Thursday, July 14, 2011

GST may lead to 3pc corporate tax cut

Published: 2011/07/13

PETALING JAYA: The introduction of the goods and services tax (GST) is likely to be followed by a reduction in corporate and
personal income taxes of between two and three per cent, says a tax expert.

Experience from other countries, that have implemented the GST, showed that such a move would ultimately lead to a reduction in corporate and personal income tax rates, said Yee Wing Peng, Deloitte KassimChan Tax Services Sdn Bhd Managing Director.

The appropriate tax rate reduction after GST implementation depended on the dynamics of a particular economy, he told reporters after launching the Deloitte Tax Challenge 2011 competition to promote taxation as a career option for
university undergraduates here today.

"We are going through trying times where discipline is required on the part of the government and the people to tighten their belts, especially, against a backdrop of rising cost of goods," he said when asked about the focus areas in Budget 2012.

"I do not anticipate a lot of tax goodies in the coming budget but on the other hand, there may be certain tax incentives, given in the past, which could be abolished or rolled back.

"I hope the government can probably announce the road map for GST
implementation because it would help the country diversify its sources of revenue and bring in additional income," he said.

Lim said the road map should commit to reducing corporate and
personal income taxes as this would prompt the public to view the GST more favourably and speed up its implementation.

Minister in the Prime Minister's Department Datuk Seri Idris Jala had said earlier that Budget 2012, to be tabled in Parliament on Oct 7, may see significant changes in the corporate tax structure which was currently pegged at 25 per cent. - Bernama

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