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PETALING JAYA: The big four accounting firms have approved the 2021 Budget, which aims to stimulate the economy that has been trampled by the Covid-19 pandemic.
Dubbed as the mother of all budgets, the government has allocated RM322.5 billion for the expansive budget, or 20.6% of gross domestic product (GDP), the largest ever to give the economy a boost. very necessary.
Ernst & Young (EY) said it was a budget fit for purpose, meeting the country’s immediate needs to foster recovery, growth and investment.
He added that the 2021 Budget continued to address the immediate needs of the most vulnerable, through the continuation of specific stimulus measures, especially for the B40 group.
“Now it is key to monitor and measure the implementation of the budget closely with the desired objectives.
“As we saw earlier this year, the Covid-19 pandemic has created significant uncertainties and economic conditions can change very quickly.
“As such, the government must be agile and prepared to review and supplement budget measures when necessary,” he said in his budget overview.
EY added that the government continued to take a long-term strategic vision by providing the highest allocation to the education sector for the third year in a row, while development spending was also encouraging with more than 40% of public spending, the highest. in 10 years.
The firm also noted that the budget reinforced the view that the government was trying to stop offering a zero tax rate to attract high-value investments with the global mall.
“The incentive for pharmaceutical companies and the proposed incentives for relocated service activities have potentially tax rates of up to 10%.
“This is a very strategic move by the government, as it encourages foreign investment and at the same time maintains a flow of tax revenue for the country,” EY said.
Meanwhile, PwC Malaysia highlighted that the budget has incorporated sustainability and, for the first time, is aligned with the 17 United Nations Sustainable Development Goals.
He said that the pandemic has been a wake-up call for the world and, as far as Malaysia is concerned, it was necessary for the country to rethink its development agenda, especially on sustainability and green technology, which will play a vital role in driving . the economy.
“Malaysia will need to analyze its development path and address ongoing environmental degradation issues, such as the generation of plastic waste, declining forest cover and the value of biodiversity. The government has provided a comprehensive list of measures in the budget to support sustainable private sector initiatives, from financing, adoption of green or climate technology to strengthening natural resources and biodiversity, ”said PwC in its Overview budget 2021.
KPMG Malaysia’s chief tax officer, Tai Lai Kok (pictured below) commented that the budget was geared toward stimulating the nation’s economic activity as the country grappled with the effect of the pandemic.
However, he said the huge allocation raised some concerns that the debt ceiling may need to be raised further.
“While the loans are expected to account for about 26.5% of the proposed funding, the government is optimistic in terms of revenue collection, as it has set a target of RM 236.9 billion, compared to RM 227. , 27 billion ringgit expected by 2020.
“From a fiscal point of view, the government continues to provide industry-focused support and fiscal measures aimed at improving the nation’s position as a destination for foreign investment, especially with the review of current tax incentives,” he said, adding that Equity The crowdfunding initiative was a pleasant surprise, which would help startups to raise alternative funds quickly.
Deloitte Malaysia CEO Yee Wing Peng was optimistic that the expansive budget was the right measure to ensure people’s prosperity, business continuity and economic resilience amid the pandemic.
Along with previous stimulus packages, he said these would be the panacea for a faster economic recovery.
“Unexpectedly, the pandemic has led the world economy to its steepest decline since the Great Depression of the 1930s.
“As the road to recovery will be long and tortuous, decisive government interventions with bold fiscal measures are imperative to help accelerate our nation’s economic recovery,” Yee said.
The Chairman of the Tax Committee of CPA Australia Malaysia Division and PwC Malaysia Tax Leader Jagdev Singh said the budget has been drawn up to ease people’s economic burden and promote investment in specific sectors to stimulate Economic recovery.
“Measures such as the reduction of one percentage point in the personal tax rate charged on income between RM 50,000 and RM 70,000, the expansion of personal allowances focused on health and welfare issues and the extension of the tax allowance for the contribution to the Private retirement plan would greatly benefit the M40 category by reducing your tax burden.
“Cash donations remain the most relevant way of putting money in the pockets of the B40 group and it is good to see that the government has further improved the Bantuan Prihatin Nasional,” he said.
Jagdev said that although companies have called for more relief, including a reduction in the corporate tax rate and a revision of the seven-year time limit for tax losses and loss transfer provisions, the government has resisted the temptation to modify tax legislation.
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