Nobody likes to be taxed again and again. I mean everyone pays income tax. Businesses pay corporate tax. Inheritance tax is thus an ‘extra’ tax and this is not like GST which is prevalent in most countries in the world. Malaysia does not have inheritance tax.
In other words, if we happened to have lots of properties and we are no longer around, those properties could be gifted to our children in the future and they do not actually lose some of it due to tax. These following countries have inheritance tax. The United Kingdom. The United States of America (some states). Japan. Germany. Hong Kong (if the value of the estate is less than HK$7.5 million)
Not all advanced countries have inheritance tax yeah. Singapore does not. Australia does not. Canada does not. There has been some rumours everything we are near to the budget session but as at Budget 2020, Malaysia has no plans to introduce inheritance tax. With regard to this rumour, our Finance Minister Lim Guan Eng said, “It is unlikely. If there are, it is just a follow up of what we have announced in Budget 2019.” (full article here) Thus, let’s just understand what is inheritance tax today.
Article in investopedia.com An inheritance tax is a tax imposed by certain states on those who inherit assets from the estate of a deceased person. Its tax rate depends on the state of residence, the value of the inheritance, and the beneficiary’s relationship to the decedent. Inheritance tax is known in some countries as a “death duty” and is occasionally called “the last twist of the taxman’s knife.”
Article in wikipedia.com An inheritance tax is a tax paid by a person who inherits money or property of a person who has died whereas an estate tax is a levy on the estate (money and property) of a person who has died. (Briefly, inheritance tax is what we pay if we receive some assets from our loved ones who have passed away. Estate tax is meanwhile a tax levied on those assets before it’s distributed. Yes, it’s possible to be taxed twice on the same assets yeah)
This is what Consumers Association of Penang (CAP) acting president Mohideen Abdul Kader said with regards to inheritance tax. He said this is the best solution to tackle problems related to wealth inequality among people in the country. He said that if implemented properly, inheritance tax would not affect those from the lower income segment.
He also shared that prior to 1991, Malaysia had estate duty and it’s applicable if the networth of the estate exceeded RM2 million. The rates were 5 percent on estates worth RM2.4million and 10 percent on everything above that. He said, “If the government wants to reintroduce inheritance tax, based on the present situation, it should be imposed on estates worth more than RM3 million to protect the people in the lower income group.” Full article here.
Personally, I would not like inheritance tax. Who would? However, if we are looking at it from the point of redistributing some wealth to the lower income (not give them directly lah but government has more funds to provide subsidies or even housing), then perhaps the effects will be positive. The first thing which should happen first before any other taxes is however to reintroduce the GST yeah. That would help tremendously instead of trying to expand the coverage of SST. There are certainly reasons why GST has been implemented in most countries in the world. Hopefully we do not hear too much about inheritance tax again even for Budget 2021 yeah. Happy understanding.
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