20% Rise in Tax Collection

There has been a 20% increase in tax collection in the first eight months of this year compared with the same period last year. In 2007, the IRB collected a total of RM74.669bil. This year target is RM77bil in revenue after refunds.

So far, refunds have totalled RM6bil for individual taxpayers, companies and big organisations. IRB usually received about 400,000 refund notices, but only 200,000 to 300,000 were genuine. And 20% to 30% of the refund cases needed auditing.

Another statistic worth noting is that this year saw about 1.2 million people using the e-filing system, compared to about 800,000 last year.
Non believers out there, just try it, avoid the hassle in joining the last minute rush to the agency!)

IRB the cash cow of the nation. The nation can go bust if this agency is not on tip top condition. Worth noting is the high amount i.e. RM6bil of refund! Major chunk is being claimed by the business entities. There surely must be a better system to reduce this amount and thus reduce the refund administration.

In the present self assessment system, the companies are paying taxes monthly, in advance based on projected income for the year. There is a drain on the cashflow especially for SME as the trade collection might be slow.

Our wish is that the leaders and those in the Treasury to make good use of the billion! Yeah, really make good use of the billion for the rakyat!

Budget 2009 - Any Goodies For You & Me?

The good old politicians claimed the budget put money into our pockets. Hmm! 'our pockets' - you and me pockets or their pockets? It is a deficit, an expansionary budget as the main chunk is to pay for the operations. The budget deficit is projected at 4.8% of GDP, the highest deficit in a decade.

How about the next budget? How is the government going to cut the widened deficit next year? Time to introduce GST or other taxes to boost revenues? Probably not as these measures will lose them more votes. Seriously, it is time to cut the fat and excesses and reduce wastage at the bloated government set-ups.

Back to Budget 2009. How do we benefit? At a glance, I concluded that those in civil service will gain the most! As for private sector employees, time to restructure the paycheck. In the name of tax planning, reclassify the salary into various allowances i.e. travelling, handphone and Internet allowances and housing interest subsidy. All these are tax exempted. The total package remains the same but the 'take home' should be more. Additionally, the reduction in taxable income will put us in a lower tax bracket. More good news - there is some reduction in the personal tax rate with the highest rate at 27%. Ah-ha, for once, can trust these politicians - this is the money into our pockets!

Another incentive that is worth noting from investment point of view - 50% stamp duty exemption on loan agreement for medium cost houses below RM250,000. As the first RM100,000 is charged at 1% and subsequent at 2%, there should be a saving of RM2,000 at the maximum. Nothing superb but better than nothing for those that are house hunting!

The budget announcement injected some positives with KLCI rising above 1100 points for the first time in 2 weeks. However the political risk factor remains.

No Service Tax

Customs announced that restaurants earning less than RM3mil annually and are not operating from hotels no longer need to charge their customers 5% service tax. (effective July 1).

Do we go back to these restaurants and ask for refund? Moving forward, how do differentiate them ; who is eligible to collect and who is not? The worrying part is most will continue to collect from the customers but may not remit the money to the Customs!

http://thestar.com.my/news/story.asp?file=/2008/7/11/nation/21798459&sec=nation

pic - oink!oink!oink! golek