Tengku Zafrul: Govt looks to improve revenue collection through shadow economy, no more selling of duty-free cigarettes

Soo Wern Jun
·2-min read
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz tables Budget 2021 in Parliament November 6, 2020. ― Bernama pic
Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz tables Budget 2021 in Parliament November 6, 2020. ― Bernama pic

KUALA LUMPUR, Nov 28 — The government announced several measures to improve revenue collection including from the shadow economy, Finance Minister Datuk Seri Tengku Zafrul Aziz said.

This would mean that there will be no more selling of duty-free cigarettes on duty-free islands.

“So, no more selling duty-free cigarettes on duty-free islands where sometimes it becomes a hub.

“We did an analysis — how come so many can smoke on this island? It doesn’t make sense, the number of cigarettes per capita, including tourists, is just too high,” he said in a report in The Edge today.

He said that at the moment the government is also looking at reducing leakages and one of the methods is to curb illicit smuggling of high-duty goods.

“Cigarettes are one of them. The shadow economy in Malaysia averaged 21 per cent to GDP (gross domestic product) between 2010 and 2019. That’s a big number,” he said.

He recalled that in 2019, it went down to 18.2 per cent of GDP — still a big number as nearly 20 per cent of GDP is from the shadow economy.

“So this provides a sizable income to the government if it’s regulated properly,” he said.

When commenting on whether there are plans to bring back the goods and services tax (GST) or introducing capital gains tax (CGT), Zafrul said while these would be the fastest ways to achieve percentage share of GDP of 2015-2019 numbers, the timing is not right to introduce both taxes.

“But once the economy has recovered, that’s something we need to discuss,” he said.

As for CGT, Zafrul said it is one of the taxes that is being looked at but it is not the right time to introduce it as it is more sensitive to the markets, companies and others.

“We are expecting higher collection from investment income in 2021.

“We hope that the government companies will improve their investment income from next year,” he said.

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