Image credit: The Sun Daily
KUALA LUMPUR: Next year's budget will likely continue to roll out stimulus measures to address "the now" - the key issues of saving lives and livelihoods in the short term, said Ernst & Young Tax Consultants Sdn Bhd (EY).
It will also position Malaysia for "the next" - the recovery in the medium and longer term.
EY said the 2021 Budget would be a "tough budget", as it has to balance taking care of the rakyat, especially the vulnerable, creating and protecting jobs and livelihoods, paving the way for sustainable growth and positioning us to be nimble to seize and realise opportunities during the recovery phase.
"At the same time, we are looking at a 5.8 per cent to 6.0 per cent budget deficit and debt levels above the statutory limit of 60 per cent.
"Hence, we also expect some immediate measures to increase the tax revenue of the country, including changes to existing tax provisions to broaden the tax base and tighten gaps,' the firm said in a statement today.
In the meantime, EY said Malaysia must continue to be attractive to investors.
Asean, it noted, was expected to be the world's fourth largest economy by 2030 and Malaysia needs to secure her fair share of the investment pie.
"We therefore expect some measures, including fiscal and non-fiscal incentives, to continue to help attract targeted foreign direct investments."
Beyond the Covid-19 pandemic and 2021 Budget, EY said Malaysia needs a comprehensive reform of its tax framework to be in a better fiscal position - one that is balanced in achieving revenue growth while encouraging economic growth, and also, alleviates the challenges or burden on those requiring support, the B40.
"There is no short cut in tax policy formulation. In isolation, changes introduced in an annual national budget will not be comprehensive enough.
"The government needs to look at these together with the country's economic agenda and its focus on the engines of growth, in order to formulate holistic tax reform based on the above overarching goals."
EY added that there was also need for more consultation and engagement with stakeholders, particularly businesses and foreign investors.
Source: https://www.nst.com.my/business/2020/10/636385/2021-budget-address-now-and-next-ernst-young