PwC: Malaysia may seek further cuts in corporate tax

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KUALA LUMPUR: The country’s corporate tax rate could be further cut in the Budget 2015 to be tabled on Oct 10, said PricewaterhouseCoopers (PwC) Taxation Services Sdn Bhd senior executive director Jagdev Singh.

He said although the rate was reduced by 1% to 24% in the last budget, the government could probably be a little more aggressive on that front.

“Neighbouring countries like Thailand, Vietnam and Singapore are already heading towards [a tax of] 20%,” he said after a media briefing on the goods and services tax (GST) here yesterday. He also said further cuts in personal tax could help alleviate the rising cost of living.

And while various measures were introduced last year to curb speculation and price increases in the property sector, Jagdev said now is the time to focus on affordable housing issues.

“While some measures are put in place, I think a lot more needs to be done,” he added.

Earlier, PwC Taxation Services executive director Hanita Ahmad said there remains a number of challenges that Malaysian businesses face when it comes to the implementation of the GST come April next year. They include identifying the products that fall under the GST gambit.

Hanita said there is also the issue of possible double taxation on inventories that remain as at March 31, 2015 and how to treat them as they are billed in advance.

“[The Royal Malaysian] Customs  released their preliminary guidelines before the legislation was brought in, and the problem is that these guidelines have not been updated to be in line with the legislation,” she said.

“The zero-rated and exempt goods orders are also still outstanding, and we hope that this will be addressed in the upcoming Budget speech,” she added.

PwC Southeast Asian Consulting Services executive director Matthew McKee is of the view that the GST presents a good opportunity for businesses to explore pricing strategies.

“The implementation of GST allows companies to get a better understanding of their costs and creates better internal transparency of where the costs and value are being created,” he said.

McKee also made several recommendations for businesses for implementing their own pricing strategies.

This article first appeared in The Edge Financial Daily, on October 2, 2014.