Second Finance Minister Datuk Seri Johari Abdul Ghani dispelled rumours that the government plans to implement an inheritance tax under Budget 2018.
This is after unverified messages circulated online that the authorities would implement a 10 percent inheritance tax on the money and properties of someone who has passed away.
Previously, Malaysia introduced such a tax under the Estate Duty Enactment of 1941, but it was repealed in November 1991. It imposed a levy of between five and ten percent on estates worth at least RM2 million, with the highest rate applicable to assets with a combined value of more than RM4 million.
One of those favouring the reintroduction of the tax is the Consumers Association of Penang (CAP), which hopes that it would be deliberated when Budget 2018 is tabled in the parliament in a bid to tackle wealth inequality.
“Implemented properly, inheritance tax as well as other relevant forms of taxation, such as wealth tax, capital gains tax and gift tax, provide important revenue for state coffers from the highly rich, and not from those in the lower income brackets.”
“Inheritance tax, similar to estate duty or estate tax, is assessed on the net worth of an individual at death. Not all estates are subject to the tax. Only those of and above a certain value are included,” stated the group.
On the other hand, Axcelasia Taxand Group Executive Chairman Veerinderjeet Singh opposes the tax as there are already taxes on property sales in the form of stamp duty and Real Property Gains Tax.
He is also against inheritance tax as there are no economic deals involved that generates profits. “One can argue that there is no sale or purchase of the asset. So, in reality, there is no transaction involved.”
Similarly, economics professor Dr Yeah Kim Leng at Sunway University Business School thinks the tax in unnecessary as the country’s tax revenue sources are sufficient at present.
“Inheritance tax is a way to diversify revenue sources for a country. Mature economies around the world have inheritance tax as a way to boost spending and to reduce income inequality.
“These societies place a greater emphasis on equality, but people will find ways to reduce these taxes they potentially have to pay. At this juncture, I don’t think there is a need for it in Malaysia,” he added.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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