KUALA LUMPUR – The government is urged to assist small and medium enterprises (SMEs) by raising the corporate income tax threshold for the 15% tax rate from RM150,000 to RM300,000, following the introduction of the new RM1,700 minimum wage.
Former finance minister Lim Guan Eng (Bagan-PH) has further proposed increasing the next taxable income threshold for the 17% tax rate from RM300,000 to RM600,000, and eventually to RM700,000.
“This will enable SMEs to save RM10,000 in taxes for the 2025 assessment year,” he said during the debate on the Supply Bill 2025 at the policy level in the Dewan Rakyat.
Lim said the plantation sector and labour-intensive SMEs, particularly those employing foreign workers, would be most affected by the minimum wage hike.
He added that minimum wage increases should be scheduled well in advance, allowing all parties ample time to prepare.
In Budget 2025, the government agreed to raise the minimum wage from RM1,500 to RM1,700 per month, effective from February 1, 2025.
However, employers with fewer than five employees will be given a six-month deferment, with the new rate applying to them from August 1, 2025.
Lim also proposed raising the windfall profit levy threshold for palm oil by RM500, to RM3,500 per tonne in Peninsular Malaysia, and RM4,000 in Sabah and Sarawak.
“The RM150 increase in the windfall tax threshold for crude palm oil is too small. It should be raised by RM500, to RM3,500 in Peninsular Malaysia and RM4,000 in Sabah and Sarawak,” he said.
He argued that the current windfall tax threshold is irrelevant, as it applies when market prices barely exceed production costs.
Lim pointed out that Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani had acknowledged the current threshold for the windfall levy on palm oil is outdated, as production costs have risen to RM2,800 to RM3,200 per tonne, compared to RM1,800 previously.
In the 2025 Budget, the government has proposed increasing the windfall profit levy threshold to RM3,150 in Peninsular Malaysia and RM3,650 in Sabah and Sarawak. – October 22, 2024