KUALA LUMPUR (Oct 18): Tax policies and strategies must play a role in encouraging corporations to embrace and implement environmental, social, and governance (ESG) policies, said caretaker Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

He noted that Malaysia had adopted the 2030 Agenda for Sustainable Development, which includes priorities to reduce greenhouse gas emissions by 45% of gross domestic product by 2030.

“We are also committed to achieving carbon neutrality by 2050, and have urged all government-linked investment companies, as well as government-linked companies, to set similar net-zero targets,” he said in his keynote speech in the 2022 annual meeting of the 51st Study Group on Asia-Pacific Tax Administration and Research here on Tuesday (Oct 18).

To support this effort, he said, the caretaker Government is working towards carbon taxation and studying the feasibility of a carbon pricing mechanism.

“We have also proposed extending the Green Investment Tax Allowance and Green Income Tax Exemption for eligible green activities, and we expand these to include solar and battery energy storage systems,” he said.

He also said that the Government is committed to sustainability in the broadest sense beyond the environment, and in line with the United Nations’ Sustainable Development Goals (SDGs), which are targeted to be achieved by 2030.

“Aligned to the SDGs, the Government targets to eliminate hardcore poverty and towards this, in Budget 2023, we proposed to set aside RM1 billion focused on helping the very poor households to improve their earnings,” he explained.

Tengku Zafrul also pointed out that Malaysia had progressed well in education, where currently for enrolment into universities, women outnumber men.

“However, in the labour force, female labour force participation remains relatively low at 55.7%, compared with male labour force participation of 82.6%, mainly due to women leaving the workforce to care for family,” he said.

Towards supporting working mothers, he said, a RM3,000 tax relief was proposed in Budget 2023 for childcare expenses, with income tax exemption for women returning to work after a career break.

Tengku Zafrul also emphasised that tax administrations bear enormous responsibility for ensuring that a country’s financial position is adequate to fund the Government’s planned spending.

“As such, tax administrations must be quick to adapt to changing socio-economic conditions and new norms when conducting tax operations,” he added.