Deloitte Touche Tohmatsu Tax Services Sdn Bhd managing director Ronnie Lim defines the new singletier corporate tax system (STS) and compares it with the former two-tier imputation system (TTS)

Ronnie Lim

THE new corporate tax system is called the STS because profits earned by companies are only taxed once, i.e. on the company that gained those profits. When that company declares dividends, the profits thus distributed are no longer taxable on the shareholders of the company.

In contrast, under a TTS, companies pay normal corporate tax on their profits. Dividends distributed by those companies are not tax exempt and shareholders are again taxable thereon whether at their marginal rates or some reduced rate in respect of dividends. This creates a TTS because profits earned by companies are taxed twice – once at the company level and later in the hands of the shareholder who receives a distribution of profits by way of a dividend. A TTS will discourage payment of dividends, especially in the case of family-controlled companies. (more…)

StarSpecial: The Economic Report 2008

KUALA LUMPUR: Prime Minister Datuk Seri Abdullah Ahmad Badawi tabled the RM176.9bil Budget 2008, themed “Together Building The Nation and Sharing Prosperity”, in Parliament on Friday.

Abdullah, who is also Finance Minister, said the budget is focussed on three main strategies: Enhancing the nation’s competitiveness, strengthening human capital and ensuring the well-being of all Malaysians.

The amount allocated for Budget 2008 is 10.9% higher compared with 2007. (more…)

By DANNY YAP KUALA LUMPUR: Malaysia needs to reduce income tax if the government wants to reintroduce the goods and services tax (GST), according to Malaysian Institute of Certified Public Accountants (MICPA) president Datuk Nordin Baharuddin.

He said if GST was implemented income tax should be reduced because GST would burden consumers,” he told reporters at the MICPA Bursa Malaysia business forum on Monday.

Asked if Malaysia was prepared for GST, Nordin said: “MICPA has been preparing for it for sometime but the timing of the GST implementation was not “suitable” for the government.”

GST was introduced in Budget 2005 as an indirect tax on consumer for goods and services.

Commonly known as value-added tax, GST was supposed to come on stream in January 2007, but the government postponed the implementation of GST to a date to be announced.

On the possibility of GST implementation in Budget 2008, Nordin said: “We have no confirmation that it would be implemented soon.”

However, Nordin said MICPA hoped for a reduction in the tax rate for individuals and companies in Budget 2008.

“There was talks of a reduction in tax for individuals but we don’t know by how much,” he said.

On his expectations in Budget 2008, Nordin said the new budget should provide incentives for the agriculture industry, particularly in areas like biotechnology and the manufacturing and services industries.

On the recent of listed companies that were suspected of fraud, he said it was important for corporations to keep good record of transactions.

by WONG CHUN WAI

PUTRAJAYA: A home for every Malaysian – that will be the main agenda for Budget 2008 that will be unveiled by Prime Minister Datuk Seri Abdullah Ahmad Badawi at the Dewan Rakyat today.

A home-financing scheme is expected to be announced to allow wider house ownership.

It is regarded as the Government’s commitment to ease the housing burden of Malaysians, especially for the lower and middle-income groups.

Treasury officials have remained tight-lipped over the details of the initiative, regarded as the biggest Merdeka gift for the people.

The home-financing scheme could possibly be made through monthly deductions through the Employees Provident Fund.

In a further boost for house buyers, Abdullah, who is also the Finance Minister, is likely to announce further reductions for stamp duties, which made up a substantial amount of expenses for buyers.

Sources said the Government was aware that owning a house was a necessity for the rakyat and it should not be a burden, as paying housing loan instalments made up the largest portion of a person’s monthly budget.

A source described the mechanism as “interesting and broad based” which would make it easier for “those wanting to buy their first house or already owning one.”

There is further good news – Abdullah is also expected to announce details of how the self-employed who may not have EPF contributions or those with inadequate financial records such as salary slips to prove their repayment ability can get housing loans.

Officials have downplayed suggestions that the Budget would be perceived as a general election budget, saying the Government had always ensured that every Budget would help the people.

The broad framework of the Budget essentially covers three areas:

CIMB Research expects pro-business and investment growth budget

BUDGET 2008’s theme is Enhancing Competitiveness and Sharing Economic Prosperity – a continuation of previous policies aimed at sharpening the nation’s competitive edge while creating a favourable investment climate for companies to realise their potential and venture into new growth areas and innovate. –>

By DAVID TAN

LANGKAWI: Budget 2008 is expected to contain a host of “grassroots goodies” to bolster disposable income and address today’s higher cost of living.

Aseambankers chief economist Suhaimi llias said: “Budget 2007 cut corporate tax to 28%. This round we expect a cut in personal income tax to increase disposable income and spending. (more…)

By NICHOLAS CRIST

Whatever the contents, Budget 2008 will be delivered against the backdrop of the golden jubilee of independence. We should therefore be looking forward to a budget that complements a nation that is well into adulthood (more…)

By SEAH SIEW YUN To keep pace with the increasing demands and complexities in the globalisation arena, business laws are being reviewed and tax systems reformed.

FROM the old way of allowing the deduction of revenue expenses while capital expenses are added to tax, investors are now looking at a more sensible, tax-friendly system. (more…)

BY DR JEYAPALAN KASIPILLLAI COMPLIANCE costs are expenses incurred by taxpayers in meeting the requirements laid on them by law. These are costs over and above the actual payment of tax.

Compliance costs are incurred not only by taxpayers but also by those who are required to collect the tax from them on behalf of the Inland Revenue Board (IRB).

For example, in Malaysia, employers are required under the Scheduler Tax D (more…)

By SOO EWE JIN For a long time, the Inland Revenue Board was seen as quick to collect payments but slow to refund any excess. However, its CEO Puan Hasmah Abdullah has changed that by getting tax-payers to e-mail her their problems and attending to them immediately. (more…)