SMALL and Medium Enterprises (SMEs) are surprised and disappointed with the introduction of the capital gain tax (CGT) without any consultation with SME stakeholders.
Although the CGT will be able to increase our tax revenue, it must not be at the expense of entrepreneurship and the SMEs.
We should be introducing an inheritance tax or windfall tax instead of a blanket CGT which would hurt SMEs disproportionately.
As the details of the capital gain tax are not finalised, we are hopeful that the government will engage with all stakeholders including the SME.
There should be carve-outs, including full waiver for sale of shares by founders or after a holding period of five years, to encourage long-term investments and entrepreneurship.
There should also be a waiver of gain tax on any activity that is deemed to be a merger and acquisition to encourage consolidation among SMEs.
While we recognise the efforts by the government to promote automation, digitalisation, and low carbon transition for SMEs, we are also disappointed that there is little or no measure to encourage SMEs to move up the value chain through investments in research and development except in a few selected industries.
We see two key positive outcomes from the budget for SMEs namely the introduction of the government procurement act and the focus on technical and vocational education and training (TVET) and the long-term visa for foreign graduates of local universities. We are hopeful that the funds for TVET can be decentralised and disbursed through state-level skill development agencies.