That 2% monster!

It seemed harmless at first sight; the proposal to “broaden the tax base… that tax at a fixed rate of 5% be imposed on gains from the disposal of real property” with a collection mechamism whereby the tax is collected through a withholding mechanism whereby the purchaser withholds 2% of the purchase value and pays to the Inland Revenue Board.

One month thereafter and one month before implementation date, here are some potential migraines to consider…

1. All purchasers of real property or real property company (RPC) shares will be required to withhold 2% of the purchase price and remit the same to the IRB when the purchaser is unsure whether the disposer is subject to RPGT on the gain, or whether the disposer has got a gain from the sale, or whether the disposer is gonna or not gonna file their RPGT returns.
2. Reread point (1). See any problems yet? RPC shares are shares in companies with at least 75% of their tangible assets being comprised of real property or RPC shares… now, do you see the problem?
3. Reread point (1). See another problem? Where the purchaser is unsure, just withhold and remit to IRB. Imagine this scenario… investment dealers, banks, insurance companies, brokerage firms, any freakin’ person deciding to purchase an entire business aka balance sheet etc will now have to be wary of the lock, stock and barrel they’re purchasing or the thousands of shares traded in case there are RPC shares there and whether they may need to withhold 2% of that purchase price and remit to the IRB.
4. Worse still, what about properties forclosed by banks for bad loans and mortgages? How would the “withholding” work? Has the bank “purchased” the property? How would the bank then have to get back the money they are trying to recover through an auction of the property on the basis that there was probably no gain to be taxed and that it should not even be taxed under RPGT in the first place?

And I’m sure there will be more. Those are just some I am able to pluck out so far.

The old man is right…

After yearly fiascos like this, I think the old man has a point.

It’s not going to work…

This has noble intentions. But it ain’t gonna fly.

Firstly, there isn’t anything new about replacing federal income tax with zakat payments for Muslims, which is essentially a tax rebate. That has always been an available option for them.

Secondly, there isn’t any federal legislation that allows a non-Muslim a similar option to replace their federal income tax with anything else. The closest thing we’ll ever get to that are approved donations. Approved donations get deducted before the tax rates are applied and there’s a limitation on even that. In the end, whatever’s left is still subject to tax at the individual’s applicable rate…. unless, of course, that individual donates his entire earning to the government.

Thirdly, the federal government ain’t gonna pass any law to change the second point above to be in line with point one for the non-Muslims.

Lastly, I’m disappointed with Pakatan for coming up with this “instant noodle” solution which is essentially a one-hand-trying-to-clap-for-political-protest of the federal government’s management of our income taxes. If they had half a brain, BN worshippers will be scrambling to ridicule this.

Excuse me?

I know this is not really tax related, but it’s the big news for the day and I am seriously confused over it.

The news: Here.

The extract…

KUALA LUMPUR: The 30% bumiputra equity requirement for Malaysian companies seeking public listing is now repealed, said Prime Minister Datuk Seri Najib Tun Razak.

However, these companies are now required to offer 50% of the public shareholding spread to bumiputra investors.

For the uninitiated, public shareholding spread is the percentage of shareholding in a listed company that must be held by the public. In numerical terms, that’s at least 1,000 people. 999 persons does not constitute the public, got it? Under Bursa rules, the current minimum public shareholding spread is 25%. But what I understand from an investment banker is this… its near impossible to even meet the 1,000 people-equals-to-public requirement in the first place. Usually, listed companies would just make an application for exemption from having to comply with this. To top that off, the determination of who gets how much shares is subject to a public ballot. Yes, lucky-draw style.

Now, if a question hinting heavily on the nonsensical impracticality of the “groundbreaking” announcement hasn’t popped up in your head already by now, go back to the top and read this post again.

PKFZ: Can we not pay for it?

An interesting analysis on the PKFZ shit hitting the nation’s already dirtied fan… only, I don’t think it’s costing RM500 per Malaysian, because not all Malaysians pay tax. I think I remember reading somewhere that there are 3 million taxpayers in Malaysia. So, the cost per taxpayer is really RM2,333.33 and counting!

It kinda brings me to an idea. What if Malaysian taxpayers lobbied for a tax rebate against this wastage? Oh, I don’t know… an idea for the political parties to save taxpayers their already flushed down the toilet hard earned dough AND at the same time, send a message that, “Hey! That was wrong and here’s your money back. We’ll find a way to bring those bozzos who created the white elephant to task”  might just be an election winner.

And it’ll kill a few birds with a stone, really. Those Malaysians eligible to pay tax but are hiding in and/or chained in a Seri Kembangan apartment because the Inland Revenue hasn’t flushed them out yet, will just not be eligible for this once in a PKFZ-boo-boo opportunity.

But then again, I tend to dream too much…

Do they ever consult each other?

The news today is Baffling. Okay, news in this country has always been baffling. But this one gives the word a capital B.

First, they announced that there’s gonna be a toll rate increase come this Sunday. And then, get this… the PM objects… to a decision made “two or three weeks ago”!!

Now, the Baffling part. The PM then said that whilst the toll rate increase decision was made less than a month ago… “however the situation has now changed, and the economy has not become better as yet.” 

What the hell is he talking about?! What’s changed?! Okay, nevermind. The other point, which has now been overshadowed, of course, is that a member of his own cabinet goes through the trouble of announcing something which he then takes to the media to denounce. There’s also another, buried between the lines, bit of question to this Baffling stimulus-killing fiasco - Where’s the “this means the Government has been paying compensation for 14 months” money coming from? No. No prizes.

We flunked

Of course we flunked!

Seems our Centre for Public Policy Studies chairman declared he was “surprised and embarrassed”.

Personally, if they gave us a passing mark, I’d be “surprised” and… “positive our tax ringgits were used to bribe our way up that Open Budget Index”.

Interestingly, one key finding of the study is that “Less transparent countries share similar characteristics” -

• The worst performers tend to be low income countries and often depend heavily on revenues from foreign aid or oil and gas exports.
• Many poor performers have weak democratic institutions or are governed by autocratic regimes.

So, anyone up for the “this is an inaccurate reflection of how we do things in right-to-own-sovereignty-Malaysia, so go mind your own business” argument? Me neither.

Wanna bet?

I think I should be a bookie. Take bets for the likelihood the polar extremities our economic policies tend to take could be heading… say, in a few months time.

North pole: We are toast (read: in recession) and the government scraps GST. The odds? Reports here, here and here that there’s a second stimulus package in the works. So, one would assume introducing a consumption tax into the current climate would warrant a stay in the psych ward.

South pole: We swim in the opposite direction of world trends and introduce GST anyway because Be-End has got nothing more to lose and might as well squeeze the Rakyat for all they’re worth. The odds?  Well, from February until mid March, the Forestry, Financial Services, Property Development, Government, Travel etc industries will be attending public consultations with the Tax Review Panel and Royal Customs Department on GST… tentatively at stop press, I should qualify.

But then, this is Malaysia. And one of our national dishes happens to be rojak. So, what do you think the outcome’s gonna be?

If math were taught in English…

I was happily avoiding the ongoing flippety-flops of whether our children’s ability to count or reason should be taught in our national language or an international medium or any other tongue because I thought no matter the medium that we ultimately choose in the end, if needs be, we can always learn the other to a workable extent after graduation. Worked out fine for me anyway.

I also didn’t draw a tax parallel because the mastery of English in tax law is pretty decent here in Malaysia, so much so that the tax legislation used in the Inland Revenue’s website, is in fact, English. Yes, even the Malay version of the website has its legislation in English.

They burst my happy bubble today.

The income received may be chargeable to tax … irregardless of whether the payment made is in the form of cash or in kind.

Now, my math ain’t what it used to be, but does a combination of a double negative (assuming that word up there is a combination of “irrespective” and “regardless”) make it a positive?

Thankfully, it’s a draft. That will be corrected. I hope.

I need that Public Ruling out now!

Because I have a flippin’ painful stiff neck!

No, really. Each tiny jerk everytime the phone rings or if someone hollered at me from a workstation situated anywhere beyond directly in front of where I’m sitting sends my pain receptors into overdrive from my shoulder blades up.

Anyway, there’s supposed to be this slew of tax exemptions granted by Budget 2009 for employees who receive such heaven-sent benefits from their employers, like traditional medicine and alternative treatments… that I so need right now. The funny thing is, all those exemptions were supposed to have kicked in for the calendar year 2008. But given the propensity of our legislators for twisting the intentions of a proposal into some unimplementable creature and propel us to grander heights of global laughing stock, which employer would have the guts to pay for our neck massages without a written decree, I ask?

Oww.