KUALA LUMPUR, Sept. 11 -- The Center for Market Education (CME) has issued a stark warning about the difficulties faced by South-east Asian countries in implementing effective income tax collection and the heavy reliance on indirect taxes.

The report argued that these challenges, combined with a lack of a coherent regulatory framework, are reportedly undermining legitimate businesses, stifling innovation, and fueling illicit trade across the region.

The think-tank sounded the alarm during the launch of its latest report, titled "Indirect Taxation and Innovation: An Asean Framework" at a policy forum in Kuala Lumpur.

The report articulates how untransparent and unpredictable tax regimes have fostered an environment ripe for smuggling sy...