Not enough taxes levied in Malaysia

taxes levied

The report on the federal government’s fiscal outlook and revenue evaluations and estimation showed some shocking statistics on the true state of taxes.

Out of the 1.25 million companies, some 62.4% or 780,742 are registered with the Inland Revenue Board (IRB), of which only an insignificant 61,000 or 7.8% were liable to pay taxes as of end-2017. The ratio is much better for the personal income tax.

Out of a workforce of 15 million, barely 16.5% or less than 2.5 million people are accountable or subjected pay to taxes.

Malaysians have all along been mindful and aware that a vast majority of individuals and companies are not subjected to taxes. Nevertheless, the numbers are growing according to a study going back to the year 2000. The trend is unhealthy for the country that is still dependent on oil money to grease and push the economy.

Regionally, Indonesia is the country with the lowest ratio of tax collected compared to the GDP. The tax revenue is only 3.4% of the country’s entire output of the domestic economy.

The reason why most of the Malaysian companies or individuals do not pay taxes is that the existing set of rules permits a generous set of incentives and relief that lets companies minimize or dodge their tax bill.

The rules additionally do not take into account the informal economy, which leads to leakages and loopholes within the system.

The informal economy in Malaysia is just beginning to grow. Tracing the leakage at this juncture is critical if the lopsided tax system is to be repaired. Towards this end, the Tax Reform Committee (TRC) of the government is looking at levying services tax on offshore companies offering digital services.

 

 

Shreyas Tanna

About Shreyas Tanna

The winner of Mr. Pune 2009 Pageant, Mr. Shreyas Tanna is currently the young, dashing, and dynamic CEO of a market research company called Research N Reports in Pune. Fondly known as RNR, the company specializes in market research as well as industry analysis, and is closely associated with its parent company Absolute Markets Insights (AMI). Mr. Shreyas Tanna began his corporate journey as the Head of Corporate sales & PR at RED Entertainment while pursuing his degree for MMS (Marketing) from the MGM College of Management, Mumbai. After accomplishing the tedious task of balancing his work and education, he further polished his skills in Corporate Sales, Public Relations, Channel Development, Global Client Engagement, Strategic Consulting, and Brand Development by working with HDFC Life and ResearchMoz Global Pvt. Ltd. His dedication towards his work has even won him accolades such as the National Level Performer 2013 – HDFC Life and Mr. ResearchMoz 2015. A disciplined individual with a loving heart, he is often seen taking crisp walks with an engrossed look and a gentle smile within the premises of his company to interact with the various departments. And he will be usually followed by an adorable trail of his beloved trio of Shih Tzu babies proudly known as Gucci, Drake, and Paris. The most enticing thing that you will notice about this content and proud pet parent is his infectious positivity and the firm belief in his eyes, a reflection of his favorite quote, “LIFE IS BEAUTIFUL!”

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