KUALA LUMPUR, Oct 11 — The Anwar administration is rumoured to consider introducing several new taxes in Budget 2025 — in a bid to raise Malaysia’s revenue and close the fiscal gap.

One of them is reported to be a levy on wealth, income or assets transferred to family members upon the owner’s death.

The rumour has caught public attention, especially after some government lawmakers openly said they would not vote to support the inheritance tax if it is tabled in Parliament.

Sarawak DAP chief Chong Chieng Jen claimed that it is a tradition and culture of Asian parents to leave something for their children, deeming the inheritance tax as a double taxation and a financial burden on a family.

But Malaysia is no stranger to taxes on wealth transfers.

There was the colonial-era Estate Duty Enactment, introduced in 1941 and repealed in 1991, which, according to past news reports, was because the collection was too low.

Is inheritance tax a normal thing in Asia?

Arguably yes. In fact, Japan and South Korea have the highest inheritance ceiling tax rates in the world, at 55 and 50 per cent respectively. France and the US come in third and fourth at a ceiling rate of 45 and 40 per cent respectively.

Most Asean members also have some form of levy on inheritance or estate transfers.

Vietnam, for example, taxes inherited property exceeding VND10 million (around RM1,730 at current exchange rates) at a flat rate of 10 per cent.

But it does make exemptions if the income is generated from the inheritance of real property as long as one of the following relationships is applicable to the heir and the deceased person: husband and wife; parent and child, including adopted children and foster parents; mother and father-in-law, child-in-law; grandparent and grandchild; sibling.

Thailand has the Inheritance Tax Act that was enacted in 2015 as part of a broader tax reform.

The tax is applicable if the estate’s value exceeds 100 million baht (about RM12.8 million in today’s exchange rate) at a rate of 5 per cent for ascendants (such as parents), and 10 per cent for descendants (such as children).

The Thai government exempts inheritance tax for spouses and those left to schools, charities, and religious groups.

Singapore imposed what it called Estate Duty but abolished it in 2008.

Asean members that do not currently impose inheritance taxes are Malaysia, Laos, Cambodia, Indonesia, and Myanmar.

How has their population responded to the tax?

It varies depending on which country but one fundamental trend applies: opposition to the tax often comes from the richer segments who also usually part of the business communities, while the lower and middle income are usually supportive of it.

In Thailand, there has been no visible opposition to it and the tax was never turned into an election issue when the country headed into one of its most volatile open elections to date, which saw a split Parliament that eventually forced a compromise between rivals.

This can be similarly observed in Vietnam.

South Korea’s finance ministry said in July it would remove the highest tax rate of 50 per cent, which is levied on inheritance exceeding 3 billion won and instead apply a rate of 40 per cent, the next highest, to any inheritance exceeding 1 billion won.

The tax cuts were reported to be a part of the republic’s broader push to boost the domestic stock market and tackle a falling birth rate, which is the world’s lowest.

Analysts argued that high inheritance taxes is the factor behind the "Korea discount”, which refers to South Korean firms’ comparatively lower valuations.

Family-run companies have few incentives to make management decisions that would lift stock prices as higher valuations mean more inheritance taxes for successive generations, according to the analysts.