Business

Wednesday October 14, 2009

Budget unlikely to dish out many goodies to man in the street

By DANNY YAP


KUALA LUMPUR: The upcoming Budget 2010 is unlikely to dish out many goodies to the man in the street.

Horwath KL Tax Sdn Bhd tax partner Poon Yew Hoe said the Government had incurred a significantly larger deficit of 7.6% this year (well above the average of 3% to 4% per annum), because it needed to prop up the struggling economy when the global economic crisis hit Malaysia last year.

“The Government has stretched its financial resources during the economic crisis, so it is unlikely that we will see too many goodies for the working man in Budget 2010,” he said at a media briefing on the 2010 Budget & Tax Planning seminar yesterday.

RHB Bank Bhd and Horwath are jointly organising the seminar at three locations. The one-day seminar will be held in Sunway Lagoon Resort Hotel, Petaling Jaya (Oct 29), Gurney Hotel (Nov 3) and Grand Paragon Hotel (Nov 6), both in Penang.

Poon Yew Hoe ... ‘The Government has stretched its financial resources during the economic crisis.’

Poon said the seminar would cover budget updates, tax cases, field audits, tax investigations, transfer pricing risk assessment and issues on reinvestment allowance (RA).

“We will also be advising more effective tax planning for small and medium enterprises (SMEs) and corporations. RHB Bank will also be presenting its economic outlook,” he said. He said the seminar was targeted at business owners, high net worth individuals and senior corporate executives.

Poon said the Government had been very proactive in its measures to stabilise the economy when the global economic crisis occurred – vis-a-vis fiscal and monetary policies, including the two stimulus packages.

“However, there is room for improvement especially in encouraging the growth of more SMEs by giving them tax breaks in the early years of business, relaxing the RA by extending the years for existing companies and/or broadening the RA application, especially during these tough economic times,” he said.

On the other hand, Poon said it was also important for Malaysian companies to expand their businesses beyond local shores to be more resilient and competitive and not to rely solely on tax breaks and incentives to grow.

On the implementation of the goods and services tax (GST), he said the GST implementation would depend on the state of the economy and should be timed appropriately for a smooth transition to a new tax regime so as not to hurt the lower income group and SMEs.

Poon said Horwath believed a lower income tax regime had its merits. “It (the lower tax regime) encourages employees to work more and also does not stifle entrepreneurship,” he noted.

Horwath is a member of the Crowe Horwath International, one of the top 10 global accounting organisations, which is internationally associated with 140 member firms operating in 560 offices around the world.

RHB Bank head (retail) Renzo Viegas said the bank had played its part, especially during the crucial moments of the economic dowturn, by disbursing RM400mil worth of loans to SMEs under the government guaranteed loan scheme.

“RHB’s on-going participation in these seminars for three years now is a show of commitment to assist the growth of the business community, especially SMEs,” said Viegas.

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