FORMER finance minister Lim Guan Eng has urged Prime Minister Datuk Seri Anwar Ibrahim to sustain the momentum of recent fiscal “reforms” by easing pressures on taxpayers, arguing that stronger domestic consumption is essential to shield Malaysia’s economy from mounting external risks.
Lim, who is also the Bagan Member of Parliament, said the economy faced headwinds ranging from geopolitical conflicts to uncertainties in global trade, which could undermine growth if left unaddressed.
Against this backdrop, he welcomed several reform measures announced by Anwar, who also serves as Finance Minister, particularly those aimed at improving cash flow for small and medium enterprises.
He said SMEs remained the backbone of the national economy and were crucial to maintaining the resilient growth rates Malaysia had recorded despite global volatility.
Measures that eased financial strain on these businesses would, in turn, help sustain employment, investment and consumption.
Lim noted that Anwar had previously instructed the Inland Revenue Board to accelerate tax refunds and to clear all outstanding excess tax payments for the 2023 and 2024 assessment years by 2026, a move he described as positive for both businesses and individuals.
Building on this, Lim outlined a series of fiscal steps which, he said, could stimulate business activity and boost domestic demand.
These included allocating 10 per cent of the government’s fiscal budget to the non-Bumiputra community to support business development and entrepreneurial activity.
He also called for a freeze on the proposed expansion of the sales and services tax mechanism that was adopted last July, arguing that additional consumption taxes could dampen spending at a time when economic confidence needed support.
Lim further proposed policies to strengthen local supply chains, including requiring consumers to source half of their essential goods from domestic producers.
At the same time, he suggested imposing a 10 per cent sales and services tax on imported and locally sourced iron ore, metallurgical coking coal and coke, while abolishing the tax on steel scrap to reduce costs for downstream industries.
To ease compliance costs, Lim urged the government to raise the threshold for mandatory e-invoicing to companies with annual revenues of RM5 million.
He also proposed the establishment of a taxpayers’ tribunal to address and resolve disputes related to rebate claims more efficiently.
Among other recommendations, Lim called for a freeze on the two per cent Employees Provident Fund contribution requirement for foreign workers, as well as a freeze on the two per cent tax on dividend income exceeding RM100,000 a year received by individual shareholders, both residents and non-residents, in companies not listed on Bursa Malaysia.
He also advocated reducing the corporate tax rate for SMEs to 15 per cent, cancelling the implementation of the CP500 tax instalment scheme imposed by the Inland Revenue Board on individual wage earners through monthly PCB deductions, and increasing personal income tax relief from RM9,000 to RM12,000.
In addition, Lim said the process for registering foreign workers should be simplified through greater use of digitalisation and online systems, which would help businesses address labour shortages more efficiently while reducing administrative delays.
Taken together, Lim argued, these measures would provide meaningful relief to businesses and taxpayers, strengthen domestic consumption and help insulate Malaysia’s economy from global uncertainties. - February 2, 2026
