KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
China has begun cracking down on overseas investment gains by its ultra-rich, marking a significant shift in the country’s tax enforcement strategy, according to insiders. In recent months, wealthy individuals across major Chinese cities have been summoned by tax authorities for meetings to assess potential payments, including back taxes from previous years.
The enforcement aligns with President Xi Jinping’s “common prosperity” campaign, which aims to reduce wealth inequality. Wealthy individuals could face up to 20% tax levies on their investment gains, with some also subject to penalties for overdue payments. However, the final amounts are negotiable, according to those familiar with the matter.
This move is part of the government's broader effort to boost revenue, especially as land sales decline and economic growth slows. China’s tax authorities are leveraging data from the Common Reporting Standard (CRS), a global system aimed at preventing tax evasion. Since 2018, China has been exchanging information with 150 jurisdictions to track offshore accounts, providing the tax bureau with a "treasure trove" of data, as noted by Patrick Yip, vice chair of Deloitte China.
China’s fiscal revenue dropped 2.6% from January to August 2024, while land sales income plunged 25%. This has driven local governments to aggressively pursue overdue taxes, with authorities targeting not only corporations but now increasingly focusing on individual tax audits. The government has implemented various stimulus measures in recent weeks, including efforts to ease local government debt burdens.
The push to tax the ultra-wealthy follows Xi’s ongoing crackdown on several sectors, including consumer internet, finance, and property, which has shaken the confidence of many of China’s wealthiest individuals. As a result, emigration among affluent Chinese citizens has spiked, with over 1.2 million people leaving the country since 2021, according to United Nations data. This exodus is tied to both financial and political pressures, as more scrutiny is placed on offshore wealth.
While it is unclear how long this tax push will last or how extensive it will be, many wealthy individuals holding at least $10 million in offshore assets and shareholders of companies listed in Hong Kong and the US are expected to be impacted.
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