Budget Management Seminar 2017
The Annual Budget Management Seminar was held recently at Monash Malaysia in conjunction with the 2017 Budget presented by Prime Minister Datuk Seri Najib Abdul Razak.
Organised by the School of Business, Monash Malaysia, the event was hosted by Professor Jeyapalan Kasipillai, Deputy Head of School of Business (Education). Special guest speakers included Dr Veerinderjit Singh, Executive Chairman of Axcelasia Inc; Bernard Yap, Indirect Tax Leader of Ernst & Young; and S. Saravana Kumar, Advocate & Solicitor, Partner Tax, GST & Customs with Lee Hishammuddin Allen & Gledhill.
“One of the important things that I have read in recent days, in a few business dailies, is that there is a possibility of a recalibration of the budget next year if the global economic climate necessitates it”, said Professor Jeyapalan Kasipillai, in his opening address.
Dr Singh said that the budget was prepared taking into account the current state of the global economy with oil price hedged at US$45 per barrel. He added that any fluctuation causing a significant drop in oil prices would result in a recalibration of the budget, similar to the one witnessed earlier this year.
“The drop in oil prices necessitated the introduction of GST, last year, to fill the void resulting from the loss of income from petroleum. The revenue from petroleum in 2012 was RM33.9 billion, but it has dropped to RM8.5 billion for 2016 and is projected to record a slight increase to RM10.6 billion in 2017,” said Dr Singh.
He went on to add that the budget was also prepared to continue Malaysia’s commendable rating that was given by credit rating agencies. These companies rate a country based on how manageable their fiscal deficit is.
Also, worth noting was the fact that Malaysia dropped significantly in the ranking for paying taxes after the introduction of GST. However, this was due to the time taken by the Inland Revenue Board in the refund and auditing process. Dr Singh said that these problems will be smoothed out in ensuing years, as the implementation of GST is still in its infancy stage.
He expressed concern that almost 40% of the budget is going towards paying civil servants and retired civil servants. “There is something that needs to be done about this”, he said. The amount of civil servants for a country the size of Malaysia is perceived to be disproportionate.
Making EPF contributions a lifetime commitment for current civil servants to remove the pension scheme were among the suggested mechanisms to lessen the budget contribution towards retired civil servants.
Bernard Tan, from Ernst & Young, said that there are 24 proposed amendments to the GST Act 2014. Changes in the basis to calculate registration, an increase in penalties for late payment and clarification on how such penalties are calculated are amongst the proposed amendments in the pipeline.
Saravana Kumar later presented participants with case studies related to taxes. He showed arguments and counter arguments in a variety of different cases involving the Inland Revenue Board against alleged tax violators.