The government should just lower the corporate tax rate instead of handing out tax incentives, according to the Malaysian Association of Tax Accountants.

Its president, Aziz Abu Bakar said although Malaysia's corporate tax rate of 26 percent was competitive against most Asian countries, there was however an exception, when compared to Singapore's rate of 18 per cent.

"One of our proposals to the government is for a clear and cheaper corporate tax rate rather than having a lot of tax incentives. That is the tax regime we want the government to change," he told reporters after the opening of the Goods and Services Tax (GST) Conference here today.

He said the problem was that people usually looked at the tax rate and forgot the incentives, which sometimes is not beneficial to a company.

"In terms of incentives, it's difficult to mould your company to fit it. So, it is better to provide a reduced tax rate, which is competitive against Singapore," he added.

How low should it go?

The replacement of the current Sales and Services Tax (SST) with the GST, proposed initially at four per cent and expected to be in place by the middle of 2011, is expected to lower the corporate and income tax.

Aziz, however, declined to predict at what rate the two taxes should be lowered to, if the GST is implemented.

"I cannot put a figure to it. But it has to be competitive," he said.

He also urged the government to offer some relief to companies in getting their systems ready for the GST implementation.

"We have proposed to the government, for some sort of relief for companies, that ensure their systems are GST ready. For example, it can be in terms of paying the accountants and IT people.

"But we will leave the details to the government," he indicated.

- Bernama