KUALA LUMPUR, Oct 30 — The proposed one-off “Cukai Makmur” (Prosperity tax) announced in Budget 2022 yesterday, instead of a windfall tax, supports the government’s initiative, as those enjoying extraordinary profits from the Covid-19 pandemic could assist those adversely affected in the spirit of shared national prosperity, audit firm Deloitte Malaysia said.
“It is really good to see the government doing a lot of pump priming. Various corporate tax measures such as Cukai Makmur, deferment of instalment, extension on special tax deduction for reduction of rental of business premises, extension of expiry date for tax losses, and many more will be panacea to the challenging economy,” deputy managing director Tan Hooi Beng said in a statement today.
Meanwhile, Ernst & Young Tax Consultants Sdn Bhd (EY) Malaysia tax markets leader Farah Rosley said Cukai Makmur is in line with recent international trends, such as the Organisation for Economic Cooperation and Development’s (OECD) move to impose higher taxes on larger and more profitable companies from the year 2023.
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz, when tabling Budget 2022 yesterday, announced a one-off Cukai Makmur on companies that make more than RM100 million in profit for the year of assessment 2022.
“First, chargeable income up to the first RM100 million is taxed at 24 per cent, and second, the remaining chargeable income is taxed at 33 per cent, for the year of assessment 2022 only,” he said.
Meanwhile, Farah said other notable corporate income tax proposals were the extension of the carry-forward period for unabsorbed business losses, from seven to 10 years, and the extension of the reinvestment allowance tax incentive for a further two years to 2024 for companies that have exhausted their existing reinvestment allowance period.
“These proposals will be welcomed by companies suffering from the pandemic, as well as those looking to reinvest as the business climate improves,” she said.
On the Special Voluntary Disclosure Programme (SVDP) to be introduced by the Royal Malaysian Customs Department in phases with penalty remissions of 100 per cent in Phase 1 and 50 per cent in Phase 2, Farah commented that the remission of taxes may also be considered on a case-to-case basis.
“The SVDP represents a unique opportunity for taxpayers to regularise their indirect tax positions, pay reduced or no penalties, and move forward with a clean slate,” she said.
Similarly, Deloitte Malaysia indirect tax leader Tan Eng Yew reckons that the SVDP should encourage businesses towards a culture of self-compliance, which augurs well for the next phase of fiscal reforms.
“It is a well thought through, targeted and balanced Budget from an indirect tax perspective,” he said.
On the introduction of a Tax Compliance Certificate as a pre-condition for tenderers to participate in government procurement, Farah said it would be a further motivation for taxpayers to fulfil all tax-compliance requirements and help ensure that taxes are up-to-date.
Meanwhile, Deloitte Malaysia said in its commentary that the move is likely a form of check and balance to ensure that the government only does business with parties that are responsible taxpayers.
“An area of concern is if ongoing disputes with the Inland Revenue Board Malaysia would influence the issuance of this certification for the taxpayer,” it said. — Bernama
