Inland Revenue Board (LHDN) CEO Nizom Sairi said the government is already on track to collect more than RM3 billion.
“But if we take the current trajectory into account, based on economic growth and other factors, we should double the initial estimate,” he said after the opening of the National Tax Conference 2022 here today.
In an announcement last year, the finance ministry had anticipated a collection of at least RM3 billion.
Going by historical data, the LHDN believes the tax will affect approximately 253 companies in the country.
Under the Cukai Makmur mechanism, companies with chargeable income in excess of RM100 million will be charged at a rate of 33% instead of the usual corporate tax rate of 24%.
Looking at the bigger picture, Nizom sees the possibility that the LHDN would collect in excess of RM139.3 billion gross in taxes outlined in Budget 2022.
“From the latest figures, I see signs of growth despite inflationary headwinds,” he said.
On Malaysia’s decision to implement the 15% global minimum tax for multinational companies (MNCs) in 2023 as part of the Organisation for Economic Cooperation and Development’s proposed tax reform, Nizom said the move will put an end to tax breaks.
It will force businesses into taking a holistic approach in choosing their investment destination and not make a decision based on just tax breaks.
He pointed out that this will make it a level playing field for the government to get creative in attracting investment to the country.
“For instance, Malaysia has a good supply of skilled workers and graduates as well as good infrastructure. The MNCs have to weigh the cost of doing business as a whole,” he said.
On this subject, deputy finance minister Mohd Shahar Abdullah said the global minimum tax agreement would result in more than US$125 billion (RM556.8 billion) in profits reallocation from 100 of the biggest MNCs operating in various countries. This would ensure that businesses pay a fair share of taxes wherever they operate and generate profits.
“To ensure that multinationals pay the right taxes where they are due, the government, through the LHDN, will continue to develop comprehensive strategies in dealing with international tax compliance risks that include calling for greater disclosures and transparency by multinationals,” he said.
“Instead of attempting to end tax competition, the global minimum tax agreement imposes multilaterally agreed-upon restrictions,” Shahar added.