Inheritance And Capital Gains Tax Not Being Introduced This Year
The rumoured inheritance and capital gains taxes are unlikely to be introduced in Budget 2019. Sources claim that the government is still studying the possible effects of such taxes, and they may only be introduced over the next few years.
Instead, the unnamed source claims that the government will focus on extending the Sales and Services Tax to online businesses. This would apply to foreign digital service content providers; and would not be introduced as a new standalone tax.
Local online businesses are already subject to the SST, but it does not yet extend to international players. Expanding the tax could potentially level the playing field and increase the country’s tax base; however, it may also have a negative impact on startups and SMEs.
The Tax Reform Committee, which was formed in September, is also looking at reviewing the tax incentive structure. It claims that some incentives are no longer effective and should be abolished. Likely to be replaced by new incentives that will stimulate the private sector.
However, any such changes are unlikely to be introduced in the short term. More time is needed to study the proposed changes, and any new incentives will be introduced gradually.
The new government has the unenviable task of trying to manage a staggering RM1 trillion national debt. Finance Minister Lim Guan Eng has already said that the upcoming budget announcement will make him the most unpopular minister around. A move that he believes is necessary for getting the country back on track.