Wednesday, 25 April 2007

Tax and cheap

I was at the MICCI taxation committee meeting today and all the members were discussing about our proposals on the 2008 National Budget when someone talks about the tax regime in Malaysia as compared with our neighbour known as Sillypore Singapore. Well, some of you may not be paying taxes for now but I think you will find some of the things I have to say useful to a certain extend.

A little background information for those who are not aware, the National Budget is the time when our Pak Lah appear on TV talking about how much money the gomen will spend on this and that and this and that in the following year. It’s also a time when he will probably announce stuff like reduction in road tax or passport renewal fees. If you are a smoker or a drinker, it’s a time when you will find out that your ciggies and alcohol will be more expensive, because taxes on these 2 items always increase. And before that happens (usually in September), all the professional bodies are asked to submit the respective proposed amendments to tax laws or equivalent.

So it was during the discussion on our proposals when the notion about individual taxation here in Malaysia vs Singapore cropped out. So how much taxes are we paying as compared to our neighbour, who we always make fun of? Check out the following tables (please click to enlarge):

A quick glance and you will know that the highest rate for Sg is much lower compared to us. Further, you will only be taxed at the highest rate in Sg if you earn above SG$320,000 while in Malaysia, RM250,000 is the top band. Maybe some of us will want to be taxed at such high rate, because that means we are earning so much money. But I think if you are that rich, you won't be spending time reading blogs.

Therefore, we poor souls have to look at the lower ends. In our beloved country, earning RM2,500 a year and you will be subject to tax already (based on the schedule). However, there is an individual rebate of RM350 if you annual chargeable income is RM35,000 and below. In layman terms, it simply means if your chargeable income is RM35,000 and below in a year, your tax will be reduced by RM350.

I am sure many is asking what is chargeable income. On normal circumstances, chargeable income means “all” your income minus your individual relief of RM8,000 and minus all your other deductions like EPF, medical insurance, parents medical, life insurance, purchase of books, etc. It is your net income. By the way, your money earned from your Adsense and PPP, chances are you may have to report it. Those of you who happily and proudly declaring all your income in your blog… one day those fellas from the gomen see your blog and realised you never reported them… then… good luck!

Back to our taxes… with the rebate of RM350, effectively, we are only paying tax if our chargeable income is RM20,000 and above. From this aspect, we are on par with Sg, as they only start to pay tax when their chargeable income is above SD$20,000. But, look at the schedule… if our chargeable income is at RM35,000, our tax rate is already 7%, while in Sg, it’s only at 5.5% at a chargeable income of SG$40,000. If I continue, I might just confuse some of you so I leave it to your intelligence to analyse the 2 schedules.

One thing to ponder, our maximum deduction available for EPF contribution is RM6,000, and life insurance is included in it. This means if we more than RM6,000 of EPF is deducted from our salary in a year, and we have life insurance, we still only be able to claim RM6,000. Sucks right? Well, tell ya’ what… in Sg… understand that full deduction on their CBF (equivalent to our EPF) is allowed. This means… lower chargeable income for them… higher chargeable income for us.

Now, most of you will know that slaves workers in Malaysia are paid lower as compared to our equivalent Singapore counterparts. This simply means we are underpaid and over-taxed. It’s as simple as that.

Right, I hear some of you saying, Sg has got GST. First, I’ve blogged before, GST may also happen in Malaysia. Secondly, taking GST consideration… how much are Singaporeans paying for their goods and services. Let’s take the so ever famous you-and-I-must-have-one-if-not-you-and-I-are-not-cool… and i-Pod. Many of my friends travel to Sg just to get one… they said it’s cheap, even after conversion. This simply means, if i-Pod is sold at RM1,000 in Malaysia, it’s being sold for less than SG$440 in Sg.

What does this mean? A person earning RM here and a kiasu-ian earning SD$ there… with a dollar to dollar comparison… it means we are not only underpaid and over-taxed… we are also paying almost double for our goods.

You know we always we are one of the cheapest country around?... Particularly our petrol. Well, you know what is truly cheap?.... us.


P/S: I got the “how much your blog is worth” thing up at my sidebar… wow… really worth so much? Yay!! I am rich!

46 comments:

angel said...

LOL! I was JUST looking at the tax rate a few minutes ago. (Yeah, I'm one of the procrastinators :P)

How now brown cow?
One word...

M I G R A T E !

Haha...

Thanks for the taxation lesson! ;)

Anonymous said...

You must be one big shot to sit in the MICCI tax committee meeting?

SuLee said...

I hear ya, and Malaysians are truely underpaid...and boy with the "excellent" public transit , everybody drives a car! hv u ever stuck in those bumper to bumper ride on federal highway and got too bored?

try looking around, everybody is alone in their freakin car looking as bored as urself!? what about the carpool campeign? oh yeah i once heard about that like 10 years ago? I dont get it, Petrol and toll are killing everybody!

(THERE! zewt, im talking about Malaysia! not canananada! :P)

Jemima said...

Zewt, this is just my 2 sens. ;)

Assuming that one can really get the worth of one's blog in cash, at the end of the day.. one will still end up with nothing.

Prices of everything goes up.. the only thing that isn't going up is the value of our Ringgit. *sigh*

Cirnelle said...

This could have been a day I could have happily looked forward to as being the last day of work before that long weekend.

You have just managed to single-handedly ruin this day. =(

Wennnn said...

Aiks Wennnnn memang tak paham all this la... Luckily I dun nid to do all this here lor. My company willl sort it all out...

jaezrel said...

zewt....everything in msia is increasingly expensive but the pay isnt increasing....

rite....maybe it's a mistake to come back msia and work.....even if we slave ourselves overseas we definitely earn 'more'....riteeeeeee??????

Huei said...

i'm blue!! hehehe

wtf the tax is so kao!?!? i have no idea..crazy!!

tell u lar..those money spent on this this that that rite...50% goes to middle man...30% goes to the boss of whatever they decide to do..only 20% goes to what actually is being built..i guess..or maybe less! =P hehehehehheheheheh

Someone who is constantly craving said...

oh well..actually wat is cheap is our currency also la!..thats y we forever tell foreign ppl to crowd us because we r cheap mah..

our tax levels are pretty crap when compared to our very near neighbour..

so did u guys talk abt GST in the micci meeting?..u knw i m banking on this to happen..if not i need to make some adjustments to my career

me said...

har? tax again ah? my head already pening from filling in my form lah *runs to hide from taxation topic*....*pops head back in*...unless you have some advise for me on......errr...tax 'planning'...not evasion, mind u, simply clever tax planning.

Princess Eileen said...

Thanks for welcoming me home to Malaysia in such a "decent" way, Zewt! Now I have to use all lobangs to find a way to stay back. Hahaha....

Why dont you teach us how to avoid tax? Kekeke... lobang lobang

Big Rice said...

harlow... what sillypore har?

how come ur blog is worth so much.. aiyo.. i think i should shut my blog down... hahaha...

Economist said...

zewt, let me comfort all of us by showing how we are better off than our counteraparts in SG....

1) We can watch a midnight movie without worrying to about the MRT leaving us behind

2) We have LAND..VAST LAND....many playing fields but y is Spore TIGER CUP champions? GO figure!!!

3) Less occurence of HUMAN JAM on weekends

4) Even if live in condos, we wont be able to see what our neighbours are having for dinner everyday

There you go....Hopefully this cheers us up....

Bujang Skrang Ulu said...

I think I need some revision on the taxation thing .. I kindas forgot how it works .. ha ha ha. see, it shows im not a good student. :p

TTL! said...

But I think if you are that rich, you won't be spending time reading blogs.

wtf u trying to say ? my dad is a billionaire u bitch.

jk =D

anyways. im not a working person so i might not know this very well but isnt the living cost in singapore way higher? okay the ipod, gadgets and all the other "wants" are cheap but have you ever considered the "needs"? they even have to pay for their own parking in their own condomonium like a shopping complex. and its not cheap. and all the food, accommodation, petrol, parking spaces etc are not cheap.

Wingz said...

*Sigh* Mana mau lari?!

zewt said...

angel - i will be doing more comparison... perhaps with australian way of life... then will really wanna migrate... :) well, one more week, better get it done.

Anonymous - no, i am small fry only.

SuLee - ah yes, truly a malaysian comment. which is why, you should really stay in canada... or are you already planning to do that?

Jemima - why would one will still end up with nothing? well... our ringgit has actually appreciated considerably against most majoy currencies.

cirnelle - it's ok, you still have your long break. hehe...

Wennnn - so good lar you... eh, i heard UK also reducing their tax rate... you know UK reducing tax rate!!!! malaysia should follow suit.

jaezrel - of cos... i am going to do a comparison with aussie soon... then you can see more. as for UK... i dunno much so cant compare.

zewt said...

huei - ah yes... only 20% or less will be spent on the real job... the things collapse... we blame god. but dont worry... they are actually talking about building a nuclear power plant. when an 'act of god' happen... boooom... all die... no one will blame anyone.

someone who is constantly craving - yeah, we talked a bit but did not elaborate cos it's not important hahaha... it will happen, just not now.

me - individual... difficult to do tax planning. not interested in tax... better dont ask me any tax question.

princess eileen - eh... can comment again eh? like i said... individual... susah sikit la. company then you can tax plan.

big rice - ooopppsss... there's a singaporean here... hehe... aiyah... worth only... not that i can get those money.

economist - well... i can list out a whole list of things that will also make our Sg counterparts much much much better... i am sure you know what i mean.

Bujang Skrang Ulu - no need revision if you're not in the industry. can ask me... but i charge... hahahahaha

TTL - yes, it's true... it's higher.... but if you earn SG$.... trust me... almost everything is affordable... except cars. but if you're in singapore, you will not complain about the super efficient public transport. what are those needs? as far as i know... most 'needs' are affordable if you earn SG$4000 a month. if you earn RM4000 a month here... you cant afford a lot of things still.

wingz - singapore lor.... or aussie land pun boleh. eh... where is the CD??

PurpLe~MuShRooM said...

Hahah... this one not applicable to me anymore. But i'm paying lotsa china tax here as foreigner. Much higher that what i've paid back home.

Winn said...

zewt ar ..y they cap 2500 as taxable income? they know the value of 2500 this year is not the 2500 nx yr right?

if i earn 2300 this year my co decides to pay me 200 more coz of the higher standard living..then the poor me have to pay back gomen in tax..how can? how long has it been 2500 already? why cant they measure taxable income against the ..err inflation rate,gdp,gnp..watever economic terms geh?

and how come we can only claim PC every 5 yrs? PC nowadays obsolete very fast wo..

btw i did my tax! underpaid overtaxed. y can swipe with cr card oneeeeeeeee!

Winn said...

i mean, why cannot swipe with cr card:P

me said...

humph! not interested in tax, kononnya...but keep posting on the topic. heehee.

Dangerous Variable said...

Can you help me do my text returns ar..? I haven't done it yet. I don't think I am taxable for last year's tax.

It is very good piece that you wrote! The tax for Ciggie and Booze will not go up that high because the black market will thrive!

Anyways, I am more concerned about the booze!

J.T. said...

Zewt, very interesting. I was not familiar with Msian tax table but thanks to you, I have an idea what is happening to the rakyat's salary. If you would like to make a comparison to the U.S., you can go to: http://www.irs.gov/formspubs/
article/0,,id=150856,00.html
Hope the link works.

SuLee said...

Yes I came here as a PR status...So guess Im staying here....

QueenB said...

tax n me; i just stashed the forms away n pretend they've got nothing to do with me!

bujangsigat said...

yeah, we are cheap and dumb and we are happy about that doing nothing :) oh yeah, i learn bit from our 'smart' politicians how to counter your argument zewt

'if our chargeable income is at RM35,000, our tax rate is already 7%, while in Sg, it’s only at 5.5% at a chargeable income of SG$40,000.'

1st, he will calculate for you,
7% of RM35,000, roughly 2.5k RM
5.5% of SG 40,000 roughly 2.2k SG
then he will say, 2.2SG is RM 5k++ ! See we are still paying lesser. We are good! Malaysia good!

Then the general public will do this :
yaaaa hooorrrrrrr (nodding) we still cheaper leh! gomen very good!!

Kenny Mah said...

Ah dear. This is by far the most "informative" entry you've posted, and great timing too. I haven't submitted my income tax yet, but then again I'm the King of Procrastinators. :)

Last year, I submitted it in JUNE. Yes, June. No fine. Let's just say I've certain powers of negotiation... :P

zewt said...

purple mushroom - oh yeah, i have been there before. one month's tax i paid there was more than my on year's tax here.

Winn - this one u have to ask gomen lor. they have not reduce individual tax rate for some time already lor. which is why all the professional bodies are going to lobby for it. as for credit card... you need to pay so much tax ah?

me - everything also you not interested ler.

dangerous variable - i think most of us are also concern about booze... how to get it done for you? hahaha... u have to show me how much you're earning...

J.T. - a german using term such as rakyat... i really like it. i shall look at it later...

SuLee - yes... i have free accommodation in canada... ya ya ya?

QueenB - wow... are you royalty? :P

bujangsigat - hahahahahahahaha.... and the general public will fail to see that paying RM5k+++ tax... you already have an income of RM88k++ .... right?

Kenny Mah - I shall inform the head of assessment to specifically impose a penalty on you... haha!

bubbly soda said...

I LOVE MALAYSIA!!! WE ROCKS!!!!

Urghh... Underpaid, Overtaxed, Overcharged, Overshadowed.

This country damn over la!

btw, i posted something that might interest you. not my latest post though.. the one after the latest.

Argus Lou said...

Zewt, you're so right. I slaved for over ten years in M'sia and paid like so-oooo much in taxes I was totally fed up - especially when they simply spent it on useless roundabout thingamajigs and ugly lamp posts (Ah Kong's duit, they call it).

Yes, our neighbours down south have it better - higher standard of living coz they have more disposable income. Switzerland too has much lower tax rates. Kesian us, man.

J.T. said...

Hello Zewt, I ain't no German. Malaysian lah. I have paid my share of tax to Jabatan Hasil Dalam Negeri! Worked in KL for 11 years.
I brought the "karat" of my English and BM overseas. I've been living between the States and Germany the past eight years.
The reason I referred to American taxes is because I signed up last year to volunteer preparing senior citizen's annual taxes in a small town in Louisiana. Unfortunately, I did not get to do it. Reason:
1/ we moved to Germany again before the tax season started.
2/ there were not enough volunteers to justify setting up training for the area where I lived.

TTL! said...

hahaha true also.. lets have a mass migration for all the bloggers in the blogosphere

mar said...

Haiz...
underpaid,overtaxed AND our products here more expensive...?

I can see no silver lining there.
Hehe...

BTW,hw long u been working in accts?just curious...me recently accntng fresh grad.=)

bujangsigat said...

nods..) yea yea.. sadly they fail to see that too haha!

april said...

eh teach us how to do income tax also la. give guidance ma.. step by step.. :P

u get paid more.. u have to pay tax.. u get paid less.. u can hardly live. how ar?

i want to retire liao. dunwan to work liao :(

kyh said...

those figures make me pengsan!!!

luckily me still exempted from it... :P

zewt said...

bubbly soda - well... that's the way it is here in our motherland. yeah, read it... the ppl in blue... PIB... that's the way you call it eh?

Argus Lou - hey there, welcome! first time here i suppose. yup... in terms of efficiency... we know where we stand. and hey... even the grand old UK is reducing their tax rate... speaks a lot about us huh.

J.T. - ohhh... i see. but you dont look malaysian though. but i am sure it's better to be in germany than here right? i have got a good friend staying in frankfurt. as for US tax... i heard they can directly take it from your bank account... scary.

TTL - hahaha... mass migration... u think migrate server ah... so easy. haha!

mar - i have been in the tax industry for ... 7 years...

bujangsigat - they only see one thing... i am sure you and i know what it is...

april - step by step now... too late lor... it's already 26th today. i also wanna retire... hahaha... who doesnt?

kyh - hahahaha... i am sure you will hit it one day. if not... you lagi pengsan.

J.T. said...

Zewt, my un-Malaysian look is a product of generations of horny Eurasians getting together :)

By the way, they can take it out of your account only if you authorise them to do so. Some people cannot afford to pay tax in a lump sum. So they arrange for instalment payments to come out of their account.

conan_cat said...

lol the last line is classic...

what's cheap in malaysia? us.

well obviously malaysian workers are underpaid, the recent research of poverty in malaysia shows that the standard for poverty in malaysia is those earning salary lower than....

not 300...


not 500...


not 1000...


but 1500.

it means that if you earn less than 1500 in malaysia it means that you are poor. And imagine how many floor sweeping uncles and dish washing aunties out there earning less than 800 a month. a promoter averages rm1200.

compare this to sg? do you still think malaysia is a good cheap place to live in?

april said...

nv too late ma.. people can still refer back. then they will go like.. shittt.. this one can claim one ar.. or oh shit.. why i forgot to claim this one? hahaha!

Happysurfer said...

Zewt, I believe the Sgp equivalent of EPF is CPF or has it been changed to CBF as what you indicated?

zewt said...

J.T. - oh... so my chinese look is the product of horny chinese? instalments scheme is also available in malaysia. but in malaysia, the govt can never direct debit taxes from taxpayers' account.

conan_cat - 1500? i think i received some mails before indicating that one person earning 3000 cant really survive in KL. if that is the case... 1500... can die ler.

april - wahhhh.... like that also can... sorry la... really cant do it. perhaps next year. but i should have done it last month... sigh...

happysurfer - ohh... i guess it's my mistake... it should be CPF.

J.T. said...

Zewt, I did not imply that. I cannot speak for you lah, dear. I was talking about where I came from since you mentioned that I don't look Malaysian. :) Cheers.

Alex said...

i know of people who shout 'migrate!'. runs to australia, and then only haf a shock of their life when 30th June arrives.

oh and refering to your post, that's why i hate economics yeah. all that transaction costs and purchasing power parity is bs imho

zewt said...

JT - get what you mean :)

Alex - despite the shock on 30th june, most ppl in aussieland can still enjoy quite a lavish life. the quality is certainly better compared to here.