A blanket taxation on the remittance sent back by Malaysian worker in Singapore will only make the poor poorer and affordable shy away from spending in Malaysia.
The MOF decision of taxing Malaysian workers when they send back their remuneration to Malaysia is a poorly crafted policy. It benefits only the federal coffer while Johor local businesses and families who depend on the wages will suffer.
It is clear from the answer of Deputy Minister of Finance Mohd Shahar Abdullah in Dewan Rakyat today that all remittances from foreign country will be taxed even though it may be the hard-earned money made by Malaysian labour overseas. Hence, Malaysians who are currently working in Singapore will have to pay tax to Malaysia government even though their income has been taxed in Singapore if they bring back their saving, retire fund, monthly income etc.
The Double Taxation Agreement (DTA) between Malaysia and Singapore has clearly spelled out that salaries and wages should only be taxable at the state the person is employed. However, deputy minister has replied by saying that the latest decision of taxing the foreign sourced income does not contradict the DTA as government is going to tax “remittances”.
This decision made by Ismail Sabri Yaakob’s government is only going to make the poor poorer and affordable shy away from spending in Malaysia.
Under this new amendment of Income Tax Act 1967, any Malaysian who earns more than SGD900 will have to pay tax to the Malaysian government. Basically, almost all Malaysians who work in Singapore will have to pay tax though they may be just a 3D worker who earns their living by daily wage.
This is unfair to them who are willing to suffer the long travel hours and congestion just to get a higher income by converting the currency. Taxing this group is not going to help the local economy as they spend almost all their income in supporting their families in Johor Bahru. It is a terrible idea to make the hardworking poor poorer just because they are willing to work overseas.
On the other hand, the more affordable group who have already been taxed in Singapore will have to pay tax to Malaysia when they send remittances back. They are not super rich. They have only very limited options of where to place their money. By making this amendment, Malaysia is going to lose many of them and their remittances as they would rather been taxed only once and stay away from spending much in Malaysia, for instances, avoiding purchasing property or vehicles in Malaysia.
Johor economy, especially the Iskandar Regional Development area has been depending heavily on the hard-earned money sent back by Malaysian workers in Singapore. However, this decision will adversely affect the local purchasing power and dampen the local economy recovery.
Tengku Zafrul Aziz should withdraw this decision immediately before it makes Malaysia losing a lot more talents and remittances to our neighbour countries.
Joint statement from Johor Bahru MPs
Lim Kit Siang (MP for Iskandar Puteri)
Teo Nie Ching (MP for Kulai)
Yeo Bee Yin (MP for Bakri)
Pang Hok Liong (MP for Labis)
Wong Shu Qi (MP for Kluang)