PETALING JAYA: Apart from the Goods and Services Tax (GST), imposing a minimum tax rate of 15% on the digital economy will help boost government revenue streams, tax experts say .
The Department of Finance recently said in a pre-budget statement that discussions are underway with the Organization for Economic Co-operation and Development (OECD) on an overall minimum tax rate of 15% on the digital economy.
Dr Shankaran Nambiar said the move, part of an international program involving 137 countries, was an attempt to ensure that large multinational or multinational companies (as defined by the OECD) do not evade or pay no less taxes.
“As such, Malaysia appears keen – as part of a global effort – to help prevent the race to the bottom when it comes to tax collection from large multinational corporations,” the Malaysian Institute said. economic research (Mier). principal researcher.
This tax only applies to multinationals with a turnover of 750 million euros.
“So it won’t matter to most Malaysian businesses,” he added.
Managing Director of Thannees Tax Consulting Services Sdn Bhd, SM Thanneermalai said taxing the digital economy is not wrong.
He said many businesses are now part of the digital economy and taxes are not paid in the country where sales are made.
He said this tax system will apply to foreign service providers, as local companies already have a registered tax presence.
Thenesh Kannaa, Partner at TraTax, said taxing the digital economy is in line with international practice and promotes neutrality.
“At present, if someone walks into a store to buy (say) RM50 of an imported product, the price may include import duty and sales tax.
“But if the consumer purchases the same product through an online platform, it can be home delivered without any import duty or sales tax due to the low value shipment exemption,” he said. .
“This means that the tax treatment is not neutral, which puts companies operating in Malaysia at a tax disadvantage,” he said.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz recently said the government should make efforts to broaden its revenue base.
He noted that national revenue collection as a percentage of gross domestic product (GDP) last year was relatively low at 15.1 percent compared to other countries in the region such as Singapore, Thailand and the Philippines. Tax revenue, meanwhile, amounted to 11.2% of GDP.
On how the government can increase its sources of revenue and increase its coffers, Dr Nambiar said the government can look at prosperity taxes, inheritance taxes as well as taxes on soft and sugary drinks.
Apart from additional taxes, he said taxation of the system also needs to be improved for efficiency, while oversight needs to be stepped up.
Thanneermalai, on the other hand, said that the government may also look into capital gains tax as well as taxation of cryptocurrency.
“There’s a lot of money going through that hasn’t been taxed in the crypto world,” he said.
Besides that, he said tackling the underground economy and tax evaders is also another option.
“There are still many taxpayers who do not file their returns on time and who do not pay the correct taxes.
“There is an underground economy that the tax authorities should focus more on,” he said, adding that the underground economy, which is worth billions, could bring in tax revenue to the tune of billions of ringgits.
He noted that increasing tax revenue will also come down to a high level of compliance and enforcement.
Former Finance Minister Lim Guan Eng said in 2019 that the underground economy was estimated at around 21% of GDP with the 2018 economy at RM1.45 trillion.