THE federal government’s revenue collection in 2024 is envisaged to record a marginal growth of 1.5% to RM307.6 billion or 15.6% of gross domestic product (GDP), driven by higher tax collection. 

Tax revenue continues to be the major contributor and is expected to grow by 6.4% to RM243.6 billion, which constitutes 79.2% of total revenue or 12.3% of GDP, the Ministry of Finance (MOF) said in its Fiscal Outlook and Federal Government Revenue Estimates 2024 report released today. 

“The revenue collection will be supported by robust economic growth, coupled with measures initiated to further enhance the revenue mobilisation through broadening the tax base as well as improving tax compliance and transparency. 

“Furthermore, several measures will be implemented, among others, the introduction of a capital gains tax for the disposal of unlisted shares by companies and e-invoicing,” the ministry said. 

Earlier, the government revenue projection for 2023 was revised upwards by 4% or RM11.7 billion to RM303.2 billion or 16.4% of GDP, compared with initial estimates of RM291.5 billion. The MOF said in 2024, direct tax collection is estimated to increase by 6.9% to RM185 billion or 75.9% of total tax revenue.  

The bulk of the increase is primarily attributed to continuously higher collection from companies’ income taxes (CITA) and individual income taxes at RM106.4 billion and RM42.5 billion respectively. 

The increment in CITA is primarily contributed by better corporate earnings prospects and continuous efforts in enhancing audit and tax compliance. Individual income tax is projected to increase by 6.9% in tandem with a better outlook for the unemployment rate and annual wage growth.  

Petroleum income tax is expected to record a stable collection of RM21.7 billion on account of steady average crude oil prices averaging US$85 (RM402.05) per barrel.  

Revenue from other direct taxes comprising stamp duty and real property gains tax is expected to register RM8.6 billion and RM800 million respectively in line with a better property market outlook.  

The ministry said revenue from indirect taxes is anticipated to increase by 4.7% to RM58.6 billion, mainly contributed by higher collection from sales and services tax (SST).  

The SST is forecast to register RM35.8 billion or 1.8% of GDP due to higher consumption, it said. 

Sales tax collection is projected to increase by 4% to RM18.3 billion. 

Services tax collection is estimated at RM17.5 billion on the back of higher demand for food and beverages followed by the telecommunications and insurance sectors.  

Excise duties collection is estimated to grow by 3.8% to RM13.6 billion on account of higher imported cigarettes, excise duty on liquid or gel products containing nicotine for electronic cigarettes and vape devices, widening the scope of sugar-sweetened beverages tax, and a stable outlook in the automotive industry.  

Non-tax revenue is projected to decrease by 13.8% to RM64 billion mainly due to lower dividends from Petroliam Nasional Bhd (Petronas), reflecting reduced dependency on petroleum-related revenue.  

The annual dividend from Petronas is projected to be lower at RM32 billion while the annual dividends from Bank Negara Malaysia and the Retirement Fund Incorporated are estimated at RM3 billion and RM1 billion respectively. 

In addition, licences and permits are expected to register RM14.6 billion mainly contributed by petroleum royalties amounting to RM5.6 billion, levies on foreign workers (RM3.3 billion), and motor vehicle licence fees (RM3.1 billion).  

Petroleum-related revenue in 2024 is anticipated to be lower at RM61.8 billion or 3.1% of GDP, compared with RM69.8 billion or 3.8% in 2023 mainly due to lower Petronas dividends despite the forecast higher average crude oil price. 

Non-petroleum revenue is envisaged to increase by 5.3% to RM245.8 billion, reflecting better revenue diversification on the back of a favourable economic outlook. 

“Moving forward, the government will continue to ensure sustainable non-petroleum revenue generation in order to finance expenditure commitments, particularly in providing better infrastructure and social welfare for the public,” the MOF said.  

The ministry said the government remained committed to fortifying its revenue base, narrowing the tax gap, and enhancing tax efficiency, with the overarching goal of establishing a sustainable revenue collection framework.  

“This objective will be pursued through a diversified array of initiatives, including but not limited to the optimisation of tax incentives, the reduction of tax losses, and the augmentation of tax compliance through effective audit processes. 

“In addition, efforts will be intensified to enhance revenue mobilisation and tax transparency through the implementation of the Medium-Term Revenue Strategy and tax expenditure reporting,” the ministry added. – Bernama, October 13, 2023.