Cut corporate tax to revitalise the economy

REDUCING corporate tax may help businesses to rejuvenate during these trying times, said TA Securities Research.

In a statement today, its lead economist Shazma Juliana Abu Bakar suggested that the government cut corporate tax from the current 24% to 20%, or lower.

“We agree that the government may lose some revenue during this tough times. However, the move will be countered by higher investments later,” she said in a report entitled 2021 Budget Preview: Measures to Underscore Importance of Economic Recovery & Resilience.

“Other nations have done it. For example, Thailand has announced a 20% tax rate while Singapore’s corporate tax is levied at a flat rate of 17% on chargeable income,” she added.

Shazma added that apart from vaccine development programmes for the COVID-19 pandemic, the private sector will still hold the key to revitalise the economy at large.

“The private sector will remain as the main contributor to our economy although we do expect uncertainty and fragile consumption growth in the first half of next year.

“Consumers are expected to remain cautious due to the economic volatility and low wage growth,” she said.

Tax relief for individuals

On other measures, Shazma urged the government to provide higher tax reliefs for individuals from the current claimable of RM9,000 to RM10,000.

She added that the government should also provide higher lifestyle tax relief from the current RM2,500, to support employees working from home.

The economist also suggested higher tax relief to be provided on domestic travel expenses to support domestic tourism activities.

“For now, Under the Penjana stimulus, people can only claim up to RM1,000 on travel expenses incurred from March 1 till end of the year,” Shazma said. – Oct 16, 2020

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