Federal Govt Revenue to Grow 5.5 pct To RM339.7 Bln In 2025 -- MoF Report

KUALA LUMPUR, Oct 18 (Bernama) -- The federal government revenue is estimated to grow 5.5 per cent to RM339.7 billion next year from the RM322.1 billion expected in 2024, in tandem with a better economic outlook next year, said the Finance Ministry (MoF).

Tax revenue, projected at RM259 billion in 2025, continues to be the major contributor to overall revenue with a share of 76.3 per cent or 12.4 per cent of gross domestic product (GDP), the MoF said in its 2025 Fiscal Outlook and Federal Government Revenue Estimates report released today.

The government’s revised revenue for 2024 is estimated to be RM322.1 billion, 2.3 per cent higher than in 2023.

Tax revenue is expected to remain the major contributor to overall revenue collection at RM241 billion, constituting 74.8 per cent of total revenue and remaining stable at 12.4 per cent of GDP.

Meanwhile, the MoF said non-tax revenue is anticipated at RM80.7 billion or 3.9 per cent of GDP in 2025, while for 2024, the amount is estimated to decline 5.5 per cent to RM81 billion, with a lower share of 25.2 per cent to overall revenue.

Direct Tax

The MoF said direct tax collection is projected to increase by 6.6 per cent to RM188.8 billion in 2025, constituting 72.9 per cent of total tax revenue, in anticipation of better income tax collection.

This is up from the RM177.1 billion expected to be collected in 2024, of which RM139.3 billion would be from individual and companies income tax (CITA) collection.

Revenue from CITA, estimated to be RM98.5 billion this year, is set to remain the largest contributor in 2025 at RM106.5 billion, attributed to the phased implementation of e-invoicing and improving economic outlook.

“This is followed by individual income tax, which is projected to improve 7.8 per cent to RM44 billion (from RM40.8 billion in 2024), in line with the stable job market and improved wages," it said.

The MoF said that in 2025, the increase in civil servants’ salaries is expected to have a positive impact on the collection of individual income tax, with more civil servants to be included in the taxable bracket.

On petroleum income tax, the MoF said that a lower collection of RM20.7 billion is expected in 2025 compared to RM21.8 billion this year in line with the forecast lower crude oil prices.

It said revenue from other components of direct tax, namely stamp duties and real property gains tax, are however expected to be higher at RM10.1 billion and RM1.8 billion, respectively, in 2025 based on the expectations of continued expansion in the real estate market.

Indirect Tax

The MoF said indirect tax is forecast to improve further by 9.8 per cent to RM70.2 billion in 2025, with the sales and service tax (SST) collection contributing the highest share of 66.5 per cent to the total, amounting to RM46.7 billion or 2.2 per cent of GDP.

“Of this, RM20.8 billion is from sales tax and RM26 billion from service tax, in tandem with the full implementation of new service tax rate, as well as improving consumer sentiment and business confidence,” it said.

The ministry said that in tandem with the expected pick-up in motor vehicle production in 2025, excise duties collection is projected to improve to RM13.8 billion.

On collection from indirect tax in 2024, the MoF said the figure is anticipated to increase 10.6 per cent to RM64 billion, driven by higher collection from SST and excise duties.

The ministry said service tax is projected to surge 25.8 per cent to RM21.5 billion in 2024, in tandem with the increase of the tax rate to eight per cent from six per cent, coupled with the widening of the scope of services, among others, including logistics, brokerage, and underwriting services effective March 1, 2024.

“Similarly, sales tax is estimated to grow 5.7 per cent to RM19.4 billion (in 2024), in anticipation of higher passenger vehicles sales and the implementation of low value goods tax beginning Jan 1, 2024,” it added.

-- BERNAMA