An overview of current tax incentives matters among companies in Malaysia

Peng, Low Mei

Abstract

The Earth is sick! The fact of climate change is now widely accepted by every major scientific body universally. The environment is positing challenges to everyone. People around the world have taken notice of the world's ills, and major governments are working on solutions to curb with the pressing issues to slow down the effects and begin to shape a better world for the future. Some of the initiatives by the Malaysian Government is the introduction of tax incentives among the companies. This study aims to provide an overview of the current tax incentive issues among companies in Malaysia. Purposive sampling method was adopted to collect responses from Malaysian companies by using a semi-structured questionnaire. The results reveal that majority of the companies acknowledged the predicament of rising production cost and emerging environmental issues yet most of them are unaware about the tax incentives offered by the Government. The study informed that the facilitating factors for tax incentives application and implementation are the companies’ financial resources; supportive management, and the clear directives from the Government. Time consuming in studying the requirement, complicated procedures and benefit reap from the tax incentives application are the main barriers that contribute to low tax incentive applications. This study contributes by providing a timely review of current tax incentives situations in Malaysia and proposals for better utilisation of tax incentives for companies’ performance.

References

Cheng, S., & Shi, S. (2015). Green Tax in the People's Republic of China. Int'l Tax J., 41, 61.

De Gouveia, K. N. (2014). Income tax incentives for renewable energy research and development and implementation: a comparison between South Africa and China (Doctoral dissertation, University of Pretoria).

Hwang, H., & Mai, C. C. (2004). The effects of pollution taxes on urban areas with an endogenous plant location. Environ Resource Econ 29:57–65.

Malaysian Investment Development Authority MIDA (2017, August 10th). Retrieved from http://www.mida.gov.my/home/search/?find=tax+incentives

Mao, J., & Wang, C. (2016). Tax incentives and environmental protection: Evidence from China’s taxpayer-level data. China Finance and Economics Review, 4(14). Retrieved August 18, 2017, from https://chinafinanceandeconomicreview.springeropen.com/articles/10.1186/s40589-016-0040-0

MIDA. (2017). Environmental Management. Retrieved August 15, 2017, from http://www.mida.gov.my/home/environmental-management/posts/

MIER. (2017) Malaysian Economic Outlook. Retrieved August 15, 2017, from https://www.mier.org.my/

Ministry of Energy, Green Technology and Water. (2011). “Low Carbon Cities Framework and Assessment System”, Retrieved August 23, 2017, from http://esci-ksp.org/wp/wpcontent/uploads/2012/04/Low-Carbon-Cities-Framework-and-Assessment-System.pdf

Oates, W. E., Baumol, W. J. (1975). The instruments for environmental policy. In: Mills E (ed) Economic analysis of environmental problems. Columbia University Press, New York, pp 95–128.

Rynoso, R., & Heusinger, S. (2010). Sates Offer Rich Incentives for Going Green: Is Your Company Leaving Money on the Table with Unrealized Credits and Incentives. CPA Prac. Mgmt. F., 6, 12.

Sakarnor, M., Sharifah, B., Norkhazimah, A., & Bakhtiar, A. (2009). The awareness and utilisation of Tax Investment incentives on environmental protection activities, Energy and Environment, 3rd International Conference on 7th-8th December 2009.

The Star Online. (2017). Retrieved from http://www.thestar.com.my/news/nation/2017/06/28/port-klang-used-as-dumping-ground-unwanted-waste-in-containers-shipped-in-and-discarded-by-irrespons/#LAAueQZV8YFk7FTf.99

Yang, B. S., & Mai, C. C. (2013). The impact of uncertain environmental regulatory policy on optimal plant location and anti-pollution technology selection. The Annals of Regional Science, 50(3), 753-769.