KPMG Tax Services Sdn Bhd executive director Ong Guan Heng pointed out that it was a great news to citizens that there was no increment in the Goods and Services Tax (GST) rate in Budget 2017.
The government will be relying on the collection of GST to cope with expenses and reduce the dependence on income from the oil and gas industry. Thus, there will be no reduction in GST in the short-term.
It was expected that Malaysia will achieve a fiscal deficit target of 3% of gross domestic product in 2017, compared to 3.1% this year. Malaysia's economy is also expected to grow between 4% and 5% next year, compared with 4.0% and 4.5% growth this year.
As the contribution from small and medium enterprises (SMEs) to the country’s economic growth has become more significant, the government will also reduce the SMEs’ tax rate on chargeable income up to the first RM500,000 to 18% from 19% effective year 2017 onwards. This scheme is believed to ease the burden of SMEs and to aid SMEs towards transformative growth.
In addition, there is also a new scheme for companies specifically for the years of assessment 2017 and 2018 which offers a reduction in tax rate to be applied to the increase in chargeable income compared to the previous year of assessment. It was expected that this new scheme would reduce the cost of business and to motivate businesses to increase their chargeable income.
This article first appeared in INTERNATIONAL TIMES, on October 26, 2016.