My recent visits to Johore in conjunction with the Johore state election reveal that many Chinese are fed with the falsehood that Lim Guan Eng, a Chinese has acted against the Chinese by imposing unfavourable taxes against the Chinese when he was the Finance Minister.
1. It was BN and PN/BN governments which imposed the unfair tax of deemed profits
Malaysians have to pay taxes on the loans or advances they make to their own companies or businesses even though they did not impose any interest or make any profit from the loans or advances. Section 140A Income Tax Act 1967 (ITA) which took effect on 1/1/2009 requires that transactions with associated persons for acquisition or supply of property or services be carried on an arm’s length basis.In accounting terms it is called Transfer Pricing ( TP ). This section was introduced when BN was in government. After the Sheraton Move in February 2020, PN/BN came to power. They introduced Section 113B ITA which took effect on 1/1/2021 that if a company or business fails to furnish contemporaneous TP documents upon request by the Inland Revenue Board (IRB), it can be prosecuted and fined from RM20,000.00 to RM100,000.00 and/or an imprisonment up to 6 months. Previously no penalty was imposed if TP adjustments show no additional tax.
With effect from 1/1/2021 under the new Section 140A (3C) ITA, a surcharge up to 5% will be imposed on all TP adjustments and this apply irrespective on whether there is a tax payable on the adjustments.
This unfair tax was imposed under BN and PN/BN governments and not under PH government !
2. The PH Government Tax Amnesty on undeclared income was good news but letters issued created the false impression that the PH Government was after Malaysians for taxes.
Under the BN Government, a fine up to 300% can be imposed on those who failed to declare or under declared their taxable income. Under the PH Government, Lim Guan Eng announced an amnesty to encourage those who have not declared or under declared their income to surface their undeclared income to help in the economy. Only a 10% penalty would be imposed compared to the hefty penalty of up to 300% under the BN Government. The IRB issued 1.2 million letters to Malaysians to announce the good news.
Unfortunately, most of those who received the letters have never paid any tax in their whole lives and have no dealing whatsoever with the IRB as their incomes were below the taxable bracket. In the IRB letter, Malaysians who do not have a tax file are encouraged to open one with the IRB. They misunderstood the IRB letter received by them as the PH Government coming after them for their taxes !
3. Real Property Gain Tax after the 5th year of property acquisition
PH Government is a caring government wishing to create a more equitable society where the poor, needy and vulnerable in our society will be taken care of with their dignity intact. Money must be raised for this purpose. Incurring further debt is not a wise option as it will eventually cause financial woes to the country and our Ringgit will depreciate in value. It was thought best to tax those who make money without having to work for it. Property appreciation is one such gains.
Based on 2013 valuation, PH government thought it was reasonable to still tax 5% of the gains though the property has been acquired for more than 5 years. PH Government was a responsive government. Due to great unhappiness expressed by the people, the PH government was considering abolishing the 5% RPGT after the 5th year of property acquisition but was not given the opportunity as the PH government was toppled undemocratically in February 2020 by PN/BN in the Sheraton Move.
In Budget 2021, the government moved to abolish this 5% RPGT after the 5th year of property acquisition and the PH Members of Parliament have no objection to it.
The BN government has been more heavy handed in imposing taxes on Malaysians. Malaysians have been buying their cars at more than double the car prices in other countries (with the exception of Singapore) due to the heavy taxes imposed by the BN government. The people have no choice but to bear with it all these years.
PH is a better government compared to BN and PN/BN governments.
I call on the voters in Johore to come our in full force on 12th March 2022 (Saturday) to vote for PH and reject BN and PN.