The Inland Revenue Board(IRB) said that in October 2021, the OECD had announced that 136 countries had agreed that certain MNEs will be subject to a minimum tax rate of 15% in 2023. The IRB said that the tax rate of 15% would reallocate profits of more than USS$125 billion (about RM556.62 billion) from about 100 of the world’s largest and most profitable MNEs to all countries.
Under the IRB multinational tax branch, there are close to 3,000 MNEs which would mean extra hundreds of millions of extra revenue when the 15% tax rate is implemented on 1 January 2023. With the extra revenue there is no need to impose the 10% sales tax on all online sales for low value goods(LVG) below RM500 next year.
The government had imposed a flat 10% sales tax by 1 January 2023 on LVG below RM500 purchased online from foreign suppliers and delivered to Malaysia to create a level playing field with local suppliers. Currently, low-valued goods priced RM500 and below are not subject to any tax when they are imported to Malaysia. The government expects to earn an additional RM200 million in revenue.
DAP had proposed that the 10% sales tax on online purchases of LVG below RM500 from local suppliers should be waived instead of imposing the 10% online sales on foreign suppliers to create a level playing field so that local suppliers can enjoy the same benefits as foreign suppliers. Further such a waiver of 10% sales tax on LVG below RM 500 would also help to reduce the financial burden of low-income groups who normally buy the LVG online.
In other words, the additional RM200 million in revenue for online LVG foreign purchases, and unspecified hundreds of millions of ringgit more collected from online LVG domestic purchases, will be borne by the low-income groups. Malaysians do not need new taxes nor any increases in interest rate when pressing economic issues resulting in high cost of living, ranging from soaring prices of food and materials, a severe labour shortage and a rapidly depreciating ringgit remain unresolved.
The government’s thirst for extra revenue can be met with the 15% global tax proposed on MNEs, which would be more than sufficient to replace the 10% online sales tax on all LVG below RM 500 whether from foreign or local suppliers. Would it not make more sense as well as compassion to rake in extra revenue from profitable MNEs instead of the lower income groups?