Budget 2011 not merely a ‘facelift’ plan – IRB

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KUCHING: While many observers view the recently-announced Budget 2011 as ‘unsurprising’, tax practitioners should not see it as merely a ‘facelift’ version from its previous counterparts.

Abu Tariq Jamaluddin

“Although there is no major event in the taxation system, tax practitioners should keep abreast with amendments – or the so-called ‘cosmetic changes’ – proposed in any budget’s announcements, especially with regards to procedures and regulations,” said Abu Tariq Jamaluddin, the legal appeal division director of the Inland Revenue Board of Malaysia (IRB) yesterday.

“Clearly, the allocation for Budget 2011 presents no major incentives. However, taxation still takes significance. Out of the 16-page budget speech about, 12 are related to taxation,” he concurred.

Tariq said this in his opening dialogue to commence the annual, ‘National Seminar on Taxation 2010’, organised by the board’s Inland Revenue Officers’ Union (IROU) at a hotel here. Also present were the state’s IRB director Romli A Hamid and its Kuching branch director Kamarudin Hashim.

In his talk, Tariq highlighted a number of taxation proposals that were tabled by Prime Minister Datuk Seri Najib Tun Razak on October 15.

“Take a look at the amendment proposal of Section 34C with regards to tax treatment of discount or premium from bonds issued or subscribed. Currently, this act relates directly to redemption of expenses incurred by financial institutions that issue bonds.

“But for NFIs (non financial institutions) that want to issue these bonds at a discount, they can only claim them once the bond’s period is realised; say at the end of 10 years.

“The proposal in Budget 2011 under the section will allow these groups to claim for the expenses earlier, starting from the first year of the bond’s period.”

Tariq, however, disclosed that such claims could only be done under proviso that proceeds from the subscription would be wholly-utilised in the business for the production of gross income from any source consisting of that business.

“If these proceeds were used in same parts in both business and investment, then the discount expenses provision is not allowed,” he added.

Meanwhile, IRB would take further steps towards raising the levels of awareness and understanding on various issues faced by tax practitioners, as well as among the public.

“Held also at 22 other locations nationwide , this seminar stands as evidence among our many holistic efforts directed towards the aim of creating a more ‘tax-literate’ society.

“As the tax collection arm of the government, we at IRB are working very hard towards achieving the goal set by the government without sacrificing the welfare of the general taxpayers – even in the face of numerous economic challenges within the country or abroad,” stated Romli in a speech text read earlier, on behalf of IRB’s chief executive officer and director-general Sri Hasmah Abdullah.

In Budget 2011, the federal government projected a 2.3 per cent increase in revenue collection to RM165.8 billion next year, against RM162.1 billion this year. Taking into account the estimated revenue and expenditure, deficit for next year was expected to further decline by 5.4 per cent of gross domestic product (GDP) versus 5.6 per cent this year.