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Policy Paper No. 38
Malaysia’s Tax System Friend or Foe to Prosperity?

Malaysia has the capacity to grow more rapidly and become a high-income nation. But is its tax system holding it back?

According to the International Monetary Fund (IMF) Malaysia is not a low-tax nation but it’s not a high tax nation either. Its system is significantly better than fiscal regimes found in OECD nations but it is not nearly as good as zero-tax paradises such as the Cayman Islands or Monaco or even low-tax jurisdictions such as Hong Kong and Singapore.

Author Dan Mitchell’s examines where Malaysia stands in the region when it comes to taxation policies implemented by the government and explores what policymakers should consider when setting tax policies. He provides case study examples of successful taxation reforms as well as the negative consequences of high taxation and makes recommendations for a more optimal fiscal policy for Malaysia.



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