KUALA LUMPUR (Oct 29): The Malaysian Institute of Certified Public Accountants (MICPA) said it was surprised by the imposition of the one-off prosperity tax on businesses which generate high profits for the Year of Assessment 2022.

Under the proposed tax, profits exceeding RM100 million will be subject to a 33% tax.

MICPA acknowledged that the one-off prosperity tax is a one-off imposition on grounds of fairness and equity, but insisted that it is “a rather off-tangent initiative”. 

“MICPA is of the view that the imposition of this one-off prosperity tax is uncalled for, especially when stability in whatever form has yet to be attained as the country moves into recovery mode,” it said in a statement.

Meanwhile, the institute lauded Budget 2022, saying it is a “feel-good” budget, given the various initiatives, funding and allocations for various segments of society, although the budget could have been perceived as an “election budget” if not for Covid-19.

MICPA notably applauded the extension of the special reinvestment allowance, as this will ensure companies in the manufacturing and selected agricultural sectors continue to invest in qualifying capital expenditure to continue to expand, diversify, automate and modernise their business operations.

It also noted another interesting development in Malaysia’s reversion to the previous income tax scope which taxed income derived in Malaysia, as well as income earned from overseas and received in Malaysia.

“The 2022 Budget was short on outlining any initiatives to enable Malaysia to build a sustainable tax revenue base. The review of the tax incentives regime has yet to be finalised. As such, we expect the 2023 Budget to outline a more structured reform of the tax system, which we hope can assist in moving the country to a high-income nation,” said MICPA president Dr Veerinderjeet Singh.

“Malaysia needs to, in the medium term, broaden the scope of the sales and service tax (SST) in order to increase the country’s revenue and ultimately make it a broad-based consumption tax, with added features such as tax invoicing and others similar to a value-added tax,” he added.

Nevertheless, Veerinderjeet said MICPA welcomes the introduction of the Fiscal Responsibility Act, the tax expenditure statement in future budgets, the need for a tax compliance certificate for government tender projects, the implementation of the tax identification number and the indirect tax voluntary disclosure programme.

See more Budget 2022 highlights here.