2018 Malaysian Budget Highlights & GST Updates

Transcription

1 2018 Malaysian Budget Highlights & GST Updates Moderator: Dr Veerinderjeet Singh Panel Speakers: Datuk Noor Azian Abdul Hamid Dato Sri Subromaniam Tholasy Mr. MA Sivanesan Mr Saravana Kumar

2 Backdrop to the 2018 Budget International geopolitical uncertainty Stabilising global crude oil prices Dependence on unskilled foreign labour Slow pace of technology adoption & automation Low innovation and skills development Fiscal discipline Sovereign downgrade and drop in rankings Culture that resists change and performance development

3 Strategies Primarily involving: Invigorating investment Developing the future generation Prioritising the wellbeing of the People Driving inclusive development Fortifying the 4IR and digital economy Enhancing efficiency and delivery of GLCs and public service Basically consistent with previous Budgets Budget Theme: Inclusive economy Wellbeing of the People Towards National Transformation 2050

4 Key Economic Indicators: Budget Overview 2018 (RM bil) 2017 (RM bil) 2016 (RM bil) Revenue Operating Expenditure Net Development Expenditure GDP Growth 5.0% - 5.5% 5.2% - 5.7% 4.2% Deficit 2.8% 3.0% 3.1% Source: Economic Report 2017/2018

5 Malaysia s Budget Deficit Deficit as percentage of GDP 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3.4% 3.2% 3.1% 3.0% 2.8% Year Year * 2018** Deficit as % of GDP Source: Economic Report 2016/ 2017 (2017* = Revised estimate, 2018** = Budget estimate, excluding 2018 Budget measures)

6 The 2018 Federal Government Budget Indirect Taxes 22.8% Other Direct Taxes 3.0% Where it comes from Borrowings and Use of Government's Assets 14.4% RM million Non-Tax Revenue 15.0% Income Taxes 42.6% 1 Includes revenue, borrowings and use of Government s assets. Source: Ministry of Finance, Malaysia

7 The 2018 Federal Government Budget Supplies and Services 12.0% Security 1.8% Retirement charges 8.8% Where it goes Grants and Transfer to State Governments 2.9% Emoluments 28.2% Social Services 4.3% Economic Services 9.2% 1 Excludes contingency reserves. Other Expenditure 11.2% Source: Ministry of Finance, Malaysia RM million Subsidies and social assistance 9.5% Debt Service Charges 11.0% General Administration 1.1%

8 Federal Government Revenue 2016 (RM million) 2017 (RM million)* 2018 (RM million)** Income taxes 102, , ,442 Other direct tax (RPGT / Stamp duty) 7,300 7,793 8,271 Export duties 980 1,222 1,400 Import duties 2,905 3,008 3,022 Excise duties 11,705 11,806 12,334 Sales tax and service tax Goods and services tax 41,206 41,500 43,800 Other indirect taxes 2,733 2,959 3,300 Non-tax revenue 43,078 45,143 48,291 TOTAL 212, , ,860 Source: Ministry of Finance, Malaysia 2017* = Revised estimate, 2018** = Budget estimate, excluding 2018 tax measures

9 35 Corporate Tax Rate (General) (%) Comparison of Corporate Tax Rate ASEAN countries ASEAN countries

10 Comparison of Top Corporate Tax Rates Top Corporate Tax Rate (%)

11 Comparison of Top Personal Income Tax Rates 60 Top Personal Income Tax Rate (%)

12 2018 Budget Outlook 01 Fiscal thrust Reliance on direct tax revenue No reduction in corporate taxes Reduction in personal taxes 03 Stimulate venture capital activities Various tax benefits available 02 Increase disposable income Reduction of tax rate for middle income group Continuation of BRIM handout 04 Empowering women who return to work Tax exemption on employment income 05 Health tourism Tax exemption on export of health services 07 Transfer Pricing Guidelines updated in stages in line with BEPS 06 Implementing of Malaysia s Digital Policy CA on development of customised software (consultation fee, licensing fee, etc.) 08 Encourage growth in manufacturing sector Enhancing CA on automation equipment

13 2018 Budget Outlook Fiscal discipline Reliance on GST but total revenue to increase by 6.4% over Targeted growth 5 5.5% for 2018 despite economic uncertainty and subdued growth across the global economy Domestic demand and private investment are the key drivers for 2017/2018 People centric Budget certainly an election budget! Pro-business strategies focus on SMEs, etc No new tax incentives Personal tax rate reduction of 2% aimed at the M40 group but all benefit

14 2018 Budget Outlook (cont d) Digital economy only the DFTZ mentioned. Compliance burden will be increased for all businesses with more tax audits Rumourson estate duty/inheritance tax, Personal tax reliefs no further consolidation or increases Reiteration of Government s commitment to OECD tax initiatives such as the Base Erosion & Profit Shifting project Usual allocation of funds for various initiatives effectiveness in managing the process? Nothing substantive given the constraints

15 Challenges / Concerns Global Economic Outlook Still face downgrade risks Global Competition for FDI Oil Price Volatility Impact revenue Inadequate Governance of Funds Balanced Budget by 2020 is unlikely Challenge in reducing fiscal deficit High Income Nation by 2020 is unlikely Efficiency in Tax Collection More tax audits Earnings Stripping Rule Review of the Incentives Regime needed Simplicity, certainty & transparency Holistic Review of the Tax System is needed High income /developed nation status

16 Thank You