KUALA LUMPUR — The Malaysian government has ruled out introducing any new taxes in the near future, according to the Finance Ministry. Instead, officials are focusing on improving compliance, enhancing the current tax system, and implementing measures already announced in the 2025 Budget.
The Ministry emphasized that any future tax changes would be carefully considered, taking into account the country’s revenue needs, economic conditions, and the impact on citizens. This reassurance came in response to a question from Senator Datuk Seri S. Vell Paari, who had raised concerns over potential new taxes amid rising living costs.
Government Focuses on Existing Tax Measures
In a written reply published on the Dewan Negara website, the Finance Ministry outlined its priorities, stating that it is currently focused on tax measures already planned. These include the global minimum tax for multinational corporations, set to take effect on January 1, 2025. This new tax will apply to companies with a global annual revenue of at least 750 euros.
Additionally, the government is preparing to introduce a 2% tax on dividend income starting from the 2025 assessment year. These steps are part of the government’s broader effort to boost revenue through more targeted and sustainable tax strategies.
The Ministry also highlighted other significant changes that are already on the table, such as the gradual implementation of e-invoicing for businesses with turnover exceeding RM100 million. This initiative, which began in August 2023, aims to streamline the tax collection process and improve compliance among large businesses. Furthermore, the self-assessment stamp duty system (STSDS) is set to be rolled out in phases, depending on the type of agreements and instruments involved.
Future Tax Reforms on the Table
Despite the government’s assertion that no new taxes are coming soon, some significant reforms are still planned. One of the most notable changes is the review of the sales tax, which will take effect on May 1, 2025. Along with this, the scope of the service tax will be broadened, further expanding the tax base.
The Ministry also announced that there will be an overhaul of the excise duty on sugary drinks, set to begin on January 1, 2025. This reform is part of an ongoing push to address public health concerns while also raising revenue.
These measures aim to create a more efficient and fair tax system, according to the Ministry. The government has emphasized that the changes will be designed to avoid unnecessary burdens on the public, particularly in light of rising living costs.
While new taxes are not on the agenda, the government is not ruling out future tax reforms. Any new measures would depend on various factors, including economic conditions, revenue needs, and public readiness for further changes.
A Look Ahead: Economic Challenges and Tax Preparedness
As Malaysia’s economy faces increasing pressure from global inflation and local challenges, the Finance Ministry remains cautious about introducing new taxes. The government has made it clear that before any new tax is proposed, it will carefully evaluate the revenue needs, the potential impact on citizens, and whether the current tax system can be improved.
This focus on careful tax planning is seen as a way to balance the government’s need for revenue with the economic challenges faced by everyday Malaysians. The government has stressed that the primary goal is to implement progressive tax measures that do not negatively impact the cost of living or economic growth.
In this context, the government has also promised to review the overall structure of the national tax system to ensure it is both fair and effective. Ensuring that new measures don’t put an additional strain on the population, especially in terms of cost of living, is a key priority.
The Impact of Rising Living Costs
Senator Datuk Seri S. Vell Paari’s question regarding the potential introduction of new taxes came at a time when Malaysians are grappling with rising living costs. While the Finance Ministry has reassured that no new taxes will be introduced soon, there is still concern about the indirect impact of existing tax reforms.
As Malaysia looks to diversify its revenue sources and improve tax compliance, the government must tread carefully to avoid exacerbating economic hardship for ordinary citizens. With inflation and cost-of-living concerns continuing to affect many households, the timing and nature of future tax reforms will be key to ensuring they are not seen as a further burden on the people.
