Tax breaks for media firms for retaining staff
PETALING JAYA: The government announced yesterday that it will provide media companies with tax breaks in an attempt to help curb employee retrenchment, Finance Minister Lim Guan Eng said.
“We will give them tax exemptions, but we want them to give us an assurance that they will take every step possible not to retrench employees,” Lim said when asked about the ongoing crisis affecting the media industry in which several companies have had to shut down or retrench staff.
He added the government did not interfere in the day-to-day running of these media companies.
“I had a meeting with the corporate bosses of media companies last week (and) they were basically asking about some tax measures and tax exemptions,” said Lim, adding that he did not want to see any loss of jobs.
The good news follows the ongoing retrenchment of Media Prima Bhd employees involving some 543 staff from New Straits Times, Berita Harian and Harian Metro.
On Oct 9, local Malay daily Utusan Malaysia and its sister publication Kosmo! were forced to cease operations and dismiss more than 800 employees.
Meanwhile, a Bernama report stated that a year after Malaysia shifted its consumption tax system back to the Sales and Services Tax (SST), a lot more still needs to be done to boost government revenue.
It quoted Lim as saying that the government will not revert to the Goods and Services Tax (GST) despite calls from economists to revive the tax due to the shortfall in tax collection and lack of efficiency.
One of the main reasons is that the consumer price index basket for goods under SST is much lower, at 37% compared to the 60% during the GST era.
For 2020, the government expects SST collection to rise by 15% to RM28.3 billion while direct income tax collection is expected to be RM130.3 billion, with collection of other direct taxes of RM12.3 billion and other indirect taxes of RM19 billion.
To boost collection, the government has proposed to introduce a new band for taxable income in excess of RM2 million, taxed at 30%, which is a two percentage point increase from the current 28%, during the 2020 Budget. It will also be implementing SST on digital services, beginning Jan 1 at 6%.
From listed services, the government is aiming to increase tax revenue by RM2.4 billion a year, and the Customs Department has started registration of foreign service providers beginning Oct 1.
Software, applications and video games, music, e-books and films, advertisements and online platforms, search engines and social networks, databases and hosting, internetbased telecommunications, online training as well as subscriptions to online newspapers and journals and others, will fall under this basket.
“Service tax shall be charged and levied on any digital service provided by a foreignregistered person (FRP) to any consumer in Malaysia. Digital service has the meaning assigned to it under Section 2 of the Service Tax Act 2018,” the department said.