KUALA LUMPUR, Feb 27 — CGS-CIMB expects the market’s reaction to be neutral to negative post-Budget 2023.
The research house explained that the high-income earners would be impacted by higher income taxes, higher taxes on luxury goods and capital gains tax (CGT) on disposal of non-listed shares, but this would be offset by the discontinuation of one-off prosperity tax, no plans to implement the Goods and Services Tax (GST) and no changes to the sin tax.
“There are also plans to introduce a luxury goods tax in 2023 on items such as luxury watches and fashion which could negatively impact consumption of some of these high-ticket items and on top of this, there are also plans to conduct a study to introduce a low-rate capital gains tax for the disposal of non-listed shares by companies from 2024,” CGS-CIMB said in a research note.
The plans to impose a luxury goods tax and capital gains tax will expand its tax revenue base, however, this could potentially raise concerns in the market that the government could broaden the capital gains tax over time.
“Also, the introduction of a capital gains tax will lead to lower gains from the disposal of non-listed subsidiaries by listed companies in 2024. It is unclear at this juncture if the plans to introduce CGT will boost merger and acquisition activities and spur companies to go for listing ahead of 2024 given the lack of details on the quantum of the tax rate,” it added.
Meanwhile, the absence of prosperity tax and no GST are the key positives and would allow Malaysian corporates that have chargeable income of more than RM100 million to enjoy a lower tax rate in 2023.
In the budget, the government confirmed that it is not planning to impose the GST as food inflation is more than 5 per cent and wages are still at a low level. — Bernama
