By TEH ENG HOCK | Wednesday August 20, 2008

Call to cut EPF deductions

KUALA LUMPUR: In these times of rising food and fuel prices, people can have access to more disposable income if the amount deducted from employees for the Employees Provident Fund is reduced.

Malaysian Institute of Taxation (MIT) president Dr Veerinderjeet Singh said that although the proposal would reduce employees’ contribution to the fund, it would help them to get by in the current challenging economic climate.

Dr Veerinderjeet Singh: Travel allowances paid to employees should be fully exempted from tax.

The proposal is among those, he hoped, would be announced in the Budget 2009.

Other calls by the MIT include raising the ceiling for tax rebates on insurance and EPF contribution to above RM6,000, and a broader tax band.

“In Singapore, the bracket is wider. So you may earn a little bit more but it won’t push you up to the next tax bracket. This will help the middle and lower income earners,” he said.

Dr Veerinderjeet Singh also called for travel allowances paid to employees to be fully exempted from tax.

“If an employer decides to give its employees allowances, it is because the nature of the work is such. The money should be deemed fully utilised and not taxed,” he told reporters after the launch of the National Tax Conference.

Dr Veerinderjeet Singh also called for the Continuing Professional Development (CPD) points, which is a requirement for tax agents to obtain and renew their licences, to be imposed and monitored by a professional body and not by government regulators.

Allowing the industry to self-regulate could reduce the administrative constraints faced by the Finance Ministry, he said.

“Perhaps in the future, we can have an independent Tax Agents Board like in Australia,” he said.

IRB chief executive officer Datuk Hasmah Abdullah welcomed the idea of allowing a professional body to help regulate the taxation industry but said the law might have to be amended to accommodate the move.