PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) has urged Putrajaya to incorporate “more competitive” tax regimes in Budget 2021.
FMM president Soh Thian Lai suggested that corporate tax be capped at 20% and the tax on small and medium enterprises (SMEs) at 15%.
He told FMT this would help provide for a conducive business and investment climate, adding that government policies should enhance competitiveness by reducing the cost of doing business.
Soh also proposed that personal income tax for the 2020 and 2021 assessment years be set between 5% and 10% to mitigate the impact of the Covid-19 pandemic on individuals.
“This will help increase disposable income and encourage greater consumption, leading to higher domestic demand for goods and services,” he said.
“The government should also restructure personal income tax bands so that taxpayers would not hit higher tax rates too quickly.”
He also called for a moratorium on the minimum wage, which currently stands at RM1,200, for the next two years, saying firms needed to revive their businesses and return to their pre-pandemic position.
“Review the definition of the minimum wage as take-home pay, not basic wage,” he said. “Minimum wage should be basic wage and all fixed cash payments and allowances defined as wages under Section 2 of the Employment Act.
“It has been a longstanding tripartite understanding that fixed cash payments or allowances under Section 2 are recognised as wages,” added Soh.
Soh also proposed that the goods and services tax (GST) be reintroduced at a rate of 3% with a transition period of six months from the current sales and services tax.
He said the reintroduction of GST would strengthen trade in the country.
He said there should be a threshold of RM500,000 for the tax, adding that Putrajaya should also ensure outstanding GST refunds were fully paid off before reintroducing it.
He also said Putrajaya should drive business transformation through the adoption of technology by continuing programmes for Industry 4.0 and supporting research and development.
He urged the government to remove the RM50,000 threshold for R&D and to extend an automatic double tax deduction to firms involved in order to encourage innovation and creativity.
“Allocate RM100 million to RM200 million to set up a future manufacturing fund to support R&D work and the implementation of R&D by universities and key engineering research centres to support IR 4.0 adoption,” he said.
Soh also called for the setting up of a single agency to manage technical and vocational education and training (TVET) to ensure efficiency and standardise training and qualifications across the board.
He said foreign worker levies could be utilised to set up a TVET apprenticeship fund for employees to upskill themselves.
Source: https://www.freemalaysiatoday.com/category/nation/2020/10/30/fmm-calls-for-reduction-of-taxes-in-budget-2021/