src='https://pagead2.googlesyndication.com/pagead/js/adsbygoogle.js?client=ca-pub-2513966551258002'/> Rightways: Tax Infolinks.com, 2618740 , RESELLER

Pages

Share This

Showing posts with label Tax. Show all posts
Showing posts with label Tax. Show all posts

Friday, October 29, 2021

Malaysia Budget 2022

 


 The theme for Budget 2022 is "Keluarga Malaysia, makmur sejahtera" (Malaysian family, prosperous and peaceful). 

Finance Minister Tengku Zafrul Abdul Aziz said it is based on three core concepts "rakyat yang sejahtera" (people's wellbeing), resilient businesses and a prosperous economy.

Screengrab from the live broadcast of the Budget 2022 speech from Parliament on Oct 29, 2021.

PETALING JAYA: Tengku Datuk Seri Zafrul Abdul Aziz has started delivering his Budget 2022 speech in Parliament here on Friday (Oct 29).

The Finance Minister is expected to deliver a Budget in line with the Malaysian Family concept, which will concentrate on the country's recovery after the Covid-19 pandemic.

On Wednesday (Oct 27) Prime Minister Datuk Seri Ismail Sabri Yaakob said Budget 2022 was from the people, by the people, for the people and would be of high impact for all layers of society and businesses.

Ismail Sabri said Budget 2022 would also generate more jobs to tackle unemployment and enable the recovery process to return the country and its economy to the pre-Covid-19 pandemic with new norms in place.

He added that Budget 2022 was drawn up carefully and comprehensively, taking into account the views of all quarters, including Opposition parties.

Here are the highlights of the Budget 2022 speech as they are delivered:

Budget 2022 allocation

Budget 2022 has a total allocation of RM332.1bil, the largest-ever for the country. This surpasses Budget 2021 allocation of of RM322.54bil.

Tengku Zafrul said this involves RM233.5bil in administrative expenses, RM75.6bil in development, RM23bil for the Covid-19 fund and RM2bil for unexpected expenses.

Family focus

The Bantuan Keluarga Malaysia outlined in Budget 2022 will benefit over 9.6 million recipients with an allocation of RM8.2bil.

Households with three children or more with household income less than RM2,500 will receive RM2,000 in aid. An extra RM500 will be given to for single mothers/fathers with dependents and monthly income of up to RM5,000. This means single mothers/fathers with three children and above are entitled to a maximum RM2,500 in aid.

An additional allocation of RM300 will be given to senior citizens.

Overall, RM2.4bil in welfare aid is allocated to benefit over 440,000 households.

Education first

Education gets the biggest slice of the pie in Budget 2022 with RM52.6bil for the Education Ministry and RM14.5bil for the Higher Education Ministry.

Tengku Zafrul said this includes RM450mil in aid to be provided to three million students.

Health matters

Health Ministry gets an allocation of 32.4bil, the second-largest after the Education Ministry.

From the allocation, RM2bil will be channeled to purchase of vaccines and RM2bil for additional Covid-19 expenses.

He added that the government would be purchasing another 88 million doses of vaccines, which includes the third dose for children between the ages of 12 and 17.

PTPTN repayment incentives

Government to give discounts to PTPTN borrowers for payments from Nov 1 to April 30.

Borrowers will get a 15% discount for full settlement; 12% for payments of at least 50% of the outstanding balance in a single payment. Those who make repayments through salary deduction or scheduled direct debit will get a 10% discount.

Just for jobs

Allocation of RM4.8bil to create 600,000 job opportunities under the JaminKerja initative.

With a target of 300,000 hires, the initiative will offer incentives to employers such as 20% of the first six months' pay, and 30% of the following six months pay for hired employees making above RM1,500.

Among others, RM1.1bil has been allocated for training and upskilling programmes for 220,000 trainees.

The Technical and Vocational Education and Training (TVET) sector will receive an allocation of RM6.6bil under Budget 2022.

Tengku Zafrul said the focus is on eeting industry needs and an additional allocation of RM200mil has been allocated for joint venture programmes with industries.

Boosting healthy lifestyles

There will be an excise duty imposed on nicotine-based gel or liquid products for vaping and electronic cigarettes, says the Finance Minister.

"Towards a healthy lifestyle the government plans to broaden the scope of excise duty to include premix sugary drinks made from chocolate, malt, coffee and tea," said Tengku Zafrul.

Women matters

The goverment will make it mandatory for all publicly-listed companies to appoint at least one woman to its board of directors.

Tengku Zafrul said RM5mil would also be allocated for the Women Leadership Foundation to encourage female participation in the economic sector.

Free self-hygiene kits will be given to young women in the B40 category monthly, which will benefit some 130,000 youths nationwide.

Tengku Zafrul added that RM11mil would be allocated for free mammogram and cervix examinations.

New villages

A total of RM200mil has been allocated for the Chinese community, among them for the purpose of upgrading Chinese new villages, as well as financing schemes for the small and medium enterprises (SMEs).

RM145mil has been set aside for the Indian community, among them for the implementation of programmes to strengthen the community's social economy through Tekun Nasional, the national Entrepreneurial Group Economic Fund, under the Indian Entrepreneurs Development Scheme.

Levelling up eSports

To push the eSports industry in the country, RM20mill will be allocated under Budget 2022.

This includes RM5mil to develop an excellence centre for drone sports in the country.

Housing for all

RM1.5bil has been allocated for continuing low-cost housing projects. Another RM2bil allocated for housing credit guarantee scheme to help those without a stable income to buy a house.

Tengku Zafrul also said the government would no longer impose the real property gains tax (RPGT) on Malaysians, permanent residents and companies when they dispose of their real property assets from the sixth year onwards.

For sporting excellence

To further improve the national Paralympics team, the National Sports Council (NSC) will receive a RM10mil allocation. This is to enhance training programs and organise leagues for various sports to prepare for the 2024 Paris Paralympics.

RM158mil will be allocated to renovate, enhance and build sporting facilities around the country.

RM50mil will be allocated to encourage people to continue leading an active lifestyle.

Cash in hand

Employees’ contribution rate to the Employees Provident Fund (EPF) that was reduced to 9% in 2020 will remain until June 2022.

Boost for youths

A RM300mil allocation to provide RM150 in credit into eWallets of youth aged 18 to 20 who are students at institutions of higher learning.

Lower vehicular taxes continue

To reduce the cost of vehicle ownership, the government will extend the 100% sales tax exemption on completely knocked down (CKD, locally-assembled) passenger vehicles and 50% on completely built-up (CBU, imported cars) including MPVs and SUVs for six months until June 30, 2022.

The exemption was introduced by the government in 2020 to drive sales in the automotive sector which was affected by the Covid-19 pandemic.

Defending the nation

The Defence Ministry will get an allocation of RM16bil, of which RM1.6bil is to upgrade the readiness of main assets of the Armed Forces. This allocation also involves RM14mil to replace main equipment of Naval Special Forces (Paskal) and Air Force Special Forces (Paskau) such as parachutes, closed-circuit diving equipment and boats.

e-vehicles to get a power up

Tengku Zafrul said the government sees the potential of electronic vehicles (EV) to minimise pollution, and therefore plans to give up to 100% exemption of import and excise duties as well as sales tax.

Road tax exemptions of up to 100% will also be given out for electronic cars.

Tax relief of up to RM2,500 will be given for the purchase, assembly, renting and leasing of EVs.

Tourism budget

A total of RM1.6bil has been allocated for the tourism industry. RM600mil will be allocated under the Penjana Tourism Financing dan BPMB Rehabilitation Scheme while RM85mil will be go towards a three-month special assistance for over 20,000 tourism operators.

Zafrul also announced matching grants for the purpose of the renovation of budget hotels and homestays, with an allocation of RM30mil.

To spur domestic tourism, the RM1,000 tax rebate will be extended until 2022.

Sabah and Sarawak

The two states will receive increased development allocations of RM5.2bil and RM4.6bil respectively under Budget 2022.

Fisheries and agriculture

RM1.7bil allocated for the various incentives and subsidies for the fisheries and agriculture industries.

Please folllow The Star's coverage of Budget 2022 here.

Click on the logo to see the full text of Tengku Zafrul's Budget 2022 speech in Malay.Click on the logo to see the full text of Tengku Zafrul's Budget 2022 speech in Malay.

Related stories:

Budget 2022: RM52.6bil allocation for Education Ministry, says Tengku Zafrul

Budget 2022 focused on helping 'Malaysian Family' tackle post-Covid-19 challenges, says Tengku Zafrul

Budget 2022: RM32.4bil allocated for health

Budget 2022: RM2.4bil in welfare aid allocated to benefit over 440,000 households

 Source link

 

 Here are five key takeaways from Malaysia’s 2022 budget:

5 key takeaways:

1. What’s in it for households, firms hit hard economically by COVID-19?

https://www.bharian.com.my/berita/nasional/2021/10/881438/bajet-2022-bantuan-keluarga-malaysia-bkm-sebanyak-rm2000

Households are set to benefit from a new cash aid scheme - Malaysian Family Assistance. Under the scheme, RM8.2 billion will be allocated to households, benefitting more than 9.6 million recipients, said Mr Tengku Zafrul. 

 Households with three or more children and a monthly income of less than RM2,500 will receive a one-off payment of RM2,000. 

Additionally, single parents or households earning less than RM5,000 each month will receive a one-off payment of RM500. Senior citizens will also receive RM300 each. 

Companies will also receive aid to get back on their feet.

Among others, income tax instalment payment for micro, small- and medium-size enterprises (SMEs) can be deferred for up to six months until Jun 30, 2022. 

Landlords who give rental discounts of at least 30 per cent to businesses will be granted tax relief. 

Firms are also given tax deduction of up to RM300,000 to renovate their spaces, such as to improve seating arrangement or air circulation, in order to minimise the spread of COVID-19. 

2. What additional resources will the health sector get?

The Health Ministry is set to receive RM32.4 billion, the second largest allocation behind the Education Ministry. 

Mr Tengku Zafrul outlined that RM4 billion has been allocated for COVID-19 management, of which RM2 billion is for vaccines and another RM2 billion is to boost the capacity of public health facilities such as by purchasing test kits, personal protective equipment and medication. 

He added that the government has signed agreements to obtain 88 million doses of COVID-19 vaccines, which are sufficient to immunise more than 140 per cent of the population, and enough to give third doses to all residents above the age of 12.

Mr Tengku Zafrul also announced that RM100 million will be allocated to sponsor 3,000 contract medical and dental officers to pursue specialist programmes.

3. What are the green measures?

Meanwhile, Mr Tengku Zafrul said the 2022 budget was formulated while keeping in mind the 17 Sustainable Development Goals (under the the 2030 Agenda for Sustainable Development) and the implementation of environmentally friendly programmes. 

In line with Malaysia’s commitment to be carbon neutral by 2050, he announced that the Voluntary Carbon Market initiative will be launched under the auspices of Bursa Malaysia. 

“This initiative will act as a voluntary platform for carbon credit trading between green asset owners and any entity towards a shift to low-carbon practices,” said Mr Tengku Zafrul. 

 Related:

Tengku Zafrul added that the government is also looking to support the development of the local electric vehicle (EV) industry, and intends to provide full exemption on import duty, excise duty and sales tax for EV vehicles. 

Road tax exemption of up to 100 percent is also given to the vehicles.

In addition, individual income tax relief of up to RM2,500 will be given to offset the costs of purchase and installation, rental and hire purchase as well as subscription fees for EV charging facilities.

4. How will tourism industry players benefit? 

The budget also encompasses initiatives targeted at players in the tourism industry, which have been hit badly by COVID-19. 

Mr Tengku Zafrul said a total of RM1.6 billion will be allocated for a number of efforts, including a RM600 million wage subsidy for tour operators who have experienced at least 30 per cent dip in income. More than 26,000 employers and 330,000 workers are expected to benefit from these subsidies, he added. 

Tengku Zafrul added that matching grants worth RM30 million will be given to more than 700 budget hotels and homestays registered under the Ministry of Tourism, Arts and Culture for repair works. 

He said RM60 million in incentive funds will be allocated for activities to promote domestic tourism. Moreover, special individual income tax relief of up to RM1,000 for residents who spend on domestic tourism will be extended until 2022. 

5. What kind of assistance will be given to women, children?

A key highlight for the 2022 budget is the special assistance given to women and children. 

Mr Tengku Zafrul announced that the government is making it mandatory for all public listed companies to appoint at least one woman to its board of directors in order to recognise women’s roles in the decision-making process. 

“Currently, women hold 25 per cent of the board positions in 100 main public listed companies. 

“However, 27 per cent or 252 companies listed on Bursa Malaysia still do not have women on their boards,” he said. 

The minister added that companies who hire unemployed women, housewives and single mothers will receive government incentives. Putrajaya will pay incentives amounting to 30 per cent of their monthly wages for the first six months, and 40 per cent for the next six months. 

This applies to monthly salaries of RM1,200 and above, the minister said. 

Additionally, the government is looking to allocate an additional RM13 million to the police’s Sexual, Women and Children’s Investigations Division (D11). 

Addressing the issue of orphaned children whose parents succumbed to COVID-19, Mr Tengku Zafrul said that RM25 million will be allocated to Yayasan Keluarga Malaysia to ensure their education, welfare and future.  

“The government urges all parties, including NGOs, local communities, local leaders and even corporate companies to play a role to ensure that the welfare of these children continue to be safeguarded so that everyone can live together as one family without separation and build a bright future,” he said. 

  Source link

 

Islamic affairs continue to get priority from govt | The Star

 

RM1.5 billion for management and development of Islamic ...

 

 

Related posts:

 

Budget 2022 likely to be friendly to house buyers

 

World Bank: Malaysia needs to do to achieve high-income status, but at a slow pace

Tuesday, October 15, 2019

Budget that braces for tough times


Broad measures spelt out under Budget 2020 will likely sustain the economy, if there is no further escalation in trade fights.

A glimmer of hope emerged after the US outlined the first phase of a deal to settle some issues related to trade, but there is a lingering suspicion that China could be just buying time as it will most likely not concede to any loss of sovereignty.

China is developing its own ecosystem that could be “outside the reach” of the US, and it is possible that the time bought with such rearguard actions may allow China to achieve its aims.

Malaysia, a trade dependent economy, can only hope that it all works out well, if it can integrate into both ecosystems, said Inter-Pacific Securities head of research Pong Teng Siew.

More stimulus measures would be undertaken should the global economy worsen and in the worst case scenario, Malaysia would have room to spend more if it increases the budget deficit, currently at 3.2% of the gross domestic product (GDP).

The worry is that a further deterioration in global trade tensions may push the global economy into recession. If that does not happen, these Budget 2020 measures should be able to sustain the economy, according to RHB Research Institute chief Asean economist Peck Boon Soon.

Given the external headwinds that continue to pose more downside risks, it looks like Budget 2020, which attempts to spread out its positive effects, has been designed to brace for rough times.

Some positive impetus could be derived from measures to support tourism, construction and infrastructure, as well as small and medium scale enterprises (SMEs), said AmBank Research head Anthony Dass.

Tourism-related businesses such as food and beverage, accommodation, travel and transport, shopping and entertainment will likely benefit.

Recognising the importance of SMEs in driving growth, a string of measures to facilitate their financing needs, ease of doing business, faster adoption of high technology and green initiatives, should also bode well.

The bottomline is that resources are limited while the government still aims for fiscal consolidation and repayment of all debts.

Spreading out these scarce resources will probably succeed in paring off any broad-based slowdown, but it will be hard to make a dent when the sense of a loss in economic momentum is gradually settling in, said Pong.

More measures are required to stimulate the economy but in view of the gloomy global outlook and domestic issues, it is still overall, a good budget.

However, the allocation between capital and operating expenditure is still imbalanced; there is too little capital expenditure and there appears to be ‘little effort’ to reduce operating expenditure.

This will have a long term effect, especially in an aging society, according to Areca Capital CEO Danny Wong. In view of concerns over the lack of investments and falling revenue, efforts to boost foreign direct investments and tourism are welcome but more robust steps are required.

A correction in property prices may be a remedy for the overhang and inaffordability issues especially among young people.

The budget tries to forestall a price pullback, which would affect developers stuck with high land prices, by allowing foreigners to fill the demand gap.

But demand has evaporated, partly caused by the migration of mid-level talent and delays in household formation, the driver of long term demand and new home construction. Developers, lulled by the padding of demand through low interest rates for borrowers, high financing margins and easy access to debts, find it hard to lower prices.

They had thought the elevated level of demand was sustainable but it was not. Reduced prices may mean less profits but possibly a lifeline by way of cashflows, and may help restore delays in household formation and loss of talent, said Pong.

A worrying trend is that more and more young Malaysians are moving out of the country in search of jobs.Even mid-level expertise and talent is migrating; previously, it was mostly those who were highly mobile internationally.

A major cause is the lack of growth in real purchasing power.

Is the projected GDP growth of 4.8% achievable?

With the government continuing its spending and development initiatives, growth should remain robust, supported by services and construction, higher production from agriculture and mining. But manufacturing is expected to moderate.

Malaysia can achieve its 4.8% growth target, said Hong Leong Bank chief operating operating officer, global markets, Hor Kwok Wai.

However, in view of slower world GDP growth of 2.8%, AmBank Research expects growth of 4.0% with an upside of 4.3% for Malaysia.

Coming up with a further set of stimulus, should things worsen, may be a challenge.

Columnist Yap Leng Kuen is watchful of the tech war. The views expressed are the writer’s own.

Source link


Read more:


TAR UC again made political pawn in Budget 2020


'Budget 2020 favours the rich'



Budget 2020 is a capitalist budget that neglects the poor, says ...


 


Viewing trade talks progress with rationality, calmness

Ending the trade war benefits whole world

Both China and the US still have resources to sustain a trade war, but further consumption of those resources is unnecessary since their goals have proved naive and absurd. The situation is still highly uncertain, but the historical indicators will gradually be corrected. China and the US will not get lost and the world will benefit from the implementation of the consensus reached by the two heads of state, assuming the responsibility to both countries and the world and moving steadily towards the final end of the trade war in stages.


Related post

 




Saturday, November 3, 2018

Malaysia's Budget 2019: Making the tiger roar again in 3 years?

https://youtu.be/r8SdMk4UfTs https://youtu.be/SvZUBTyEoWQ https://youtu.be/BSp7aNmTZS4 https://youtu.be/hh_EYfFJZW8

The Pakatan Harapan government yesterday tabled its maiden budget that sought to restore Malaysia’s status as an “Asian Tiger” with a clean and transparent government that cares for the rakyat. (EPA/FANDY AZLAN)

KUALA LUMPUR: THE Pakatan Harapan government yesterday tabled its maiden budget that sought to restore Malaysia’s status as an “Asian Tiger” with a clean and transparent government that cares for the rakyat.

Finance Minister Lim Guan Eng, in tabling the 2019 Budget in Parliament, said: “As long as we are clean, people-centric and focused on carrying out institutional reforms, we can restore Malaysia back to fiscal health in three years.

“Let our love for our country unite us, our challenges make us stronger and our confidence awaken Malaysia as an Asian Tiger all over again.”

Themed “A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society”, the RM314.5 billion budget for next year has three areas of focus with 12 key strategies.

One focus area — to ensure the socio-economic well-being of Malaysians — will be the key performance indicator of the government’s success.

“We will seek to meet this objective by ensuring welfare and quality of life, improving employment and employability, enhancing wealth and social welfare protection, raising real disposal income and education for a better future,” he said.

In a speech that lasted more than two hours, interrupted by intermittent heckling from opposition lawmakers, Lim announced a slew of measures to address the people’s key concerns, from cost of living to housing, healthcare, education and transport.

Cash grants for the low-income Bottom 40 (B40) group will continue, single vehicle/motorbike owners with engine capacity of 1500cc and below will get targeted fuel subsidy, and the minimum wage will be raised to RM1,100 from Jan 1.

A National Health Protection Fund, with free coverage on four critical illnesses of up to RM8,000 and a hospitalisation benefit of RM50 a day, was also introduced for the B40 group.

For the affordable home programmes, Lim announced an allocation of RM1.5 billion while Bank Negara Malaysia will set up a RM1 billion fund to help those earning below RM2,300 a month to own houses costing below RM150,000.

The government will also allow the private sector to engage in new crowdfunding schemes for first-time housebuyers.

The Education Ministry received the lion’s share of the budget, with an allocation of RM60.2 billion, including RM2.9 billion assistance for the poor and RM652 million to upgrade and repair schools.

An amount of RM3.8 billion has been set aside for government scholarships.

All intra-city toll rate hikes will be frozen next year, said Lim, and public transport users, meanwhile, can buy RM100 monthly passes for unlimited trips on RapidKL rail or bus services beginning January.

A RM50 monthly pass is also available for those who use RapidKL buses only.

Civil servants and pensioners were not left out — staff up to Grade 54 will receive a one-off special payment of RM500; while government pensioners will get RM250.

The budget deficit for this year is likely to be 3.7 per cent, while gross domestic product (GDP) growth is forecast at 4.8 per cent and 4.9 per cent next year.

To ensure strong and dynamic economic growth, another focus area is to promote an entrepreneurial state that leverages innovation and creativity, while embracing the new digital economy.

The government aims to provide at least 30Mbps broadband connectivity outside urban centres within five years, while funds have been allocated to encourage investments in green technology and transition into Industry 4.0.

Corporate tax rate will be reduced to 17 per cent from 18 per cent for SMEs with paid capital below RM2.5 million, and businesses with annual taxable income below RM500,000.

Meanwhile, after inheriting “a worrying state of financial affairs which was in dire straits” with debts amounting to RM1.065 trillion from the previous administration, the third area of focus is to implement institutional reforms that promote transparent fiscal discipline.

“We intend to table a new Government Procurement Act next year to govern procurement processes to ensure transparency and competition, while punishing abuse of power, negligence and corruption,” Lim said.

He said open tenders will not only achieve more value-for-money for taxpayers, it will also nurture an efficient and competitive private sector.

To ensure that Malaysia has a clean government, the budget also saw the Malaysian Anti-Corruption Commission receiving an increased allocation of RM286.8 million.

Lim said the allocation, which is an 18.5 per cent increase from this year’s, will see MACC employing up to 100 more staff next year as the government revs up its anti-graft campaign.

Putrajaya expects to collect a revenue of RM261.8 billion next year, including a RM30 billion dividend from Petronas.

To raise its revenue, the government will leverage its assets and review taxation policies.

This includes reducing its stake in non-strategic companies, expanding the Service Tax to cover online services, and raising licence fees and taxes in the gaming sector.- By Nst Team

The following are the highlights of the 2019 Budget, which was tabled by Finance Minister Lim Guan Eng in Parliament on Friday. (Bernama photo)
The budget carries the theme of "Credible Malaysia, Dynamic Economy, Prosperous Rakyat" and will focus on three main thrusts with 12 key strategies to recapture Malaysia's 'Economic Tiger' status.

The three main thrusts are:

*Institutional reforms
*People's wellbeing
*Promotion of entrepreneurial culture
.
The 12 strategies are:

*Strengthening fiscal management
*Restructuring and rationalising government debt
*Increase government revenue
*Ensuring welfare and quality life
*Increasing job opportunities and marketability
*Improving quality of healthcare services and social welfare protection
*Increasing disposable income
*Education for a better future
*Initiating new economic power
*Grabbing opportunity to face global challenge
*Redefining government’s role in business
*Ensuring economic fairness and sustainable economic growth


Related:

Govt vows to restore our finances - Nation


 

image: https://www.thestar.com.my/~/media/online/2018/11/03/03/17/budget-spread.ashx?la=en

Click to view details   
http://clips.thestar.com.my.s3.amazonaws.com/clips/news/2018/budget%202019%20p24.pdf

Related stories:
Eyes of the taxman are on you now
Accelerating adoption of Industry 4.0
MACC gets more bite in fight
Joy for first-time house buyers
Digital tax triggers generally negative public reaction
Motorcyclists rejoice as they don’t have to pay toll now
Film industry gets a shot in the arm
Good news as EIS will be implemented in January
‘Not enough allocations given for TVET’
Govt to continue with its expansionary budget
Public thankful major transport projects will go on
No more discounts for PTPTN borrowers
Nothing to look forward to for housewife
Govt to pilot B40 health insurance plan
RM45mil is good news to homemakers
More grants would boost domestic trade, govt told
Education gets the lion’s share
College students happy with allocation
Gobind: Five years a realistic target for rural broadband
Don: Budget to buffer against slower growth
Groups: Gender equality push lacking
We will explain Budget 2019 clearly to stakeholders, says Dr Mahathir
Budget 2019: travel, departure levy

Vehicles must meet criteria for fuel subsidy - Saifuddin

Good news for 6.6 million road users - Nation


http://clips.thestar.com.my.s3.amazonaws.com/clips/news/2018/original%20petrol%20subsidy.jpg

Sunday, August 12, 2018

GST vs SST. Which is better?


MALAYSIA’s decision to revert to the Sales and Service Tax (SST) from the Goods and Services Tax (GST) will result in a higher disposable income due to relatively lower prices it will incur in most goods and services.

Consumers will have a choice in their consumption – by paying service taxes based on their affordability and ability.

The coverage of GST was comprehensive and it covered too wide a sector. While it was able collect a sustainable sum of RM44bil for the country, it was not people-friendly.

The narrowing scope of the SST will at most, collect approximately RM23bil for the country but it will indeed relieve the people – so SST is needed by the people.

Methodology of SST

The Sales Tax Bill and the Service Tax Bill have just been passed at the Dewan Rakyat and are expected to get approval from the Dewan Negara when it convenes on August 20.

This leaves little room for businesses and entrepreneurs to get ready for the new tax regime in less than a month’s time.

Therefore, it is of utmost importance to understand the concept and mechanism of SST as stated in both the Bills.

SST comprises two legislations. The sales tax is imposed on the manufacturing sector as governed by the Sales Tax Act 2018 while service tax is imposed on selected service sectors, with one of the most notable ones being the food and beverage (F&B) service providers.

The Service Tax Act 2018 would govern the selected service providers and the details would be gazetted in the subsidiary legislation, PU(A) Service Tax Regulations 2018.

Finance Minister Lim Guan Eng has announced that the threshold for F&B providers is set at annual turnover of RM1mil.

This would mean that those who operate with less than RM1mil turnover would not charge service tax at 6%.

This translates into hawker food, cafes, take aways or food trucks being able to provide F&B at lower prices as compared to the GST regime of 6%. Consumers are deemed to be given an option to pay service tax or not, depending on their consumptions at places such as fast food outlets, restaurants or food courts.

Generally, living costs will be relatively lower in the SST era as the B40 group of consumers would certainly be relieved in their daily eating affair.

The existing GST regime sets up the threshold at RM500,000 per year, meaning that almost all restaurants, including simple mixed rice outlets, would have a GST of 6% imposed. The service tax regime would not impose service tax of 6% on service charge rendered in any restaurant or café operator.

Service charge in its true essence, represents tips or gratuity to the waiters working in the restaurant and it is entirely at the discretion of the F&B operators.

These operators may choose to charge from 5% to 15% or even free of charge. In summary, in the event service charge is imposed, it would not be subject to service tax.

SST is people friendly as the daily consumption of food and beverages would be much lower in price as compared to the GST regime. The imposition of service charge is not governed by any law and it is entirely at the discretion of the F&B operators.

In order to avoid disputes, it is advised that notice be placed outside the premises if the F&B operator is imposing a service charge ans the rate determined by them.

SST is one stage

Sales Tax is only imposed one time on the manufacturing company when a sale is made to a trading company. The subsequent sales of the goods by the trading company would have no sales tax imposed.

Business entrepreneurs must be mindful and careful in the cost management as Sales Tax – although imposed at 10% – would eventually result in a much lower pricing of goods as compared to the GST regime.

GST is operating on a value added concept with input tax available as deduction. The supply chain moving from manufacturers to distributors, dealers and to consumers would result in higher pricing as GST is imposed on final stage, comprising of value add and profit margin.

SST is a business cost

Under the GST regime, input tax is available as a credit or deduction against output tax based on tax invoice received from GST registrant suppliers.

This would mean that GST is never a business cost as deduction is available against output tax even though there is no sales generated. Sales Tax on the other hand, would be paid by the trading company purchasing goods from the manufacturing company.

It is a business cost and deduction is only available when there is a sale. This would mean that business cost would be higher as Sales Tax is part of the inventory cost and to be deducted as cost of sales when goods are sold or exported. In simple terms, no sales, no deductions.

Businessmen are urged to carefully analyse the cost and not overprice the goods for the benefits of the people and the sustainability of their businesses. The reduction of GST from 6% to nil would immediately translate a price reduction of 6%, which is a must for a businesses to adhere to.

Failure to adhere to the pricing would expose the operators to the fines and penalties on anti-profiteering governed by Price Control and Anti-Profiteering Act 2011.

As the breakdown shows, SST is well suited in the Malaysian environment, to both the business communities and the people.

Source: Dr Choong Kwai FattDubbed the Malaysian tax guru, Dr Choong Kwai Fatt is a tax specialist and advocate.

Related:

  • Lim urges Najib to tell the truth

     

     

     

    Related Posts:

     

    Implications of the 'RM19bil GST collected, RM18bil taken’ and RM19.4bil shortfall !

    https://youtu.be/Ew5Fk-ml6Mo  The immediate concern is the budget deficit for 2018 spiking to 4% if the GST refunds are made this ye..  

  • Jobs ahead for Pakatan's first 100 days fiscal reform

    Saturday, October 22, 2016

    Malaysia's Budget 2017 Highlights


     https://youtu.be/NlINmuXh8LY

    Here are the highlights of the 2017 Budget proposals announced on Friday by Prime Minister Datuk Seri Najib Tun Razak:

    Lower corporate tax

    * Govt has proposed to reduce the corporate tax for the year of assessment 2017 and 2018

    * Reduce tax rate between 1 and 4 percentage points for companies with significant increase in taxable income for year of assessment 2017 and 2018.

    * Reduce tax rate from 19% to 18% for SMEs with taxable income up to first RM500,000.

    * Extend double taxation promotion on operating expenditure borne by anchor companies for the Vendor Development Programme until 31 December 2020.

    Amendment to Bankruptcy Act 1967

    * To enable bankrupt individuals to rejoin business activities by amending the Bankruptcy Act for social guarantors and those diagnosed with chronic diseases as well as the elderly.

    Infrastructure, railway projects

    * New 600km East Coast Rail Line connecting Klang Valley to East Coast, costing RM55b. Conects Port Klang, ITT Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu ends in Tumpat

    * RM100m to restore East Coast railway line along Gua Musang – Tumpat that was destroyed during flood.

    * To increase trip frequency of ETS for JB-Padang Besar route, RM1.1b allocation to buy more train sets

    Boosting investments in small, midcap companies

    * Govt-linked investment companies will set aside up to RM3b to fund managers to invest in potential small and midcap firms

    * Capital Market Research Institute will set up Capital Market Development Fund with initial funding of RM75m

    * Stamp duty on instruments of transfer of real estate worth more than RM1m to rise from 3% to 4% from Jan 1, 2018

    Broadband incentives for rakyat

    * Malaysian Communications and Multimedia Commission (MCMC) will provide RM1 billion to ensure the coverage and quality of broadband nationwide reaches up to 20 megabytes per second.

    * From January 2017, fixed line broadband service providers will offer services at a higher speed for the same price.

    * A subscriber of 5 mbs per second package at RM149 will enjoy a package with twice the speed, which is 10 megabytes per second. Within the next two years, for this package, the speed will be doubled with the reduction in prices by 50%.

    BR1M, subsidies

    * BR1M’s assistance for 2017. Households with monthly income below RM3,000, raised to RM1,200

    * For households earning RM3,000-RM4,000, the BR1M allocation increased from RM800 to RM900

    * Government will provide nearly RM10b for fuel subsidies including cooking gas, toll charges, public transport

    * For the purchase of reading materials, PCs, sports equipment be combined as lifestyle tax relief up to RM2,500 from 2017

    Affordable housing for first time buyers

    *Govt vacant lands at strategic locations will be given to GLCs and PR1MA to build 30,000 houses. The selling price RM150,000 to RM300,000.

    *Govt to build 10,000 houses in urban areas for rental to eligible youths with permanent job, Rental up to 5yrs, below than market rate

    * Rakyat-Centric projects will be continued through Private Finance Initiative with allocation of RM10b

    Empowering taxi drivers, Uber

    * Taxi drivers to get Govt grant of RM5,000 to buy new vehicles, individual taxi permits, RM60m allocation

    * For ride-sharing drivers who don't own car, down payment can be made using BR1M, rebate RM4,000 to buy Proton Iriz*

    Private retirement schemes

    * Effective 2017, the Government proposes to introduce a one-off increase of the existing RM500 incentive to RM1,000 to PRS contributors. Minimum accumulated investment of RM1,000 during the otwo years. For this, an allocation of RM165mil will be provided.

    * RM400 million will be allocated, among others for clean air and ecotourism initiatives

    Source: The Star

    Related:

    Budget 2017 Archives - BAJET Malaysia

    www.bajet.com.my/category/budget-2017/
    Prime Minister Datuk Seri Najib Tun Razak has arrived at Parliament House to table the Budget for 2017. The budget speech theme is “Accelerating Growth, ...

    Budget 2017: RM30mil for NCR land survey good for landowners, says Masing

    Budget lacks measures to revive property slowdown

    Shot in the arm for affordable housing



    Budget 2017: RM25bil for healthcare programmes

    Artistes upbeat over higher tax relief for sponsors

     Lifestyle tax relief a boon for lower and middle-income groups

    2017 Budget: New corporate tax scheme for SMEs
    http://www.thestar.com.my/business/business-news/2016/10/21/2017-budget-new-corporate-tax-scheme-for-smes/