THE Chartered Tax Institute of Malaysia (CTIM) does not expect tax cuts for individuals and companies in Budget 2024. Instead it foresees the national spending plan to outline the mechanics of how the luxury goods (LGT) and capital gains taxes would be implemented.

CTIM president Chow Chee Yen said the tax rate for individuals would likely be maintained as it had already been amended in Budget 2023.

“A tax cut is not expected as the government is constantly looking to widen its tax base,” he told Bernama while talking about CTIM’s wish list for Budget 2024.

Chow said personal relief for individuals could be enhanced in line with the rise in cost of living; for instance, by raising the quantum for EPF and insurance relief.

“There may be a need to streamline some of the personal reliefs to be in line with the current needs of the rakyat,” he said.

For corporate entities, he said special tax deductions and tax incentives could be proposed for micro-, small- and medium-size enterprises relating to corporate tax governance, environmental, social and governance (ESG) principles, and e-invoice system implementation.

Finance Minister Anwar Ibrahim will table Budget 2024 in parliament on October 13.

Chow believed the government is “studying the best practices in other countries” to see how the LGT could be implemented in Malaysia at an “expected rate of 3-5%.”

The LGT, to be imposed on certain high-end items this year, was mooted in the revised Budget 2023 tabled in February 2023. No details have been disclosed since the announcement.

In the same revised budget, the government also said it would study the introduction of a capital gains tax for the disposal of unlisted shares by companies beginning in 2024.

“I am expecting Budget 2024 to release details on the mechanism for capital gains tax and the LGT,” said Chow.

Chow said the low-value goods (LVG) tax could make a comeback, despite concerns about its impact on the low and middle-income groups.

The Customs Department said in March that because of the state of the economy, it had indefinitely postponed the implementation of the 10% LVG tax, which was supposed to come into effect on April 1.

On the return of the goods and services tax (GST), Chow said the government has not ruled this out and will decide on the right time for its implementation. The GST was abolished in 2018.

On the carbon tax, he said there could be more incentives to encourage low-carbon practices in businesses but the mechanism and appropriate rate would require deliberation and consultation with stakeholders.

As for the windfall tax on the palm industry, Chow agreed it is timely to review it to ease the burden of smallholders.

He said other countries have turned to it as a revenue source but it could be time for a review.

“In line with the aspiration to ensure better wealth distribution and reduce income disparity, the government can consider channelling the revenue collected to the palm oil industry to assist smallholders,” he said.

Chow said the windfall tax is imposed on certain industries when economic conditions allow them to make above-average profits. 

“Malaysia is the world’s second-largest palm oil producer and there is a current 3% levy on palm oil prices above RM3,000 per tonne in Peninsular Malaysia and above RM3,500 per tonne in Sabah and Sarawak, the largest palm oil-producing states in the country,” he said. – Bernama, October 8, 2023.