KUALA LUMPUR, Oct 11 — The Finance Ministry (MoF) has predicted the federal government’s revenue to register RM244.5 billion or 15.2 per cent of the Gross Domestic Product (GDP) in 2020.
According to the MoF’s Fiscal Outlook and Federal Government Revenue Estimates 2020 report, the amount will be derived from the collection of tax revenue expected at RM189.9 billion and non-tax revenue at RM54.6 billion.
“The government will enhance its revenue base, reduce the tax gap and improve tax efficiency to provide a sustainable revenue collection.
“This will be done through various initiatives, among others by rationalising tax incentives; minimising tax leakages and enhancing tax compliance through effective auditing,” the report said.
The report stated that direct tax was estimated to increase by 5.2 per cent to RM142.7 billion from RM135.6 billion in 2019 attributed to better collection from companies income tax (CITA) and individual income tax.
“Higher collection from CITA is primarily contributed by better corporate earnings prospects and continuous efforts in enhancing auditing and tax compliance,” it said.
Revenue from other direct tax comprising stamp duty, Real Property Gains Tax and other tax was also expected to increase by 7 per cent in line with the expected stable property market.
The ministry also said the Tax Reform Committee (TRC) that was established in September 2018 will further improve revenue collection by reviewing the existing tax system and exploring new sustainable sources.
However, the ministry said the federal government’s non-tax revenue in 2020 is projected to decline by 7.1 per cent from 2019’s estimate of RM263.3 billion following lower crude oil price from petroleum-related revenue.
It added that petroleum-related revenue in 2020 is expected to register RM50.5 billion in line with the average world crude oil price at US$62 (RM259) per barrel.
For non-tax revenue such as licensing and permits, it is expected to also decline marginally on account of lower proceeds from petroleum royalty in tandem with the lower average crude oil price.
Revenue in 2019
Meanwhile it added that revenue performance in 2019 is expected to remain favourable amid global economic challenges.
“The revised total revenue is expected to increase RM1.5 billion to RM263.3 billion compared to original estimates, constituting 17.4 per cent of GDP,” it said.
The ministry added that tax revenue remains the major contributor to the federal government’s revenue in 2019, which constitutes 68.4 per cent of the total revenue.
The report also said tax revenue in 2019 was expected to rise by 3.4 per cent to RM180 billion due to higher collection the Sales and Service Tax (SST) and higher tax collection under the ministry’s Special Program For Voluntary Disclosure.
“Under the SVDP, about 270,000 participants have voluntarily disclosed their undeclared income, and this is expected to raise an additional collection of RM6 billion,” it said.