KUALA LUMPUR – UOB Kay Hian Wealth Advisors Sdn Bhd has recommended broader tax breaks and incentives for local and foreign investors in Budget 2024 to boost Malaysia’s capital market attractiveness.
Chief executive officer Alvin Tan said that tax incentives can be given to companies offering stock options for employee ownership, which will raise Bursa Malaysia’s participation, in addition to encouraging companies to opt for such incentives to benefit employees.
He also suggested investment tax credits in specific sectors or startups to attract capital in key economic sectors.
“Offering tax credits for research and development expenditures can also attract investment in innovative companies,” he noted.
He said dividend tax cuts are also crucial to encourage companies to distribute profits to shareholders.
“Offering tax breaks to investors can make investing in the stock market more attractive and lead to an increase in the number of investors besides boosting the capital invested,” he said.
He also hoped that the government could reduce the regulatory burden and costs associated with initial public offerings (IPOs).
The Securities Commission Malaysia (SC) recently said it is open to looking at ways to shorten time-to-market for IPOs.
Tan also urged the government to carefully assess the move to implement capital gains tax amid the current market and economic conditions.
“The assessment should involve the overall tax structure, its potential impact on investor sentiment and market stability.
“We believe the government would be able to justify the rationale behind this move,” he concluded.
During Budget 2023, the government indicated the possibility of introducing a capital gains tax on unlisted shares disposal from 2024, without giving details.
During the 12th Malaysia Plan (2021-2025) Mid-Term Review, Prime Minister Datuk Seri Anwar Ibrahim said the government is focused on expanding the tax base, transparency in the procurement system, improving the targeted subsidy delivery mechanism and better debt and liability management.
Anwar said he is enacting new taxes to be implemented in 2024, including the capital gains tax, but will ensure that they are not beyond the means of the people. – Bernama, October 2, 2023
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