Budget 2006 also try to improve cash flow of the company by :
1) Allowing a Group Relief : 50% of a company's current year losses can be offset against profits of companies in the same group with minimum 70% ownnership.
2) Allowing pioneer period losses and unabsorbed capital allowances to be carried forward.
3) Income from investment activities of listed investment holding companies treated as business income to offset opearating expenses like salary.
All the above would reduce Income Tax payable to the government and business has more income to channel to our economic, as a lot of cash flow has been tight up on petroleum and increase cost of living.
4) Allowing current year tax estimate at minimum 85% of preceding year estimate. If last year your tax payable is RM1,200,000. Previously, you have to pay tax installment of RM100,000 per month to come up with RM1,200,000 per year. Now, you only need to pay 85% amounting to RM1,020,000 per year. Per month amounting to RM85,000 . This company have extra RM15,000 spend. Thus, company cash flow increase.
Goods & Services Tax (GST)
Everybody is upset by the silent on GST in Budget 2006. In fact, government has shifted Sales Tax for cigarettes and liquor to Excise Duty. Government have increase Excise Duty for both cigarettes and liquor but reduces Sales Tax from 25% and 20 % to standard 5%. This standardisation of 25% and 20% of Sales Tax to 5% might pave the way if government want to procedd to implement GST in 2007 .
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