Thursday, March 30, 2023

Deputy Minister Says Prosperity Tax Fair Despite RM33bil Market Cap Wiped Off

NewsDeputy Minister Says Prosperity Tax Fair Despite RM33bil Market Cap Wiped Off

On Monday (1 November), around RM33.8 billion were wiped off the market capitalisation on Bursa Malaysia and it is believed that the Budget 2022 was the main cause of it.

It is said that the government’s announcement of the one-off prosperity tax was among the proposals that caused investors to flee the equity market.

Meanwhile, the Deputy Finance Minister II, Yamani Hafez Musa said it could be a short-term reaction from market players.

Source: The Edge

He also admitted that the reduction of the market capitalisation could be a sign that investors may be concerned over the prosperity tax, also known as Cukai Makmur, which is set to be introduced next year.

However, he said that investors may return as long-term investors to pick on shares which are prices are attractive.

Under the Budget 2022, the prosperity tax will be applicable for all companies with taxable income up to the first RM100 million, where earnings above the RM100 million mark will be taxed at a rate of 33% instead of a blanket rate of 24% previously.

“Even though the increase is generally 9%, it is a one-off tax and quite affordable as companies have been making high profits in the previous two years.”

“It will be implemented fairly and does not target any specific industries or sectors.” he said in the Parliament yesterday (2 November).

While responding to a supplementary question from Pontian Member of Parliament (MP), Datuk Seri Ahmad Maslan about the estimated amount that the government will get through the implementation of the prosperity tax, and Yamani said that the amount is not known yet, but it could be more than RM3 billion.

Meanwhile, Yamani said the government do not intend to implement the capital gains tax comprehensively, nor imposing a tax on capital market profits.

“The government also has no plans to reintroduce the inheritance tax as a measure to increase national revenue.” he said.

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