kuala lumpur: Finance Secretary Datuk Johan Mahmood Merikan said the government has adopted a progressive approach on taxation in Budget 2025, with individuals paying higher tax rates as their income increases.
He pointed to the government’s plan to introduce a 2% tax on dividend income above RM100,000 for individual shareholders from the 2025 tax year.
“Why shouldn’t we introduce an additional 2% tax for individuals earning more than RM100,000?Currently, people with an income of RM100,000, including you and me, are already under 19 %. So what’s wrong with requiring those whose dividend income exceeds RM100,000 to contribute an additional 2%?” After the Budget 2025 here at Sasana Kijan today. he asked when speaking to reporters after the debate.
Mr Johan explained that based on a 5% dividend yield, individuals earning more than RM100,000 in dividend income are likely to hold stocks worth more than RM2 million. “The government believes this category can contribute to efforts to widen the tax base, thereby generating additional resources that will benefit the public.”
He said the prime minister believes that taxes should be distributed fairly among different strata of society, focusing on those who can contribute economically.
Additionally, Johan said the government has not excluded the Goods and Services Tax (GST) in its tax reform plan. “Certainly (GST) is not out of the question. We will continue to look at ways to improve the tax system. But this is the ordering and this is the approach we will take.”
Mr. Johan said GST is widely recognized as an efficient and transparent method of taxation. “However, by its very nature, GST is a regressive tax. Implementing such a tax is difficult, especially in a context where the majority of the population is still struggling with rising costs of living.”
Therefore, the current Budget has prioritized raising the minimum wage in terms of the timing of the reforms, which could be a first step before considering a review of the GST in the future, he added.
Mr Johan said Malaysia’s investor incentives are aimed at attracting large-scale capital investments, promoting the creation of high-income jobs and supporting local businesses. “In terms of how we reassess investor incentives, we want to encourage investments that are not only large in capital expenditure, but also good at creating higher-paying jobs and delivering that to domestic vendors. ”
On a separate issue, Johan said the government was committed to ensuring that 85% of the fuel subsidy recipient group continued to benefit when the rationalization of the RON95 subsidy was implemented in the middle of next year. said.
He said the government was working out details of the implementation mechanism for the RON95 subsidy to ensure leakage issues were addressed.
Johan pointed out that 15% of groups, including the ultra-rich and non-citizens, consume 40% of the fuel subsidies allocated by the government each year. Therefore, the situation needs to be addressed to reduce the leakage of subsidies to these groups, he said.