NO new taxes are on the cards for this year except for the sugar tax, said Prime Minister Dr Mahathir Mohamad.

While the sugar tax was announced in Budget 2019, its implementation has been delayed as the government is still firming up an effective mechanism that will allow it to meet its health objectives.

The revenue collected from the tax will be used to provide free and healthy breakfasts for all primary school children.

“We want our kids to be strong and healthy in school,” the prime minister said in his keynote address at Invest Malaysia 2019.

Dr Mahathir said corporate tax is already competitive as it is, and the tax rate for small and medium enterprises – with a paid up capital of less than RM2.5 million and an annual taxable income of below RM500,000 – will be reduced to 17% from 18%.

“We are also rationalising tax incentives for investments, as the current administration and governance structures of investment incentives are highly fragmented, costly, and ineffective,” he said.

Malaysia currently offers over 130 types of incentives that are administered by 32 investment promotion agencies with varied roles and responsibilities, and several approving agencies.

“Our proposal entails holistic and simplified tax investment incentives that would be attractive for future investments.

“Incentives will be granted to desired sectors and types of investment that the country needs, and tied to specific key performance indicators. Agencies involved in granting and approving tax incentives will also be streamlined,” said Dr Mahathir.

Mahathir said the tax reform committee, formed to look into matters pertaining to the country’s tax regime, is finalising its proposal to enhance tax revenue.

The proposal will address measures to reduce tax leakages, accessing the underground economy, enhancing tax administration, and finding new sources of revenue.

Meanwhile, Finance Minister Lim Guan Eng said the government is still fine-tuning the application of the sales and service tax.

However, he urged private hospitals currently exempted from the 6% service tax to reduce or maintain the medical cost for patients.

“Private hospitals are supposed to pay a service tax of 6%, but they are exempt to help reduce the medical cost for patients.

“But we also hope that private hospitals can also reciprocate by reducing and maintaining their costs. Otherwise, we may have to reconsider our position to waive the imposition of service tax for private hospitals.” – March 19, 2019.