What new taxes will Malaysia unveil in next year's budget? Investors brace for the worst

(Oct 17): Malaysia is keeping investors guessing as to what new taxes will be unveiled in next year’s budget. For now, the market is bracing for the worst: capital gains and consumption taxes.

Levies on returns from capital investments may worsen stock declines. The benchmark equity index hasn’t recovered from last week’s steepest plunge in four months, after Prime Minister Mahathir Mohamad announced the tax plans. A consumption levy may further constrain economic growth that had eased to the slowest pace in more than a year.

“Taxes will definitely be introduced especially on the rich and on consumption,” Geoffrey Ng, a director of Fortress Capital Asset Management, said by phone. Capital gains tax is “definitely a widespread worry among investors,” but it is unlikely as most markets in Southeast Asia do not have such taxes, he said.

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