Despite the gloomy economic conditions, the IRB recorded a total tax collection last year of RM124b
by NUR HANANI AZMAN / Pic by BERNAMA
THE country’s tax collection target of RM143.9 billion for 2021 is obtainable, based on the expected GDP of realistically between 5% and 6%.
Asia Pacific Applied Economic Association VP Dr Baharom Abdul Hamid said the main contributor would be direct tax that is expected to be slightly more than half of the total tax to be collected.
He said indirect tax would be expected to contribute around 19% of the total tax.
“With the vaccination exercises taking place, more economic activities are expected to be allowed to operate which would also create new employment and opening more business opportunities.
“Except for tourism and entertainment sectors — which seem to be severely affected and still with no clear indication of any rebound, other sectors are all moving north,” Baharom told The Malaysian Reserve.
Despite the gloomy and challenging economic conditions, the Inland Revenue Board (IRB) recorded a total tax collection last year of RM123.09 billion which is RM1.39 billion or 1.14% higher than the target set at RM121.7 billion, which is the third target review by the Finance Ministry.
Minister Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz said the IRB had played an important role in ensuring the country’s fiscal position is sufficient to finance the government’s planned spending.
He said the targeted tax collection achievement is proof that there were industries which were not affected, and some even racked up huge profits amid the pandemic.
“I am confident that there is still room for IRB to further improve its collection by spreading the network of potential taxpayers, identifying certain industries and sectors that have been off the radar.
“Hopefully, by exploring new opportunities, the government’s collection target to the IRB for 2021 amounting to RM143.9 billion can be achieved,” he said in a statement.
Tengku Zafrul also expressed his hope that the IRB would continue to focus and be committed to carrying out the trust that had been given because the country’s financial continuity depended on the body’s ability to fulfil its duties and trust.
He said that IRB’s efficiency and effectiveness in performing its role would prevent the country from resorting to austerity measures as what happened in other countries due to the failure of the tax system in securing the country’s financial position.
“I am sure the IRB has already compiled, arranged and identified tax strategies to achieve the target or obtain more than that amount. Moreover, the month for taxpayers’ reports will start soon.
“The IRB has proven not only able to collect taxes from those eligible, but is always ready to carry out the responsibilities entrusted by the government efficiently and effectively,” he said.
Tengku Zafrul said the reopening of more economic sectors under the second phase of the Movement Control Order (MCO 2.0) has succeeded in reducing the country’s losses to RM300 million a day compared to RM2.4 billion a day during the previous MCO.
“The MCO 2.0 allowed more economic sectors to operate than the previous one, to balance between the health aspects of the people and the current economic pressures.
“During MCO 1.0, our country suffered a loss of RM2.4 billion a day and if it is implemented continuously, surely our country’s economic system, including the public health system, will paralyse,” he added.
Malaysia has also managed to control the number of deaths due to Covid-19 to 0.3% ratio, or in the lowest 5% category globally.
The effectiveness of the government’s measures to curb the spread of the pandemic had been recognised by the international credit rating agency, Moody’s, which maintained the A3 rating with stable projections in January this year.
Moody’s also stated that the Covid-19 pandemic is not expected to have a long-lasting effect on the country’s economic structure.
“The current and subsequent waves of contagion will only delay but not hinder the country’s economic recovery towards a higher and sustainable growth path.
“The success of this rating was driven by a strong economic foundation, good fiscal discipline including the support of economic sector diversification,” Tengku Zafrul said.