Auditor-General: 2021 income tax collection fell RM11b due MCO job losses, pay cuts

Malay Mail
Malay Mail

KUALA LUMPUR, Oct 6 — Individual income tax collections fell RM11 billion year-on-year in 2021 as Covid-19 restrictions prompted mass layoffs and huge salary cuts, the Auditor-General said in the report on the government’s financial statement for that year released today.

Total income individual income tax collection was RM27.05 billion, which was 30.6 per cent lower than in 2020.

“The enforcement of the movement control order to curtail the spread of Covid-19 had a huge impact on the salaried sector whereby many workers were laid off, told to take unpaid leave or take cuts to their salaries, allowances and other benefits,” the report said.

“This situation affected the individual tax collection made through the monthly deductions (PCB). This collection method contributes close to 75 per cent of total collection from individual income tax,” it added.

Still, total tax revenue for 2021 rose 12.5 per cent to RM173.7 billion, driven mostly by higher corporate income tax that increased by nearly 60 per cent. Total corporate income tax collection for 2021 was RM79.8 billion, increasing by RM29 billion from RM50 billion in 2020.

Among factors cited for the increase were higher commodity prices and overwhelming demand for products like rubber gloves and food.

Putrajaya collected RM43.5 billion in indirect taxes in the same period, mostly from sales and services tax.

Sales tax collection amounted to RM13.5 billion accounting for 31 per cent of total indirect tax revenue. Services tax collection was RM12.01 billion or 27.6 per cent of total indirect tax revenue. Excise duty contributed RM10.2 billion, with the levy on cigarettes making the biggest cut, at RM2.9 billion.