Govt urged to further reduce corporate tax

MALAYSIA should further cut corporate tax to be more competitive and implement a goods and services tax (GST) to make up for the loss in revenue.

Associated Chinese Chambers of Commerce and Industry Malaysia (ACCCIM) secretary-general Datuk David Chua said the country has been slow to lower corporate tax compared to other countries.

"If the companies are subject to lower tax, they will become more competitive in the mid- to long-term and this will translate into lower prices of goods and services," he said.

Eventually, the GST will not burden consumers, he added.

"If we manage it well, the transfer will be quite orderly. It is a worldwide trend to widen the tax base and lessen the leakage from tax avoidance by businesses."

American-Malaysian Chamber of Commerce (AmCham) also felt that the corporate tax should be further cut to place the country on a competitive footing with other Asean countries. It proposed lowering the tax over a tiered basis to 18 per cent by 2012.

AmCham president Datuk Nicholas Zeffreys said the consumption tax was needed as depleting oil reserves would hit contribution to government revenue in future.

Zeffreys acknowledged that the GST was complex and could hurt business development and the lower-income group.

"If the GST is to be implemented, its weaknesses need correction and business needs sufficient notice to prepare for it," he said.

Meanwhile, Malaysian International Chamber of Commerce & Industry (MICCI) executive director Stewart Forbes said tax cuts would directly lower the cost of doing business and enhance Malaysia's competitiveness.

This would make Malaysia an attractive foreign direct investment destination, he said.

"If the current financial situation worldwide does not permit immediate corporate tax cuts, then the government should at least indicate when this can be done, perhaps in line with GST introduction, so that investors can plan ahead for doing business in Malaysia," Forbes said. - By Hamisah Hamid