GEORGE TOWN: Malaysia’s shadow economy accounts for 21 percent of gross domestic product (GDP) and amounts to an estimated RM300 billion.
Finance Minister Lim Guan Eng as quoted in Bernama said the strong underground economy, which he attributed to illegal activities that are difficult to track down, should be tackled effectively or else, it will not only result in a big loss of revenue to the country but also reflect the inefficiency of the government agencies and implementing machinery in handling issues related to the shadow economy.
He said the loss in tax revenue from the hidden economy could threaten the stability of the nation’s tax ecosystem particularly in the aspects of fair taxation and voluntary tax compliance.
Lim urged LHDN to constantly enhance its collaborative network and information sharing with other government agencies in the effort to curtail the leakage from the underground economy.
Meanwhile, Lim, who is also Bagan MP, said the government has set the direct tax collection target for 2020 at RM154.676 billion, up from RM147 billion in 2019.
He said although Malaysia’s economy continues to grow every year, the tax collection as a percentage of GDP has not been keeping pace.