Though it is a negative surprise, analysts say the government may generate at least RM9.5 billion via “Cukai Makmur” or prosperity tax proposed in Budget 2022.
The 33 percent tax is imposed on corporate listed entities whose earnings is more than RM100 million in 2022.
The estimate is based on Affin Hwang Capital’s coverage of 118 listed companies.
They say 85 will be affected, resulting in an additional tax charge of RM9.5 billion.
“It will effectively wipe out our current market EPS (earnings per share) growth forecast of 1.2 per cent,’ Affin Hwang said in its 2022 Budget review.
“The prosperity tax came as a negative surprise and the market would likely react adversely to this massive but one-off tax.”
On the other hand, Hong Leong Investment Bank Bhd (HLIB) says “Cukai Makmur” represents a one-off earnings hit to the upper tier of corporate Malaysia.
“Perhaps the most obvious hit from 2022 Budget is the Makmur Tax, denting the upper tier of corporate Malaysia. Using our calendar year 2022 forecasted group earnings for the FBM KLCI constituents (though not necessarily methodologically correct), we estimate the tax would reduce our baseline projection by 11.4 per cent,” says HLIB.
HLIB, on the other hand, stated that the actual impact may be lower because the tax is likely to be levied at the individual subsidiary level rather than the group level.
This may result in a lower taxable earnings base, and foreign subsidiaries that contribute to group earnings should be exempt from this.
