Monday, October 3, 2011

PM may announce lower tax rate to attract FDI

KUALA LUMPUR: UHY says Datuk Seri Najib Tun Razak may lower taxes in a move to attract foreign direct investment (FDI), boost domestic investment and also encourage consumer and business spending.

It said on Monday, Oct 3, it said the consensus amongst Tax Practitioners in Malaysia wa that the Prime Minister planned to announce a cut of 1% to 2% in corporate tax rate for the 2012 Budget proposals to be announced on Friday.

"Malaysia has one of the world's most competitive and business friendly tax systems in the world today, given the global state of affairs with a debt crisis in the US and EU, a further reduction in tax would put Malaysia on the map as a haven for investors and international businesses," said Alvin Tee, senior partner of UHY in Malaysia.

In the research report that span over 21 countries, including members of G8 as well as key emerging economies, it said under the statutory tax profit of US$100 million per annum, the same business in Brazil would pay over a third more in tax (US$34 million) than the equivalent business in Malaysia (US$25 million).

It also said that Bank Negara Malaysia would synchronise its policy changes with that of the People's Bank of China.

Tee said due to uncertainties in the US and Europe, he anticipated Najib to announce tax proposals that would further increase inter-Asean trade and trade with China to counter slow growth in exports to US and Europe.

"High corporate taxes can deter business investment, which can hinder economic growth. Over the last decade many EU countries have slashed corporate taxes, leaving some of the BRIC nations surprisingly high tax in comparison," said UHY chairman John Wolfgang.

According to the data compiled under the countries surveyed for corporate tax payable per country, Malaysia was ranked ninth under the pre-tax profit of US$100,000 income bracket, 12th in the US$1 million income bracket and 14th in the US$100 million income bracket.

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