M'sia second lowest tax rate in South-East Asia

Its highest rate of personal income tax at 26% in 2010, which was the second lowest rate compared with five other countries in South-East Asia, maintained Malaysia according to KPMG annual individual income tax and social security rate survey.

"The rate was reduced from 28% to 27% in 2009 and further reduced to 26 percent in 2010," said the audit office in a recent statement.

"Although it was recently announced that the tax rates that are three taxable income bands, ranging from 2,501 ringgit (US $ 819.73) to 50,000 ringgit will be reduced by 1%, this will have minimal impact on an eligible individual taxpayer if the tax reduction only amounts to 475 ringgit," said KPMG.

Singapore maintained the lowest rate in the region, followed by Indonesia, Philippines, Thailand and Viet Nam.

In the same statement services KPMG International executive head that datin Pauline Tam said there would be a possibility that the top tax rate would be reduced 26 ringgit Malaysia when the Government introduced the goods and services tax.

"It will be good if the Government could give a firm commitment to her because this very welcome to businesses and entrepreneurs. Open for business ' is not just about the regime of the tax base for corporation tax.

"Personal taxation is an important issue for entrepreneurs, high net worth individuals and executives, many of whom can exercise considerable discretionary power and where they choose to look."

Tam added, however, that "head top rates of tax do not tell the whole story."

"For example, here in Malaysia, while the highest rate of personal income tax 26 percent, on profit of $ 100,000, a single individual effective tax rate is 21 percent. When comparing prices in different countries, it is important to consider the threshold where the rate kicks in and the effect of social security taxes that may be levied.

"Indeed, the survey shows that in the treatment of the combined effective social security and income tax rate levied on a salary of $ 100,000 and $ 300,000 respectively in a series of six countries in Southeast Asia, Malaysia is lower than countries such as Indonesia, Thailand, Viet Nam and the Philippines."

The survey of income tax and social security rates with historical data from 2003 to 2012, 114 countries and focuses on the highest level of personal tax payable to the Central Government.

* US $ 1 = 3.05 ringgit