- 6 weeks ago
As global tax frameworks evolve toward sustainability and fairness, ASEAN economies face the challenge of balancing national fiscal priorities with regional cooperation.
In this conversation, Dr Veerinderjeet Singh, Senior Adviser in Tax Policy at KPMG Malaysia, explores how ASEAN can play a strategic role in shaping tax sustainability from harmonising incentives to addressing digital-economy taxation and cross-border investment flows.
In this conversation, Dr Veerinderjeet Singh, Senior Adviser in Tax Policy at KPMG Malaysia, explores how ASEAN can play a strategic role in shaping tax sustainability from harmonising incentives to addressing digital-economy taxation and cross-border investment flows.
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NewsTranscript
00:00Thank you for joining us. This is the economy. It's budget day. We can't wait enough in terms
00:22of the presentation that will be given in the Dewan Rakyat later in this afternoon when the
00:28Prime Minister, also the Finance Minister will present 2026 Belanjawan. And of course, we will unpack
00:35every single element and aspect of the budget 2026 as it transpires with my colleagues Najib Arof
00:43as well as Harith Ashraf Hasnan later at 3pm. But in the meantime, we need to also unpack the kind of
00:51expectations and the kind of understanding when it comes to tax sustainability, increasing income
00:57for the nation, and of course, improving governance and oversight of how we're going to spend public
01:04funds moving forward. So joining this particular conversation is an old friend of ours, but young
01:10at heart, of course, is Dr. Verindijit Singh. He is the KPMGC and Advisor on Tax Policy as well as the Vice
01:17Chair Global on Tax Commission. Dr. V, very recently you wrote a very lengthy article when it comes to
01:24tax sustainability framework. What caught my attention was on the idea on not just the technical
01:31aspect, but the whole idea on communicative and engaging element aspect on the tax framework.
01:37So we'll unpack one by one, but let's start off with the whole crux of the article that you wrote
01:44on tax sustainability framework. Let's go through with that. Thank you. Thank you for inviting me to
01:51this particular session. We go back a long way, but in the end of the day, I think it's very important
01:57for us to share all these things that are happening in terms of the economy and so on. So this tax
02:04sustainability framework is simply about we always look at the budget as a one-year event and then every
02:12time when the budget comes out, we are all having our shows like this and many others and then we
02:17unpeg those various issues. Then we prepare a wish list for the next year. The question at the end of
02:24the day is, many countries around the world don't have this kind of, let's just say, circus that goes
02:34on about the budget and we don't always have these wish lists coming out. You find that in many countries,
02:44many competitors just look at it as a very small part of the whole framework. The framework really
02:50is the economy. The economy, we already have the Malaysia plan announced and so on and so forth.
02:55So the question here at the end of the day, when you look at the tax sustainability framework that I
03:00am talking about, it is about coming out with a longer term plan and not necessarily about imposing
03:09taxes. It's about enhancing what you already have, using what you already have, extracting more revenue
03:16from what you already have rather than introducing new measures and then telling us all about how you
03:23plan to do that over a sequenced period of time. This can include increasing collection by improving
03:34compliance, using data crunching, data analytics and so on and so forth. It also may mean that we also
03:42look at slowly removing certain types of reliefs, incentives over time. The issue of a framework is
03:50all about announcing a five to ten year roadmap and remember it's not about new taxes because we get
03:57very excited when we think it's going to be new taxes and that creates a lot of angst among many.
04:04It could also include certain things which could be a reduction of certain rates depending on how the
04:10collections have been going. So the framework is really about establishing a way forward and you're
04:17right when you said earlier when I wrote something about the fact that there has to be engagement and
04:23I think this is where we talk about continuous consultation and engagement with taxpayers, business
04:29leaders and so on and so forth and that to some extent the government does do this every year for
04:35the budget. They do engage in various dialogues but it is only for a short term, only for that particular
04:41year's budget. I think we need to have longer term frameworks so that you have a longer term discussion
04:48and you have a more cohesive approach to managing your tax collection in the country and not worrying
04:56about it year to year. But when we look at the five-year plan, economic five-year plan of our
05:02Malaysian plan and a few months ago we saw the Prime Minister launch the 13th Malaysia Plan. Does that
05:10not address that longer term framework outlook? Okay, try looking into the 13th Malaysia Plan and
05:18finding out anything else that it says, anything concrete about taxation and there's nothing except
05:26maybe a mention of carbon tax which is what we expect this budget to bring forth a carbon tax because
05:35that's already been mentioned in the previous year. Yeah. But the carbon tax is not really a tax
05:41collection per se. It's not a revenue objective. The idea there is more to ensure we move towards
05:47Yeah, it's a behaviour modification tool. So if people see this as a revenue tool, that's not the wrong approach.
05:54So there's nothing else stated about how we want to push forward in the five years about managing our taxes.
06:02Right? Now, unfortunately, when we look at the Malaysia plans, we look at it more as development plans.
06:09We don't look at it as a sustainability plans. It's all about how do you want to develop the country.
06:15And in the end of the day, it's all about spending. It's about what we need to do to move the country forward,
06:21which is fine. So I see that as one aspect. But it doesn't ever cover in detail about how you're
06:28managing the tax aspects, how you're going to do engagement. When I say engagement,
06:34I also mean this concept of building public trust in the institutions. And that is no mention of this
06:42anywhere. In fact, any minister, dare I say, will not even talk about this because it seems to be a
06:48given that people should trust civil servants or civil service. But it's not necessarily the case,
06:54right? And I come back to tax per se. And why is there sometimes, not in Malaysia and many countries
07:02around the world, research has shown that the trust level in government agencies in mostly developing
07:10countries is weaker than in developed countries. And I think you all know why that is so. Because
07:17in developed countries, you see the spending that is going and you are seeing the benefits
07:24of that particular spending or the outcomes. And it does benefit you.
07:29And not only that, the recourse is also as clear as day. If the the populace is unhappy about that
07:35particular spending, the politician or the policymaker in charge will be brought to action,
07:40exactly removed the next day. Exactly. It's very swift. Accountability. Yeah.
07:44So it's about accountability. So the issues, we need to approach, go to that level in due course.
07:50I'm not sure whether we are ready for that, but we should be looking at that in terms of the fact that
07:56we should be accountable for how we spend our money, right? In Malaysia, the accountability aspects are
08:02very, very weak. And so to me, it's about there is a clear need for the government to look at developing
08:12and building public trust in our tax institutions, for example. Not only tax, but also the other
08:18agencies. But since we are talking about the budget, I'm just focusing a little bit on tax.
08:23Really public trust, because that will improve compliance. Why is there an element of
08:30people evading taxes? Usually it's for various reasons. And one of them is also about the fact
08:36that they do not feel comfortable about how the government is going to spend their tax dollars.
08:44So sometimes you need to go an extra mile to show accountability. And as you develop that, and as
08:50as Anwar has also initiated quite a lot of civil service reforms, it's still in progress. And we
09:01need to see how these public sector reforms work. And one of the things that have been recently done is
09:07obviously salary adjustments and so on. And obviously, we expect bonuses for civil servants as always.
09:15The question is, how do you measure the services that are rendered by civil servants? Where is the mechanism?
09:23And I think there should be a clear mechanism as well, because it's all about just like, you know,
09:27you and I, maybe not me now, but more you. If you look at organizations that you work for,
09:34you have a clear KPI and a performance measure. And how clear is that for the civil servants in terms
09:42of, not internally, but in terms of between the right yard and the service? We need to look at that. We
09:47need to look at ways to measure that, because that will give the government a lot more to go on in
09:53terms of doing some kind of a balancing act and so on and so forth. But we don't see that. We only
10:00look at it in terms of complaints that are coming into the various hotlines and so on. And then people
10:05don't go there because it's so difficult to get into the hotline as well.
10:07Also, it's reactive and reactionary as opposed to, say, a progressive or a little bit more forward
10:14management. Correct. So that's really what we are looking at in terms of public trust in our
10:20institutions. And I think we have, we also do have to say that if you look at it in the revenue board,
10:26perhaps in revenue board, many of us see it as one of the more efficient agencies. It depends who you
10:33talk to. Also well-hated, but when it comes to operational efficiency, I don't think, not many
10:37people are going to contest that because of that. Yes. So I think it is a well-run organization. And I'm
10:43not saying that because I used to work there years ago after graduation. But the point is, it has
10:49done well. And they are doing a lot in terms of technology, tools for the taxpayers. They are
10:58creating more things online. Yeah, but it's just impacting a narrow slither. Okay, then we come
11:06back. We come back to this issue. Because the taxpayers is very narrow. Exactly. So now we come
11:09back to this other issue on sustainability, which is, look, when you talk about tax sustainability,
11:15it's not only public trust. It's also about the base. It's also about how you spend. It's also about
11:21what incentives you give, right? So it's a, it's a combination of a lot of issues. So let's look at
11:26the base. The tax base in Malaysia, well-documented, narrow. Okay. And we can talk about this for...
11:33Something along the lines of 12% of GDP? Something like that?
11:35Yeah. The tax to GDP ratio, yes. About 12. We continue to talk about this. The question
11:44therefore at the end of the day is, if it's 12% ratio, do we have a target to say, by within
11:51two years, we'll move it to 14 or 15? We don't. We have a target on fiscal deficit. We have a target
11:58on household income and household debt. That's what we want, right? But maybe we should also
12:03start setting this as well, right? But the point was, we continue to be at that level, 12 or so,
12:11for how many years? And yet we find that tax revenue collection is going up, right? In line
12:17with GDP increases and so on. So what gives... But it doesn't matter if the numerator increases
12:23because the numerator will also increase, but the percentages remain the same in some mathematics world.
12:27Correct. Or some things may even decline because, let me also say that, you can have more revenue
12:35and then the question is, how are you spending it? Yeah. Alright? And if you spend it in new projects
12:42that come out, because I think this sometimes does happen. For example, we have floods in various
12:47parts of the country and so on. So you've got to have contingency funds to help that. That's fine,
12:52because all governments have contingency allocation. For disaster allocation. But sometimes new things
12:56come up and their money then gets moved out to another area. So the question, therefore,
13:01at the end of the day is, shouldn't our... If with an efficient tax collection agency that we have,
13:10in terms of IRB, revenues are going up and the question, therefore, is how are we managing our spending,
13:18right? I think we can't blame the Inner Revenue Board doing its job, right? Of course,
13:22some people would say that taxes are being imposed on everyone. Businesses are being pushed to the
13:30crunch in terms of all these things. We'll come to that subsequently. But that's growing pains.
13:36Yeah. But the core issue is on the spending and the accountability aspect of it.
13:41So come back to the base since we raised the tax base. Tax base is narrow because we have about 15% of
13:48the workforce paying income taxes. And that one is historical because we have high exemption levels,
13:54which means that if your income is up to a certain level, you don't have to pay taxes. Only when it
14:01reaches, let's say, 3,000 a month or something equivalent, you pay. Now, in many countries,
14:08the threshold is much lower, right? So everyone then starts paying a little bit, no matter how small,
14:13right? And therefore, everyone feels or rather, feels or becomes used to the fact that they are
14:22part of the system. One of the challenges we had when we introduced GST, right? Our favorite tax that
14:29we wrote about. When we introduced GST, one of the issues that came out was the pushback that there
14:35were a large segment of the population which doesn't pay any taxes and suddenly are saying, oh, I'm now being
14:41taxed. So you then ended up having to give cash offsets and so on. So that's an example of how
14:48too high an exemption threshold can cause people to feel disenfranchised because I've never been
14:52paying taxes. Suddenly you're taking my hard earned money. So therefore, unfortunately, this is
14:58historical. We have been raising these levels over the past. Second thing in terms of our individuals
15:04is that we give quite a lot of personal reliefs. And I think that's been something I've said many
15:09times. And we need to curtail that, not to say remove it altogether, but curtail it. Just why
15:15do you keep adding on more and more reliefs? Because only 15% of the workforce pays income taxes.
15:23So why keep increasing these reliefs or widening it to benefit only 15%? Now, the government will say,
15:31there's a middle class. I need to keep them happy and so on. But the idea of budgets is not to keep
15:36people happy. The idea is to keep the country moving in the right direction. So I think politicians
15:43need to balance that. And I understand I'm not trying to be a politician. I'm just looking at it
15:48from the point of view of nuts and bolts. So these are the other challenges. So you end up giving
15:53a lot more personal reliefs and that reduces your tax base further.
15:58But I want to talk also about the other collective measures that are being done in tandem, including
16:05that of the minimum wage policy, the progressive wage, white paper.
16:13So we come back to this issue of raise the floor, raise the ceiling and so on, which are actually
16:20very… Which is the central tenon of the Madani economy framework.
16:23Exactly. And that framework has got, the three aspects of it are the right approach,
16:29from my own perspective, I think is the right approach. The question is the challenges of how to
16:33do it, right? So yes, minimum wage needs to go up and is going up. But some will argue, I mean,
16:40it's not going up fast enough. On the other side, businesses will say, if we keep increasing minimum
16:47wage, my profitability goes, I may end up making losses, how do I sustain that? So this is where
16:52the dilemma, this is why government has decided on a very small movement upwards, which to a lot of
16:58economies or observers on the side is nothing substantial. So they need to understand the business
17:03world. But on the other side of this, the business lobby, I think in Malaysia is pretty strong.
17:08And so the pushback comes out and then comes back to the ministry. And then we tend to always give
17:17way. So the question is, what should the government do? If everyone pushes you and you give way to
17:26everyone, then you're not going to achieve what you want to achieve in the longer term. So there's always
17:31some pain in order to have gain. I think these are the challenges. And to be fair, I'm not saying
17:38that the government hasn't handled it. It's handling it, but has it handled it well? Could it have
17:44handled it better? Could it be stronger in the sense that say, no, this is to be done? And they did
17:50something in terms of minimum wage. They stuck to it, but they deferred a little bit. They gave some time.
17:55I think that is one of the ways we are managing it and the government is managing it. Just like the
18:01Ron 95 and all that. We heard all kinds of things about how it's going to be imposed. Finally, it's a
18:08simple thing, just going by citizens, non-citizens, and that's it, right? That's one of those things that
18:14it's a very simple mechanism, because I think a very complex mechanism will create more problems to
18:21everyone, right? So perhaps a more complex mechanism will come later. And a simple mechanism starts
18:27first. And that's probably the right approach. So that's an example how I think the government is
18:32trying to do some kind of sequencing. Now, Ron 95, we haven't had a last of it. It's just a start.
18:38Ultimately, there could be as more data is available, as we see the economy moving and as we need more
18:46more funds, then you can do something with that. But I must say that we started this. The question is,
18:54are we looking at the long term or are we just looking at one year? So that's where the challenges
18:59are. So tax base is narrow. How do we widen it? I've already mentioned something about the personal
19:04taxes. It won't go very far, because at the end of the day, 1,700 or 2,000 minimum wage,
19:10you're still not taxable. But you are absolutely right that the government's initiative to push wage
19:18levels up is a very good move. And therefore, in that context, I would urge that the government does
19:25not keep moving the exemption thresholds further up. Leave it where it is. Ultimately, when your wage
19:32levels reach, let's say, 3,000 and so on, everybody then may end up paying taxes, right? So that should
19:38be the way to go. So stop moving the exemption thresholds upwards so that more and more people
19:45are not taxable. Stop that. Stop giving more personal reliefs. Wait for the minimum wage movement
19:53to move up to a certain level where our wage levels then reach a good enough level and everybody then
19:58pays a little bit in terms of personal tax rates. And that would be one of the ways to move forward.
20:05If you keep increasing reliefs and you keep moving up the exemption thresholds, then you have wages,
20:12average wages trying to catch up to be taxable. Yeah, and the finishing line keeps on going for
20:16the way you're still in this race forever. So sometimes you need some
20:21decision from the authorities to say, this is what we will do. But you will never hear that, right?
20:26Well, yes. But at the same time, we are stuck in political realities as well. And real politics
20:31speaks louder than anything. And that comes back to the fact that a budget is political. And therefore,
20:37you know, lest we forget, this is the third time that the Prime Minister is going to announce the
20:41budget. The first being 2023, now 2024, and of course, 2025 Belanjuan representing the next year's budget.
20:47And how do you think... Before we go to the next question, sorry. Yeah. But I must say that given all
20:56my years of commenting and giving views on budgets, I must say that the last three years' budgets have
21:05actually been a lot more productive in terms of the initiatives that have been initiated. And a lot of
21:16difficult decisions were taken. So I think that's a positive. But could it have done more? Yes, certainly.
21:22But then... Sorry, that was my question. How do you think this government has fared in the three
21:27budgets that have been presented thus far? Yes, yes. So it is, it has done pretty well. On, in terms of giving them,
21:32giving a checklist and saying that how have you progressed, in terms of tax sustainability aspects
21:40that I'm talking about, and in terms of subsidy rationalisation, all the pain points that we
21:47don't have, have you moved the needle? Yes. The needle has moved. And is this much to the credit of the
21:54friends that we have at the Treasury under the leadership of Dr Johan even? Yes, Dr Johan, I know him
22:00pretty well. And I think we have a Secretary General of the Ministry of Finance, which is one, the most
22:09competent person I've ever come across, in terms of my past dealings. And yes, credit has to be given
22:17to the Ministry of Finance. And I think they're handling it well, no doubt. You sit down and talk to
22:24someone in the business sector, or complain about SST, and all these things. Yes, some things could
22:29have been better, but not everything can be solved immediately, right? So yes, due credit to the
22:36government for taking some decisions in terms of reforms. And one of them is about our tax incentives,
22:43and that is taken a bit longer. But the framework is coming out, and so on and so forth. Moving in the
22:53right direction. But sometimes we feel it's very slow. How, for example, the incentive framework reform
22:59was something talked about three, four years ago, but it's been taken taking quite a while. And,
23:06but it is there, it's moved in that direction. And so the challenge for us is
23:13continuing to become a nation that is going to be attractive to potential investment, as every other
23:20country in this region once. And that brings us to another dilemma in terms of how governments or
23:29countries try to outrun each other, right, in terms of getting to the dollar, so getting the investment
23:34dollar. So when you do that, you end up with giving a lot away. And, and sometimes you decide to
23:43give a little bit more, more attractive incentive to draw the investment dollar. And this is where I think
23:49Malaysia is starting to move towards because we started introducing zero percent, five percent tax,
23:59and then 10 percent for later years. And that is a very great thing to do compared to straight zero percent
24:05for 10 years, which was, which was not really feasible. We'll go for a short break. When we come back,
24:11we'll continue on with our conversation with Dr. Verinder Jit Singh.
24:41Thanks for staying on with us. This is budget day presentation here at The Economy. I have with me
24:52Dr. Verinder Jit Singh, or Dr. V, the senior advisor of tax policy at KPMG Malaysia. One thing, Dr. V,
25:01that I want to explore is on your other role as the vice chair of the Global Tax Commission at the ICC,
25:07or the International Chamber of Commerce. One highlight that we want to explore is in terms of
25:13how do you see our market and our tax framework compare against various other markets and other
25:19jurisdiction within the ICC. Surely there are pros and cons, but where do you see us having that
25:28quick win, I would argue. Yes, we need to look at it when we talk, when we talk about tax
25:32sustainability framework in the longer term, maybe five to 10 years, but the quick wins in terms of
25:37how we can equalize with our friends from other markets. Well, I think generally speaking, although
25:43we tend to, we tend to gripe a lot about what we have or don't have in terms of taxes. But if you compare
25:50ourselves with even let's say ASEAN, for example, we're not bad. We are actually in many ways second to
25:57Singapore, in terms of the type of taxes we have and how we manage it, in terms of the efficiency of
26:03the tax office that we have in the revenue board. So I would say within ASEAN, we're very clear number
26:09two, number one being the country down south. So when you look at internationally, of course, there's
26:17lots more we can learn, but that's a bit of a different area to move into. Because when you look
26:23internationally, when you look at EU, the European countries, you're looking at states which have a
26:30very solid welfare system in general. And we are not yet there. And I don't think we aspire to become
26:40a welfare state as yet, or I don't think we'll get there. But at the end of the day, because of the
26:47state of our economy, we are a growing economy. We need to enhance a lot of things. We need to
26:53develop our institutions further. So we're not yet there. So when you're looking at that, you're going
26:57to look at countries of comparable economic structure, and ASEAN countries perhaps come to mind,
27:04and then countries which are obviously developed. So I would say I would give very good, very high marks
27:11to how we have structured our tax system. So the only thing is, in between, certain things we do may
27:20not be quite what we want to do, and we need to tweak it. So to me, our tax system is fundamentally sound.
27:28It has got its weaknesses like the low tax base and so on, but so does other countries. If you're
27:36looking at Philippines, Indonesia, and so on. But the solution that most of them have is through a wider
27:44consumption tax, which we have now decided to widen the SST coverage. So in many ways, when you're
27:53looking at consumption taxes, SST is a consumption tax, GST is a consumption tax, VAT is a consumption
27:59tax. So one would argue that we do have a wide ranging consumption tax now, after the recent widening
28:07that we heard about. Of course, about efficiency of that particular SST, is it as efficient? And that's
28:14separate area, we can talk about it, and so on. So if you're looking at the conceptual area, we do have
28:20the kind of taxes that we need. So then you come back to this issue about, should we add in new taxes?
28:28And I think at this stage, no. My unequivocal answer is no. People talk about wealth tax. We are not
28:36ready for wealth tax. You're not going to bring much revenue at this stage in time. It creates more
28:41complexity on measurement tools. So what we should do is stick to what we have in terms of corporate tax,
28:49income tax, consumption taxes, excise duty, SST, and so on, and extract more from those
28:58taxes. And that extraction of more revenue goes back to what we just discussed earlier about tax base,
29:06compliance, efficiency of the tax authorities. The final area of exploration that I want to go
29:14through with you, Dr. V, is in terms of your communication with the various stakeholders that
29:21you engage with in your role as the KPMG senior advisor. You speak with a lot of C-suiters. You
29:28speak with a lot of SMEs as well. What is the mood like? Are they generally happy?
29:36I'm not going to... No, no, no. Nobody's happy, right, with taxes. Okay, carry on.
29:40No, but in terms of how the budget has been executed and the like. I mean, you did give your
29:50point of view. What about your stakeholders? Yeah. The various agencies, chambers of commerce,
29:57I'm involved in various clients, larger clients that get called by the Ministry of Finance to share
30:05views and all that. I think I must say that, again, I am comparing it with the past 10 years
30:12and perhaps the last three, four years. I'm finding that the level of intensity in terms of engaging
30:21with relevant players, the chambers of commerce, some of the big players, the big players like,
30:28let's say, Petronas and a lot of others are always consulted. All right. But the various chambers
30:35of commerce, the main ones are consulted. But I'm also beginning to see, and this is a personal thing
30:42in the sense that when you look at Dr. Johan in Amerikan in the Secretary General of the Ministry of
30:48Finance, he actually now engages some of the tax firms in Malaysia and he always engages us two,
30:57three times a year on various ideas, suggestions and thoughts and something that has never been
31:05done by any Secretary General of the Ministry in the past. And his demeanor and the way he expresses
31:14things, I think every one of us feels that we are welcomed and we can actually say things. And I must
31:21say that not only now, but even in the past, you find that the ministry is open to constructive
31:27criticism. And this is particularly so in the last three, four years. So I think consultation has
31:35been good, has been extensive. Yet, when you look at some people in the smaller chambers of commerce,
31:42they will then say, oh, I wasn't consulted. But look, you can't consult thousands of chambers,
31:46right? You can consult the main ones and widen it a bit. So I've been involved in a number of bodies,
31:52chambers of chambers of commerce as well. And we've been invited to various events. So I must say,
31:58consultation is there. The question, of course, is how deep should a consultation be?
32:07Sometimes the ministry cannot share every little detail, right? Can only talk about the conceptual stuff.
32:15So I think in that sense, I must conclude that it's been a very fair, extensive amount of consultation.
32:23And that is positive for the government and it has to be kept going. But the challenges are,
32:30when you have consultation, invariably you have a wish list coming out. And that's one of the
32:38challenges we have in terms of consultations. The consultation is about a particular few points
32:44that the ministry wants to consult others on, right? In addition to that, you'll get some of the
32:52players wanting to have this A, B, C, D, E. And that's where you'll get a tussle. I think many of us
33:01in the business world are always looking at incentives, something that can be benefiting my members or
33:11benefiting my greater thing. And that is something we should think we should now try to get it out of
33:18our minds. Because this is not the idea. The idea when you are consulted on certain things on a budget
33:24is to look at the greater good in terms of the nation. How do we move forward in terms of doing
33:29this? The moment you think that this is going to be a three percent increase in the tax rate, it's going to
33:34burden me, you give a pushback. So I think, I find that the wider audience in terms of the business
33:45community needs to sometimes not think of themselves being impacted. You should think of the nation's
33:55well-being. And in that sense, I think the larger players in Malaysia, I think the larger listed
34:02companies that are consulted, do see, do show that initiative. They do show that they're not looking at
34:09what's the impact on their bottom line. They look at it from the bigger picture. But majority do not
34:16see that way. So I think we all need to have a mindset that the government is consulting you,
34:22not because they want to know what you want. It's more about what the nation needs. And therefore,
34:28issue is we should be giving our views in terms of what is good for the country going forward. So,
34:34consultation is there, adequate, but I think mindsets of people needs to be improved so that we look at
34:45building a nation together, pain that comes along with it. And ultimately, we hope to see the fruits
34:52of our labor in terms of moving the country forward. But the challenge will be always for the government
34:58is to sequence things rather than throwing everything in one or two years. For example,
35:04every new increase that comes about is done in one or two years that is not sustainable.
35:09Yeah. Yeah. Sustainability is all about spreading it out.
35:12And being consistent throughout the whole time. Yeah. And being consistent, yes.
35:17Basically, spreading it out, but you have one bizarre thing after another.
35:20But I come back to another point about e-invoicing, for example. When e-invoicing was
35:25and we've got pushback, then you lengthen the timeline and all that. Yeah.
35:30Yeah. Was that good? Was that bad? I think the jury is still out. Yeah.
35:33Some of the businesses will say, it'll take me time. So, they're giving you more time.
35:37But at the end of the day, is that really true? Because you want to focus on your business.
35:42You don't want to do this compliance thing. So, sometimes it's about biting the bullet and just doing it.
35:48But yes, it's about sequencing. So, the government needs to be having a better picture, a better
35:54view on this. Because sometimes one agency, sometimes there's a few agencies. And agencies
36:00do not tend to talk to each other. And this is one of the weaknesses we have in terms of our
36:04government as well. And so, if you have all agencies understanding… The classic example we always
36:12have is this thing about Tanaga, about telecoms and so on, when they're digging up certain cabling
36:18in the past. Remember? Digging up the cable and the next day, another one comes out to dig up.
36:23And that's the kind of thing that continues to exist. And how do we work together to ensure we
36:29do it all at one go? And that should be the way we should be moving forward in terms of this.
36:35And the other thing comes back to this issue about our so-called shadow economy.
36:45And when I talked about the tax base earlier, that continues to be an area that…
36:52Strange, because in the age of digitization and digital money…
36:56Yes. So, e-invoicing. If you make e-invoicing compulsory for all, which I think is the idea…
37:02It is. But the execution timeline is, again, a moving target.
37:06Yeah. So, for those who are about, you know, 150,000 and below turnover, there's some kind of
37:12exemption. So, you cannot give exemptions. You can give, you can push it forward. Ultimately,
37:18I think the idea is to bring everybody in. Once you have all that in, and you have a view of all
37:24invoices being issued by all businesses. Now, this is a thing. Will we have all businesses incorporated?
37:32In the e-invoicing thing, you've got to be very careful because some people do
37:37their own little business on the side and issuing invoices without going to a company and it still
37:43happens. So, how do we capture that kind of stuff? So, assuming you have all businesses in the net,
37:48then I think we have a very efficient solution to ensuring that even the shadow economy could be
37:57curtailed, but there's no such thing as 100% curtailment, but you can then have the things.
38:04That's why I have said that e-invoicing, if it's fully implemented, well implemented,
38:10and you're given solutions to the lower income group which runs small businesses,
38:15then I believe we can stop talking about a GST and so on and so forth. Because ultimately,
38:24that will give you a full picture of total sales made in the country and you then have a better
38:30picture of it and you can go for those and curtail the shadow economy in a very effective manner.
38:36Now, the jury is still out into whether we can do that, but we are in that journey. So,
38:42that would be a very effective tool for us. So, for somebody that is impatient like me,
38:49you can imagine the kind of irritation that I have to witness before my eyes. But, you know,
38:56a good reminder from the conversation that we're having this morning is that we are heading in the
39:03right direction. We are. I mean, if a polling question is as simple as are we heading in the
39:07right or wrong direction, we are. We are. We are. Just at the accelerated rate or at a pace that
39:12that could be done. And remember, there's always human behavior in between changes things sometimes,
39:17but anyway, we are heading in the right direction. Distilling this conversation to maybe two or three
39:23bullet points, what are the two or three things that you're looking forward to when the show starts
39:28this afternoon? I think this year we don't expect any real substantive tax measures because the budget
39:37is not about tax alone. It's actually about the economy and other than carbon tax, which was already
39:43announced. So, it's not a secret anymore. I do not expect anything major to come out, but I do expect
39:50some focus on enforcement, on enhancing compliance. And perhaps even when you look at customs in terms of
39:58all these anti-smuggling activities to be further strengthened, that's crucial. There may be a
40:04little bit of tweaking of the SSD because not too long ago we widened it. There are certain things about
40:13tax on tax aspects. There may be some mention of this and obviously there will be a mention of the
40:20tax incentive framework that already MITI has already said they are going to launch in the third quarter.
40:25But it's good for the speech to also talk about it again. But no secret again, it was mentioned in
40:32the past few budgets. So, I don't expect the budget to have anything substantial on taxes, but I do expect
40:40it in terms of its usual allocations. I hope the allocations will be measured. And I always am a
40:51proponent of the fact that whatever allocations we give out, I hope they are outcome-based. And that's
40:58one of the other weaknesses we may have. We give a lot of allocations and then it's all utilized.
41:05And then the question is, do we measure that it has achieved the objective? No. Next year, you give again
41:11another round. So, that's the other aspect of spending that I mentioned earlier about outcome-based
41:18tools to ensure that whatever we are spending is actually spent well. So, it comes back to
41:24accountability, comes back to public trust. I hope the budget will probably reiterate some of this
41:30in a more coherent manner, other than talking about subsidy rationalization and all that stuff.
41:36Yeah. Thank you very much, Dr. V. That was Dr. Varinderjit Singh. He is the Senior Advisor
41:42of KPMG on Tax Policy. He is also the Vice Chair of the Global Tax Commission at the ICC.
41:48Do stay on with us on Astro Awani as my colleagues Nina Rosman as well as Sarissa Shraf-Hasnan
41:54is going to present the Belanjawan Show that starts at 3pm later today. Until then,
41:58thanks very much for watching and stay on with Astro Awani.
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