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Implementation Of GST Imminent, Says KMPG
KUALA LUMPUR, Sept 12 (Bernama) -- The proposed reduction in corporate tax to 25 percent in 2009 has fuelled speculation that the implementation of goods and service tax (GST) is imminent, says a tax expert.
KPMG Tax Services Sdn Bhd's managing director Khoo Chin Guan said the reduction in corporate tax rates was in line with developments in many parts of the world, reflecting a shift from direct taxation to indirect taxation.
"With this move happening in Malaysia as well, one could not be wrong for speculating that the proposed reduction in corporate tax rate to 25 percent is a prelude to the imminent implementation of the GST in Malaysia," Khoo said.
"I would say that it is question of time that this will happen as it is inevitable that the reduction in personal tax rates would have take place when the GST is implemented in Malaysia," he said at the opening ceremony of KPMG Tax Summit 2007 here Wednesday.
When tabling Budget 2008 last Friday, Prime Minister Datuk Seri Abdullah Ahmad Badawi announced a further corporate tax cut to 25 percent in 2009.
This caused a surprise as many were expecting a reduction in the personal income tax rate.
In 2005, the government announced that the GST would be implemented in January 2007 to replace the current sales tax and service tax structure.
However in February 2006, the Finance Ministry announced that the government had decided to defer the GST implementation to a later date.
On the introduction of a single-tier tax system with effect from the year of assessment 2008 to replace the dividend imputation system which has been in operation since 1947, Khoo said it would simplify the process of dividend payment by companies without the need to monitor the sufficiency of dividend franking credits.
"It would also enable capital gains to be paid out as dividends which otherwise would not have possible in the past," he said.
However, Khoo said the new tax system has its disadvantages as well.
"The single-tier tax system would result in the removal of tax refunds of the tax credit attached to dividends come on Jan 1, 2014," he said.
"This would impact taxpayers, particularly those who are either tax exempt or whose tax liability is below the tax credit attached to the dividend," he added.
-- BERNAMA |
