KUALA LUMPUR: The government will review the mechanism on petroleum products subsidy.

Deputy Finance Minister I Datuk Mohd Shahar Abdullah said any subsidy mechanism would be reviewed and refined to ensure the subsidy could directly benefit the people.

He added that the finance ministry has been given the mandate to hold engagements with various agencies and related companies to refine the steps on the implementation of the targeted petrol subsidy rationalisation.

He was responding to an additional question from Datuk Wira Amiruddin Hamzah (Kubang Pasu-Pejuang) and Datuk Seri Salim Sharif (Jempol-BN) on the approach taken for targeted petroleum products subsidy in Parliament today.

Mohd Shahar said that every US$1 (US$1=RM4.23) per barrel increase in crude oil price will bring RM300 million extra revenue to the government.

"But for every US$1 per barrel will have an implication of RM600 million and it is not breakeven as we implement a ceiling price. For example, we set the ceiling price of RM2.05 per litre for RON95 but the actual price is RM3.70 per litre and the government bears RM1.65," Mohd Shahar said.

He said the government would consider several medium-term tax measures, including the options to reduce the reliance on direct taxes and broaden the revenue base by shifting to tax based on consumption such as exploring the scope of taxes and sales and services tax rate.

Mohd Shahar added the government would also explore new tax revenue sources such as capital gains and digital economy taxes.

He said the government has no intention to reduce the corporate tax rate to attract more foreign investment, adding that corporate tax had been reduced by one percentage point to 24 per cent from 25 per cent.

"The government always pays attention to the announcement on changes in tax treatment in regional countries including active involvement at international level to ensure Malaysia stays competitive," he said.

He was responding to a question by Datuk Seri Mohd Redzuan Md Yusof (Alor Gajah-Bersatu) on the suggestion to offer a lower tax rate to attract foreign investment.

-- BERNAMA