody that is doing business will be basically integrated in the information that the tax authorities have. So whether a payment is made to suppliers, the latter will also be similarly linked in the billing systems of the tax authorities.

“This will essentially mean that anybody out there that has a business link will eventually be part of the tax base, and this would help to widen the tax base for the tax authorities. This is something that is going to affect most of the businessmen in the country,” he shared.

As for TIN, he said from 2023 onwards, all individual citizens and Permanent Resident (PR) status holders who are 18 years of age will be automatically given a TIN, which is mandatory to be used for all instruments and documents to be stamped.

“This would essentially inform or trigger the relevant authorities to search transactions that took place, and various follow-up queries and questions will be raised,” he noted.

Meanwhile, Harvinder also highlighted some of the tax measures that have been introduced in Budget 2023 for the man in the street, among them the two-percentage point reduction in personal income tax rate for the middle 40 per cent (M40) income group, basically, the taxpayers with the chargeable income of between RM50,000 and RM100,000.

This will, in turn, translate into tax savings and higher disposable income in the hands of taxpayers.

He noted the budget also gives income tax exemption for five years -- years of assessment 2023 to 2028 -- in recognition of the important role played by women in the workforce.

“For women returning to work, if we were to follow the Singapore model, there would be a 15 per cent exemption of the salary for the first child for mothers who are going to return to work,” he said.

Harvinder noted that under Budget 2023, there is an extension of timeframe to claim the tax relief of up to RM3,000 on fees paid to childcare centres until the year of assessment 2024. The relief was initially supposed to expire in 2023.

Noting that the relief applies only to children up to the age of six, he said that perhaps this could have been enhanced to include all primary school children.

Harvinder also said he found it interesting that a tax relief of up to RM1,000 for dental examination and treatment expenses has been included as part of the medical expenses tax relief of RM8,000 which the people can claim.

-- BERNAMA