MoF envisages 5.9 pct rise in govt revenue in 2022

KUALA LUMPUR: The Federal Government's revenue is envisaged to increase by 5.9 per cent in 2022 to RM234 billion, in line with better economic prospects.

Tax revenue remains the major contributor to total revenue, consisting of 73.2 per cent of the total share and is expected to increase to RM171.4 billion, the Ministry of Finance (MoF) said in its Fiscal Outlook and Federal Government Revenue Estimates 2022 report released today.

"However, as a percentage to Gross Domestic Product (GDP), the tax revenue is estimated to decline slightly to 10.5 per cent, reflecting lower buoyancy during the economic recovery period," the ministry said.

Direct tax collection is projected to increase by 6.1 per cent to RM127.3 billion, constituting 74.3 per cent of total tax revenue, driven by better corporate earnings prospects resulting from the acceleration in the vaccination programme and anticipated economic recovery.

Hence, companies' income tax (CITA) remains the largest contributor to the increase in direct tax at RM65.5 billion in 2022, said the MoF.

This is followed by individual income taxes, which is expected to improve by three per cent to RM37.5 billion, consistent with the expected improvements in the job market.

"Similarly, petroleum income tax (PITA) is expected to record a higher collection of RM12.4 billion.

"Furthermore, revenue from other components of direct tax, namely stamp duties and Real Property Gains Tax (RPGT), are expected to be higher at RM6.6 billion and RM1.8 billion, respectively, on expectations of higher value and volume of transactions from the property segment," it said.

Indirect tax is forecast is to improve by 5.4 per cent to RM44 billion, mainly contributed by the Sales and Services Tax (SST) collection with a share of 62.5 per cent of total indirect tax, registering RM27.6 billion or 1.7 per cent to GDP, supported by improving consumer and business sentiments.

Meanwhile, non-tax revenue is estimated to increase by 5.8 per cent to RM62.6 billion, primarily due to higher proceeds from investment income.

The annual dividends from Petroliam Nasional Bhd (PETRONAS) and Bank Negara Malaysia are expected at RM25 billion and RM5 billion, respectively. And as in 2021, a total of RM5 billion is expected from the Retirement Fund Incorporated (KWAP) as a contribution to partly finance retirement collection.

The collection from licences and permits is expected to increase slightly to RM10.9 billion, attributed to higher proceeds from petroleum royalties at RM4 billion.

In 2022, petroleum-related revenue is forecast to register RM43.9 billion or 18.8 per cent to total revenue, with dividends from PETRONAS accounting for more than half of the total.

Non-petroleum revenue is also projected to increase by 6.5 per cent to RM190.1 billion, reflecting better revenue diversification on the back of a favourable economic outlook, said the MoF.

"The Government will continue to ensure sustainable non-petroleum revenue generation to meet expenditure commitments, particularly to serve the needs of the people.

"With the commitment to support fiscal reform initiatives, the adoption of the Medium-Term Revenue Strategy will help streamline our tax policy, improve tax administration and enhance the legal framework," the ministry added.

-- BERNAMA