More tax solutions needed in Malaysia

More tax solutions needed in Malaysia

Published: Wednesday October 30, 2013 MYT 12:00:00 AM
Updated: Wednesday October 30, 2013 MYT 8:42:44 AM

Chua recognised that the focus group needed to do more to improve tax ranking considering the impending Real Property Gains Tax and Goods and Services Tax that would be imposed in the next two years.

KUALA LUMPUR: Taxpaying in Malaysia will need some clever initiatives to rank better in the World Bank Doing Business 2015 report, according to the Special Task Force to Facilitate Business (Pemudah) paying taxes focus group chairman Datuk Chua Tia Guan.

In the Doing Business 2014 report just released, Malaysia’s “paying taxes” category showed the most significant decline in ranking – from 15 in 189 economies measured to 36 – while most other categories including “getting credit,” “dealing with construction permits” and “trading across borders” indicated impressive progress.

The Doing Business 2014 is the 11th in a series of annual reports published by the World Bank and the International Financial Corp to investigate regulations that enhance and constrain business activity.

Based on business investors’ sentiments gathered from each country, the qualitative survey measures 10 stages in a business lifecycle – starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

The Doing Business 2014 report said that taxpaying in Malaysia went from rank 41 in 2012 to number 15 in 2013, back down to 36 in the recent report, attributing the sluggishness in that area to the increase in total tax rate to 36.3% from 24.5% the preceding year.

Chua recognised that the focus group needed to do more to improve tax ranking considering the impending Real Property Gains Tax and Goods and Services Tax that would be imposed in the next two years.

He said that new introductions such as the Form C as well as e-filing for sales tax to reduce the number of payments from 13 to 8 payments would be implemented to better facilitate the working days needed to file taxes and therefore, decrease costs.

These, he said, would offset the expected higher tax rate.

“Payments for the Employee’s Provident Fund, Social Security Organisation and Human Resource Development Fund will be combined into a single transaction,” Chua said.

E-filing for all payments would be enforced, he said.

“The impact of tax payments that have gone online should be seen in the Doing Business 2015 report,” Chua said.

Similarly, the “registering property” area in Malaysia recorded a decline in performance from the 33rd to 35th position in the Doing Business 2014 report.

Pemudah said among the initiatives to improve this ranking was the issuance of a circular to advise land offices and administrators to adopt a standard procedure to apply to check the register for the purpose of updating the strata titles.

“In 2012, eight out of 12 states achieved 100% compliance of one-day registration for a standard property,” the task force said of the other on-going initiatives to better “registering property” in Malaysia.