Several tax experts and corporate managers were "positive" about the 2002 budget although there was no reduction in corporate income tax.

The Malaysian Association of Certified Public Accountants (Macpa) vice-president Beh Tok Koay said some companies may be disappointed that there was no reduction in the current corporate tax.

But on the plus side, there were other incentives for the corporate sector. For example, he cited the proposal to reduce the income tax on profits from e-commerce offshore trading from the current 28 percent to 10 percent for five years.

"Overall the corporate sector can benefit significantly," said Beh who felt that the current corporate tax rate is not necessarily uncompetitive.

Beh who is also executive director of Delloite Kassim Chan Tax Services Sdn Bhd was speaking to reporters at the annual Macpa Panel Commentary on the 2002 budget proposal with seven other tax experts and managers in Kuala Lumpur today.

Increasing disposal income

He explained that the current tax rate at 28 percent may be higher than some countries in the region but one has to take into consideration that, unlike some other countries, there is no tax on the companies' dividend here.

Thus, the "effective tax rate" could be higher in other countries, although they have lower corporate tax, said Beh.

Most of the panelists agreed that the budget was generally an attempt to create more consumption to boost the country's economy by reducing the personal income tax and thus increasing the tax-payers' disposable income.

Asked if the move would be able to increase domestic consumption, the panelists said that there was a need to boost consumer confidence to encourage more spending.

Shell Malaysia Trading Sdn Bhd general manager Eddie Chan said "it's anyone guess" but he is confident that consumer confidence in Malaysia was not affected by the current economic situation based on his observations in uptown areas such as the watering holes in Bangsar.

He believed that the government is doing a good job in promoting consumer spending through activities such the mega sales.

The retailers must also play a part to encourage consumer spending, he added.