KUALA LUMPUR, Nov 2 — Federal government revenue, including the special Petronas dividend, is forecast at RM261.8 billion or 17.1 per cent of the Gross Domestic Product (GDP) for 2019, higher than the RM236.5 billion or 16.5 per cent of the estimated GDP for 2018.
Tax revenue continued to be a key component of the overall estimated revenue for 2019 at RM176.2 billion, but its contribution to the GDP was expected to decline slightly to 11.5 per cent from 12.2 per cent in 2018, said the Finance Ministry in its Fiscal Outlook and Federal Government Revenues Estimates 2019 Report.
Direct tax collection, which constituted 76.7 per cent of the tax revenue, was estimated at RM135.1 billion, a 1.2 per cent increase compared with 2018’s revised target of RM133.5 billion.
The ministry said this was mainly due to higher petroleum income tax collection at RM18.1 billion from RM16.8 billion estimated in 2018, amid a modest assumption of crude oil prices.
Meanwhile, individual tax and companies income tax were forecast at RM35 billion (2018: RM34.8 billion) and RM70.2 billion (2018: RM70.5 billion), respectively.
Revenue from other direct taxes comprising stamp duties, real property gains tax and other direct taxes were expected to increase by 4.4 per cent to RM8.2 billion next year.
“The government has established the Tax Reform Committee to undertake a comprehensive review of tax system aimed at broadening the tax base and reducing tax gap,” the ministry said.
Indirect tax collection is projected to decrease slightly to RM41.1 billion (2018: RM41.2 billion), including the expected RM22 billion contribution from the Sales and Service Tax.
Excise duties collection in 2019 is expected to improve by 6.4 per cent to RM11.4 billion on higher demand for motor vehicles.
“According to the Malaysia Automotive Association’s first half review, vehicles sales volume is anticipated to increase by two per cent in 2019 in line with continuous demand for new vehicle models and aggressive promotional campaign by automotive companies,” it added.
Meanwhile, export duty collection is forecast to remain at RM1.6 billion, while import duty is expected to grow by five per cent to RM2.9 billion (2018: RM2.8 billion).
Non-tax revenue is targeted to increase to RM85.7 billion in 2019 from RM61.8 billion previously, on higher interest and return on investments collection.
The ministry said the bulk of the return on investments were Petronas dividends, amounting to RM54 billion, RM30 billion of which was a special dividend, to be utilised to pay the outstanding tax refund.
“The payment of tax refund will improve the cash flow of businesses and households, thus helping to stimulate economic activities,” it explained.
Additionally, collection from licences and permits is targeted to expand by six per cent to RM15.6 billion, mainly due to contributions from petroleum royalties at RM5.6 billion, vehicles licences at RM3.5 billion and foreign workers levy.
Petroleum-related revenue’s share of the total revenue, excluding the special Petronas dividend, is estimated to increase slightly to 19.5 per cent in 2019 from 21.7 per cent last year.
“Even with the reduction in consumption-based tax, the share of petroleum-related revenue is still lower than the annual average of 34.6 per cent recorded during 2009-2014 period.
“This indicates that the government revenue sources remain fairly diversified, and the government is expected to enhance its non-petroleum revenue base, particularly from the efforts taken by tax reform initiatives,” it added. — Bernama