Generous Donations Substantially Smaller Than Windfall Tax Would Have Been

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The generous donations by Kossan Rubber Industries Bhd, Top Glove Corp Bhd, Hartalega Holdings Bhd and Supermax Corp Bhd of RM400 million to the Government’s Covid-19 fund to battle the pandemic is substantially smaller than the funds that would have been recouped through the expected introduction of a windfall tax.
Malaysian Institute of Accountants president Veerinderjeet Singh (above) spoke to Astro Awani hosts Melisa Idris and Sharaad Kuttan for their "Consider This" show, and was asked:
"Do you see this as a substitute to the windfall tax that was expected to be announced? And would the windfall tax have been substantially more?" asked Melisa.
"Everybody expected a windfall tax but actually squeezing out RM400 million from the glove manufacturers is actually in many ways a windfall tax," Veerinderjeet replied.
"Whichever way you want to call it, it is indirectly the same thing," he initially said.
However, he was then pressed by Sharaad, who said: "If you look at the numbers, the government would have earned something like RM4.8billion from these companies. The loss seems quite staggering between the donation and legitimate demand for taxation?"
To this, Veerinderjeet agreed.
He said Malaysia used to have an access profits tax in the past which was abolished and that this was for companies that made super-profits.
"Really you are going back to your profits rather than your turnover. So, you are right that if you impose an additional five percent tax on top of profits exceeding a certain threshold, you will probably get more.
"But the challenge here is always that if you introduce this suddenly (...) that may actually turn off investors and that is the other subtlety you have to manage," he said.
The suggestion for a windfall tax came as the glove sector enjoyed recent "supernormal" profits, given the surge in both demand and average selling prices of gloves due to the Covid-19 pandemic.
However, the tax did not materialise, and a donation was announced instead.

Top Glove said it is donating RM185 million to the fund, Supermax is contributing RM75 million, Kossan confirmed that it would offer RM50 million and Hartalega said in a statement that it would be contributing RM90 million to the fund.

 - Mkini

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