In-check: Several components of non-tax revenue are projected to increase, cushioning the impact of lower PETRONAS dividend receipts.
THE government will continue strengthening revenue management, while enhancing efficiency through the use of technological advancements and innovative approaches.
The federal government revenue is estimated to grow by 5.5% to RM339.7bil, in tandem with a better economic outlook in 2025.
Tax revenue will continue to be the major contributor to overall revenue. It is projected to reach RM259bil, with a share of 76.3% or 12.4% of gross domestic product (GDP). Meanwhile, non-tax revenue is anticipated at RM80.7bil or 3.9% of GDP.
The government has reiterated its commitment to implement the Global Minimum Tax (GMT) in 2025. It noted that the “game-changing” international taxation policy is expected to achieve several objectives, like addressing tax avoidance and profit shifting, promoting fairness and equity through a level playing field and strengthening global cooperation amongst others.
The government acknowledges that effective implementation of GMT also requires substantial resources, including skilled talents and appropriate technology. At the same time, a more robust national investment strategy in line with the aspiration of the Madani Economy framework also needs to be formulated.
Nonetheless, it remains confident in being able to pull off a successful implementation of GMT.
This aligns with Putrajaya’s goal to create ample fiscal space and address tax evasion issues, while upholding global best practices.
To recap, during the year, the government introduced various measures to broaden the tax base and minimise revenue leakages, particularly from the shadow economy. These efforts include the digitalisation of tax and financial reporting through e-invoicing, implementation of the capital gains tax as well as revision of the service tax rate.
Additionally, the sales tax on imported low value goods has been charged on goods valued at RM500 or less, beginning Jan 1, 2024.
In terms of tax revenue, the Malaysian government said it remains stable at 12.4% of GDP.
However, non-tax revenue is estimated to decline by 5.5% to RM81bil, with a lower share of 25.2% to overall revenue, mainly due to lower investment income, particularly dividends from Petroliam Nasional Bhd (PETRONAS) amounting to RM32bil, reflecting lower reliance on petroleum-related revenue.
On this note, it was stated that receipts from licences and permits are expected to decline slightly to RM16.5bil, mainly due to lower proceeds from petroleum royalty.
On the other hand, several components of non-tax revenue are projected to increase, cushioning the impact of lower PETRONAS dividend receipts.
This includes the dividend of RM2.85bil from Bank Negara and the RM1bil that is expected to be received from Khazanah Nasional Bhd.
The government is also expected to receive proceeds from asset recovery measures amounting to RM2.3bil and unclaimed monies estimated at RM2bil, following the enhancement of Unclaimed Monies Act 1965 (Act 370).
Moreover, the motor vehicle licences collection is forecast to be stable at RM3.3bil, in tandem with sales hike in passenger vehicles. Similarly, the levy on foreign workers is estimated to remain at RM3.7bil.
