KUALA LUMPUR: The government may raise additional net revenue of RM400mil from several Budget 2022 changes which are seen to be less punitive on the stock market compared to capital gains tax, CGS-CIMB Equities Research said.

       In its strategy note issued on Wednesday, the research house said (1) a 50% rise in stamp duty rate on contract notes for trading of shares on Bursa Malaysia to 0.15% from 0.1%; (2) abolishment of stamp duty limit of RM200; and (3) exemption of 6% service tax on brokerage services related to share trading.

       “The rationale for the increase in windfall profit levy rate for Sabah and Sarawak from 1.5% to 3% is to streamline the levy with Peninsular Malaysia, which has been paying a levy of 3% since 2008.

       “The threshold for CPO prices has also been raised by RM500 a tonne to RM3,000 a tonne for Peninsular Malaysia and RM3,500 a tonne for East Malaysia to address rising cost of producing palm oil.

       “On plans to expand sugar tax, we gather that the sugar content threshold would cover sugar added to beverages and natural sugar from ingredients, for example lactose and maltose,” it said.

       CGS-CIMB Research said it recently met Ministry of Finance (MOF)’s tax division, to discuss some of the government’s proposed tax measures announced in Budget 2022.

       The meeting focused on five key tax measures, namely (1) the one-off Cukai Makmur (Prosperity tax); (2) removal of income tax exemption on foreign source income; (3) a 50% rise in stamp duty on share trading and abolishment of stamp duty limit; (4) changes in windfall profit levy rate for palm oil players; and (5) plans to extend the scope of sugar tax.

       “Overall, we are neutral following the meeting as the FBM KLCI has declined by 2% to reflect the tax concerns, while the estimated potential collection from the one-off Prosperity tax of c.RM3.9bil is below our earlier estimated impact on KLCI earnings from this tax of RM4.4bil.

       “However, this is offset by potential additional tax revenue from the removal of income tax exemption on foreign sources income, which was not captured in our earlier assessment on KLCI companies’ earnings,” it said.

       CGS-CIMB Research said the government has estimated that it could potentially collect around RM1.2bil from taxing foreign source income received in Malaysia in 2022F.

       It also noted in Budget 2022, the government announced a one-off Prosperity tax whereby profit above the RM100mil threshold would be taxed at 33% instead of the headline 24% in the year of assessment 2022 (FY22).

       “The government estimates it could collect about RM3.9bil from this one-off tax. This would be mostly contributed by manufacturing, banking and utilities sectors,” it said.

       Meanwhile, effective Jan 1, 2022, income tax will be imposed on residents in Malaysia on income derived from foreign sources and received in Malaysia.

       The types of income that are taxable are dividend income, interest income, rental income, employment income and others, which are revenue in nature.

       “We gather that foreign sourced income will only be taxed if the income is remitted to Malaysia. This is likely to impact companies with foreign subsidiaries that consistently remit dividend income to the investment holding company in Malaysia.

       “However, the impact will be lower if dividend income remitted is net of tax at the source country as the tax paid is claimable as tax credit. This arrangement would address double taxation concerns.”