Page 9 - KLSCCCI Nov 2021 - eBulletin 401

商会聚焦

KLSCCCI’s response to

recent proposals on

implementation

of new taxes Although the

introduction of the
aforementioned new
It has come to our attention that the government is studying
measures to boost revenue following a statement made by Deputy taxes will seemingly bring in
Finance Minister Yamani Hafez Musa on 22 September 2021. Such more tax revenue for the
measure includes potential introduction of capital gains tax on country and fund various aid
shares. There were also a series of discussions linked to the packages meant for pandemic
re-introduction of inheritance tax in the last 12 months.
The Chinese Chamber of Commerce and Industry of Kuala relief, KLSCCCI do see
Lumpur and Selangor (KLSCCCI) is supportive of government’s drawbacks that could be
proposed measures to boost revenue and would like to offer detrimental to Malaysia’s
comments and views on the implementation of the aforementioned
new taxes. future economic
well-being.

Capital Gains Tax on Shares (CGT)

KLSCCCI believes that CGT will bring a number
of undesirable economic impact, namely: (USD’billion) 92.08
• Create more disincentives to operate in 83.6
Malaysia. CGT will cause local business
owners to question their primary presence in 80
Malaysia and move capital/businesses out of 79.74
the country. 68.82
• Further erode our ability to attract foreign
capital. Malaysia has been trailing other Singapore
neighboring countries in attracting FDIs in the
past 3 years.
60 58.0
Additionally, Malaysia’s corporate tax rate
(24%) is relatively higher when compared
against Indonesia (22%), Thailand (20%) and
Singapore (17%). CGT will further dampen our
ability to attract FDIs instead of encouraging
long term investments. 40
• Effectiveness of CGT to raise tax revenue is a
suspect. Implementation of CGT will raise calls
to account for Capital Losses which will
reduce the effectiveness of CGT to raise more 23.43
tax revenue in the first place. 20.58 20.56
• Disincentive to develop attractive sectors that 20 18.0
will drive future GDP growth. Some sectors 14.1 15.5 16.12 14.0
benefiting from the pandemic particularly the Vietnam 12.6
Technology sector such as semiconductor, Malaysia 11.34 9.4 10.4
Internet of Things, artificial intelligence, Philippines 6.92 8.7 7.62 7.65 6.4
automation, electric vehicles, etc. are sectors 5.0
that require more incentives, not new taxes. Indonesia 3.92 6.66 6.6 4.15 2.5
• Further burden employers/entrepreneurs 0 Thailand 1.82 1.5
impacted by the pandemic. CGT will reduce
the ability of entrepreneurs’/employers’ 2016 2017 2018 2019 2020
looking to sustain a business by raising cash
from sale of another business. (Source: United Nations Conference on Trade and Development)

This article reflects the views of the Finance and Capital Market Committee (FCM) of KLSCCCI. Certain members of the FCM were
excluded from participating in the development of this response due to existing employment role which may cause a conflict of interest 09