Windfall profit tax may frighten off investors, Dewan told

 

Finance minister Tengku Zafrul Abdul Aziz says the government is looking into ways to bring the “informal economic sector” into the mainstream economy. (Bernama pic)

KUALA LUMPUR: Any new introduction of a windfall profit tax must be scrutinised carefully as the matter could give a negative perception to investors, finance minister Tengku Zafrul Abdul Aziz told the Dewan Rakyat today.

He said investors might get the impression that the government was taking advantage of the multifold profits generated following the global health crisis.

“The sudden introduction of windfall profit tax can undermine the confidence of investors who have made investments in the country without taking into account the tax element on the company’s finished production.

“If existing investors in Malaysia choose to expand overseas, this can result in the country losing higher investment opportunities in the future in the industries involved,” he said at the winding-up session in Parliament today.

He was responding to a question from Syed Saddiq Syed Abdul Rahman (Independent-Muar) on the suggestion to impose windfall profit tax on big companies that recorded extraordinary profits during the Covid-19 pandemic.

A windfall profit tax is currently imposed on the palm oil industry based on the domestic crude palm oil market price threshold.

The government is expected to gain RM295 million in windfall profit tax in the first three months of this year with crude palm oil prices rising above RM2,500 a tonne.

Tengku Zafrul said to diversify the country’s income, the government is constantly reviewing existing taxes as well as necessary measures to bring the informal economic sector into the mainstream economy to increase the national revenue.

“The government will continue to strive to maximise tax revenue collection and increase tax buoyancy through tax reform initiatives,” he added. - FMT