Under the 2010 Budget, the government proposed a fixed tax rate of five per cent imposed on gains from the disposal of real property effective Jan 1 next year.
However, based on the Finance Bill, disposal within two years of acquisition will be taxed 30 per cent, 20 per cent in the third year and 15 per cent in the fourth year while disposal within five years and beyond will still be subjected to five per cent.
"As far as the Act is concerned, the rate is still there, which is five per cent to 30 per cent. Exemption order has yet to be gazetted but it is coming out very soon, maybe around this week," Finance Ministry's Under Secretary, Tax Analysis Division, Siti Halimah Ismail, said today.
She was speaking to reporters after the 2010 Post Budget Dialogue, jointly organised by the Malaysian Economic Association and University of Malaya's Faculty of Economics and Administration, and supported by Standard Chartered Bank Malaysia Bhd.
Gains from the disposal of property are subject to tax under the Real Property Gains Tax Act 1976 to curb speculative activities in the propoerty sector. However, the RPGT was exempted in 2007 to help the property sector.
Siti Halimah said the government is expected to collect some RM500 million from the real property gains tax in 2010 but lost RM240 million in individual income tax due to the reduced one per cent from 27 per cent to 26 per cent.
On the sources of tax revenue, she said that Malaysia's tax base was narrow.
"Being a narrow base, the revenue is not sustainable actually. For example, the import duty, because our commitment to free trade agreements, we have no choice but to reduce the rate," she added.
Come Jan 1, 2010, an estimated 98 per cent of the goods that come from Asean countries will be at zero import duty.
Siti Halimah said Malaysia's tax revenue was dependent on petroleum income, which contributed over 40 per cent to the total federal government revenue.
"Therefore, we have to find new sources of revenue for the government and we have a lot of new sources of growth, namely biotechnology, green technology, information and communications technology, and financial services," she said.
On the Goods and Services Tax (GST) which is expected to increase the government''s revenue collection, Siti Halimah said: "That is the reason why the government would like to push for the GST."
The government was in the final stage of its GST study, she said.
On the restructured fuel subsidy scheme, Siti Halimah hoped that the scheme would help to reduce the subsidy burden on the government.
"We hope to save government expenditure and the scheme is focused on only the targeted group," she said.
By Bernama
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