The Malaysian Insight

PEKAN MP Najib Razak is concerned over Putrajaya’s decision to impose a one-off prosperity tax on profitable companies and on income sourced from overseas.

While debating Budget 2022 in the Dewan Rakyat today, Najib said Malaysia’s “taxation rate is now the highest in Asean” as a result of the abolition of the GST (goods and services tax) which was introduced by his administration

“In fact it is higher than the US, which has reduced its taxation rate exponentially over the last two years,” he said.

Najib said the prosperity tax, although a one-off measure, may send a wrong signal to investors as it could give them the jitters over another round of taxes that may come about when the government is desperate for funds.

“We have to understand that when we choose foreign investors, they are also choosing us. They may have other countries as an alternative,” he said.

Najib said investors will instead favour neighbouring countries with more attractive tax rates.

He added that the announcement of the windfall taxes has also caused Bursa Malaysia to shed 33 points at noon, which wiped out some RM25 billion from the stock market.

He said taxing income sourced from foreign sources may also lead to many companies keeping their money at the source country.

Finance Minister Tengku Zafrul Tengku Abdul Aziz said while tabling the Budget 2022 last week that a one-off tax of 33% will be imposed on companies earning above RM100 million and 24% for the first RM100 million. – November 1, 2021.