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PM: Govt mulls corporate tax cut

Business & Markets 2012 Written by Chong Jin Hun of theedgemalaysia.com Thursday, 04 October 2012 14:55

KUALA LUMPUR (Oct 4): The government plans to reduce corporate taxes in the short to medium term to raise the country’s competitiveness as an attractive global business destination, according to Prime Minister Datuk Seri Najib Razak.

Najib said introducing a lower corporate tax regime in the future will ensure companies have more income for reinvestment to grow their businesses — a move which will further improve the dynamics and competitiveness of the country’s private sector.

“It is the government’s intention to reduce corporate taxes in the short to medium term,” Najib said during the ‘Ask Najib’ programme televised live over Astro Awani channel late Wednesday.

Malaysia’s corporate tax is currently at 25%, similar to Indonesia. While Singapore’s rate is at 17%, Thailand’s rate is 23% and Hong Kong’s is 16.5%.

Malaysia last announced a corporate tax rate cut in 2008 where former Prime Minister Tun Abdullah Ahmad Badawi announced a 1% reduction to 25% for 2010. The rate was 26% in 2009 and 27% in 2008.

Najib said the plan to reduce corporate taxes is contingent upon the government’s measures to restructure the nation’s tax system, when responding to a question via Twitter on the rationale behind the government move to reduce the individual income tax rate under the latest budget but maintain the rates for corporate sector.

Malaysia implements a standard corporate tax rate of 25% on profits of companies with a paid-up capital above RM2.5 million.

Resident small and medium companies with a paid-up capital of up to RM2.5 million pay a tax of 20% on the initial RM500,000 of their profit while the balance is subject to the 25% tax rate.

Under Budget 2013, the government plans to reduce the individual income tax rate by one percentage point for each chargeable income category exceeding RM2,500 up to a cumulative RM50,000.

The move, aimed at reducing the people’s financial burden, will exempt 170,000 tax payers from tax obligations, according to Najib.

Bernama quoted Najib as saying during the ‘Ask Najib’ programme that investors will have more confidence in doing business in Malaysia when they see a politically stable, peaceful, and harmonious country.

The prime minister said foreign investors will naturally compare Malaysia’s political and business backdrop with those of other nations, and when they are convinced of the positive environment in Malaysia, their confidence in the country’s dynamics will increase.

“When they look at Malaysia, they will compare us with other countries. And when they like what they see about Malaysia… peaceful, harmonious, no violent street demonstrations… confidence in Malaysia certainly will be much higher.

“As a nation, we will benefit from that kind of perspective,” Najib said.

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