Malaysia’s intake of direct taxes rose to a record last year, easing pressure on a budget deficit that’s expected to mark a five-year high.
The government boosted its direct-tax revenue by 11.1 percent in 2018 from the prior year, bringing the total haul to 137 billion ringgit ($33 billion), according to a release Sunday from the Ministry of Finance. That beat the previous record of 134 billion ringgit in 2014, report agencies.The release marks the first year of revenue records under the Pakatan Harapan administration that came to power last May. The scrapping of the goods and services tax, which was later replaced by a less sweeping levy, had raised questions about whether the government would be able to keep to its fiscal consolidation agenda. The country expects to narrow the budget deficit to 3.4 percent of GDP this year, from an estimated 3.7 percent in 2018 that was the widest in five years.
The finance ministry said the revenue boost was due to higher collection from companies to individuals, as well as stamp duties and oil receipts, according to the statement. Direct tax earnings from cooperatives saw the biggest increase at 129 percent compared with the previous year.
The record revenue is a sign that “economic growth was encouraging in 2018,” and that the new administration’s tax strategies were working, the ministry said in the release.