KUALA LUMPUR (Nov 23): Malaysia should consider implementing the capital gains tax, instead of the inheritance tax, said the head of the Inland Revenue Board (IRB).

IRB chief executive officer (CEO) Datuk Seri Sabin Samitah said that while decisions to introduce new taxes lie with the government, it should look at implementing the capital gains tax as the inheritance tax may not have much impact on government revenue given its narrower structure.

“In an effort to broaden the tax base and increase revenue, so that Malaysia can be on a par with other countries in the region, the government may or should consider introducing the capital gains tax in the future,” he said at the Deloitte TaxMax 2020 webinar in response to a question about taxation on income from the stock market.

The IRB CEO said the introduction of the capital gains tax would be a good measure of ensuring equity and fairness in the tax system.

He noted that people in wealthier income brackets are more likely to have capital income, compared with those in lower-income groups. As such, revenue gained from such a tax can be used to address poverty and income inequality.

Sabin explained that Malaysia’s existing tax structure base is already quite narrow as it is reliant on corporate income tax, personal income tax and petroleum tax, which had seen a slight drop due to oil price volatility.

He also pointed out that tax planning and evasion are enabled in the absence of the capital gains tax.

Sabin added that the tax is important when it comes to taxation on cryptocurrency, intangible and other digital assets in the future.

“Without the capital gains tax, these assets will be left untaxed, and it encourages aggressive tax planning and evasion,” he said.

He explained that capital gains tax would help resolve issues related to the Real Property Gains Tax (RPGT), namely disputes concerning the categorisation of gains on property and valuation of shares in real property companies.

https://www.theedgemarkets.com/article/irb-ceo-govt-should-consider-introducing-capital-gains-tax