15 Mne Tax Will Quench Thirst For Revenue Says Guan Eng

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DAP chairman Lim Guan Eng said that with the 15% tax, there will be no need to impose a 10% online sales tax on low-value goods.PETALING JAYA: The DAP has said that the 15% minimum global tax imposed on multinational enterprises (MNEs) will be more than enough to provide the extra revenue the government needs in 2023.
Party chairman Lim Guan Eng said that with the additional funds, there would be no need to impose the extra 10% tax on sales of low-value goods (LGVs) below RM500 next year.
“The government’s thirst for extra revenue can be met with the 15% global tax rate on MNEs,” the former finance minister said, adding that this would be enough to offset gains expected from the 10% online sales tax.
He noted that the Inland Revenue Board (LHDN) had said in October last year that 136 countries had agreed to impose a minimum tax rate of 15% to certain MNEs from 2023.
This was announced by the Organisation for the Economic Co-operation and Development (OEDC), according to LHDN.
The tax rate of 15% would reallocate profits of more than US$125 billion from about 100 of the world’s largest and most profitable MNEs to all 136 countries. Malaysia, having agreed in principle to the 15% minimum tax, will be one of those countries.
Lim said there were about 3,000 MNEs under the LHDN multinational tax branch, which would garner “hundreds of millions in extra revenue” when the global tax rate is imposed from Jan 1.
He had initially mooted the idea of waiving the online sales tax when the Dewan Rakyat passed the Sales Tax (Amendment) Bill 2022 earlier this month. At that time, Lim wanted the tax to be waived until after the country had resolved its economic problems and “threat” of an expected recession was over.
The bill seeks to impose a flat 10% sales tax on goods below RM500 purchased online and delivered to Malaysia by foreign suppliers registered with the finance ministry. This would come into effect from next January.
Deputy finance minister Shahar Abdullah said the move would create a level playing field for both local and foreign suppliers, and bring in an expected RM200 million a year.
Lim had said that if a level playing field was the goal, the government should do away with the current 10% online sales tax on LGVs for local suppliers.
The global minimum tax rate is part of the OEDC’s reform exercise of the international tax system, with the aim to ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. - FMT

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