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2023 MALAYSIA BUDGET HIGHLIGHTS
INDIVIDUAL TAX
1. CHANGES IN INCOME TAX RATES FOR RESIDENT INDIVIDUALS
Income tax rates for resident individuals will be changed as follows :-
Chargeable Income (RM)	Current Tax Rate (%)	Proposed Tax Rate (%)
35,001 - 50,000	8	6
50,001 - 70,000	13	11
70,001 - 100,000	21	19
100,001 - 250,000	24	25
250,001 - 400,000	24.5	25
400,001 - 600,000	25	26
600,001 - 1,000,000	26	28
1,000,001 - 2,000,000	28	28
Over 2,000,000	30	30
Effective date : From the Year of Assessment 2023
2. EXTENDED SCOPE OF MEDICAL TREATMENT EXPENSES AND INCREASED AMOUNT OF RELIEF FOR
RESIDENT INDIVIDUALS
a) It is proposed that the amount of tax relief for medical treatment expenditure be increased from
RM8,000 to RM10,000.
b) The scope of relief is expanded to include intervention expenditure for Autism, Attention Deficit
Hyperactivity Disorder, Global Development  Delay, Intellectual Disability, Down Syndrome and Specific
Learning Disabilities, limited to RM4,000 as below :-
i) diagnostic assessment certified by a medical practitioner registered with the Malaysian Medical
Council (MMC);
ii) early intervention and rehabilitation programmes conducted by health profession practitioners
registered under the Allied Health Profession Act 2016.
Effective date : From the Year of Assessment 2023
3. ADDITIONAL TAX RELIEF ON VOLUNTARY CONTRIBUTION TO EMPLOYEES PROVIDENT FUND (EPF)
The existing relief of RM3,000 on life insurance premium is expanded to cover voluntary EPF contributions
by resident individuals.
Effective date : From the Year of Assessment 2023
4. EXTENSION OF INDIVIDUAL INCOME TAX RELIEF FOR CHILD CARE CENTRE OR KINDERGARTEN FEES
The existing relief of RM3,000 for fees paid to a registered child care centre and kindergarten is extended
up to YA 2024.
Effective date : Up to Year of Assessment 2024.
5. ALLOW FOR SECOND REVISION FOR TAX INSTALMENT SCHEME (CP 500)
It is proposed that an application shall be allowed for a revision of a CP 500 two times a year, one is by
30 June and the other one is by 31 October in that YA.
Effective date : From Year of Assessment 2023.
CORPORATE TAX
1. INTRODUCTION OF CAPITAL GAINS TAX
Possible introduction of capital gains tax on disposal of unlisted shares by companies with effect from
year 2024.
2. CHANGES OF TAX RATE FOR MICRO, SMALL AND MEDIUM ENTERPRISE (MSME)
The tax rate for MSME on the first RM150,000 chargeable income to be reduced from 17% to 15%. The tax
rate for the remaining chargeable income be maintained at 17% and 24% as follows :-
Chargeable Income (RM)	Current Tax Rate (%)
First RM150,000	15%
RM150,001 to RM600,000	17%
RM600,001 and above	24%
Effective date : From the Year of Assessment 2023
3. ADDITIONAL CONDITION FOR BECOMING A SMALL AND MEDIUM ENTERPRSE (MSME)
It is proposed that a new condition be added on in determining the SME status of a company in Malaysia
as follows :-
-  Not more than 20% of the paid up capital in respect of ordinary shares / total contribution of capital at
the beginning of the basis period for a YA is directly or indirectly  owned / contributed by a company or
companies incorporated outside Malaysia or an individuals who are not Malaysian citizens.
Effective date : From the Year of Assessment 2024.
4. DEFINITION OF "PLANT" FOR CLAIMING CAPITAL ALLOWANCES
It is proposed that the definition of "plant" includes an intangible asset. So, the definition of "plant" has
become as follows :-
- Plant is defined for ITA purpose as an apparatus used by a person for carrying on his business but does
not includes :-
a)  a building;
b)  any asset used and that functions as a place within a business is carried on.
Notwithstanding the above, the Minister of Finance may prescribe any other assets as asset which are
excluded from the definition of "plant".
Effective date : From the Year of Assessment 2023.
5. CHANGES ON THE DUE DATE FOR MAKING THE WITHHOLDING TAX UNDER SECTION 107D OF THE ITA
Effective from 01 July 2022, the due date to remit the withholding tax on payment made to agent, dealer or
distributor govern under Section 107D of the ITA, 1967 will be due by end of the calendar month
immediately following the calendar month in which the payment was made to the agent, dealer or
distributor.
Effective date : From 01 January 2023.
6. TAX DEDUCTION ON COST OF LISTING IN BURSA MALAYSIA
a) The existing tax deduction of up to RM1.5 million on the cost of listing on the ACE and LEAP markets is
extended for a period of 3 years; and
b) This tax deduction is also expanded to include the cost of listing technology - based companies in Bursa
Main Market.
Effective date : From the Year of Assessment 2023 until Year of Assessment 2025.
7. TAX DEDUCTION ON ISSUANCE COST OF SUSTAINABLE AND RESPONSIBLE INVESTMENT LINKED SUKUK
It is proposed that tax deduction on the cost of issuing sustainable and responsible investment linked Sukuk
that is approved or permitted or deposited with the Securities Commission Malaysia be given for a 5 years
tax deduction. A list of eligible expenditures may be stipulated later when the law is gazetted.
Effective date : From Year of Assessment 2023 until the Year of Assessment 2027.
8. RENTAL DEDUCTION FOR NON-COMMERCIAL EV
It is proposed that company who rent non-commercial electric vehicle (EV) is given tax deduction on the
rental amount up to RM300,000.
Effective date : From Year of Assessment 2023 until the Year of Assessment 2025.
9. EXPANSION OF SCOPE OF TAX DEDUCTION FOR EMPLOYMENT OF INMATE AND EX-INMATE OF HENRY
GURNEY SCHOOL AND INSTITUTIONS UNDER THE SOCIAL WELFARE DEPARTMENTS.
Further to the double deduction given to companies that employed senior citizens and ex-convict, ex-drug
dependants and convicts who are categorised as parolees and supervised persons, it is proposed the scope
of tax incentive be expanded to include remuneration paid to inmate and ex-inmate of :-
a) Henry Gurney School under Malaysian Prison Department; and
b) Protection and rehabilitation institution and non-government care centres registered under the Social
Welfare Department.
Effective date : From Year of Assessment 2023 until the Year of Assessment 2025.
TAX INCENTIVES
1. ACCELERATED CAPITAL ALLOWANCES (ACA) IN MANUFACTURING, SERVICES AND ARGRICULTURE
SECTOR
To further drive the productivity and improve efficiency through automation, it is proposed the ACA for
automation equipment be enhanced as follows :-
a) scope of automation to include the adaption of industry 4.0 elements;
b) scope of tax incentive is expanded to include argriculture sector; and
c) capital expenditure threshold for categories 1, 2 and agriculture be aligned and increased up to RM10
million.
Effective date : For applications received by MIDA and Ministry of Agriculture and Food Security (MAFS)
from 01 January 2023 until 31 December 2027.
2. SPECIAL TAX DEDUCTION FOR EXPENDITURES ON MALAYSIAN-MADE HANDICRAFT
It is proposed that a special tax deduction up to RM150,000 be given on qualified Malaysian-made
handicraft purchased from local handicraft entrepreneur registered with Perbadanan Kemajuan Kraftangan
Malaysia.
Effective date : From 01 January 2023 until 31 December 2025.
3. TAX DEDUCTION FOR SPONSORSHIP OF SMART ARTIFICIAL INTELLIGENCE DRIVEN REVERSE VENDING
MACHINE
It is proposed that a tax deduction under Section 34(6)(h) of the ITA 1967 be given to companies and other
than companies (individuals, partnerships, trusts and cooperative that have business income) that make
donations or sponsorship of Artificial Intelligence (AI) - Driven Reverse Vending Machine.
Effective date : For contribution/sponsorship and application received by Ministry of Finance from 01 April
2023 until 31 December 2024.
4. TAX INCENTIVE FOR MANUFACTURER OF ELECTRIC VEHICLE CHARGING EQUIPMENTS
To further complement the ecosystem for EV and to attarct immediate high value investment in the
manufacturing of EV charging equipment, it is proposed that incentives be given as follows :-
Incentives	Descriptions
Investment Tax Allowances (ITA)	ITA of 100% for 5 years which can be utilised against 100% of the
	Statutory Income for each year of assessment.
Pioneer Status (PS)	Exemption from income tax on 100% of Statutory Income for
	year of assessment 2023 to 2032.
Effective date : Applicable for applications received by MIDA from 25 February 2023 until 31 Dec 2025.
5. TAX INCENTIVE FOR CARBON CAPTURE AND STORAGE
i) For companies undertaking Carbon Capture and Storage Technology (CCS) in house activity,
a) ITA of 100% of qualifying capital expenditures for a period of 10 years. The allowance can be set-off
against up to 100% of business statutory income;
b) full import duty and sales tax exemption on equipment used for CCS technology commencing on 01
January 2023 until 31 December 2027; and
c) tax deduction for allowable pre-commencement expenses within 5 years from the date of
commencement operation.
ii) For companies undertaking CCS services ,
a) ITA of 100% of qualifying capital expenditures for a period of 10 years. The allowances can be set-off
against up to 100% of statutory income; or
b) tax exemption of 70% on statutory income for a period of 10 years; and
c) full import duty and sales tax exemption on equipment used for CCS technology starting 01 January
2023 until 31 December 2027.
iii) For companies using CCS services be given tax deduction on fees incurred for use of services.
Effective date :
- For application received by Ministry of Finance from 25 February 2023 until 31 December 2027.
- Tax deduction can be claimed through the Income Tax Return Form from the year of assessment 2023
until the year of assessment 2027.
6. TAX INCENTIVE FOR CHICKEN REARING IN CLOSED HOUSE SYSTEM
Tax incentives are given on qualifying capital expenditures incurred on companies who operate as a chicken
and duck rearers who adopt environmental-friendly closed house system as follows :-
a) Accelerated Capital Allowances (ACA) 100% on the qualifying capital expenditures; and
b) Income tax exemption of 100% equivalent to the qualifying capital expenditures.
The qualifying capital expenditures that can be claimed amounting to 200% within a year.
Effective date : From year of assessment 2023 until year of assessment 2025.
7. TAX INCENTIVE FOR FOOD PRODUCTION PROJECTS
To further promote the participation of industry players in agriculture sector to ensure the security of
domestic food supply, it is propsoed tax incentives be reviewed as follows :-
a) scope of tax incentive is expanded to include argriculture projects based on controlled environment
agriculture (CEA); and
b) application period for tax incentives be extended for 3 years.
Effective date : For application received by MAFS from 01 January 2023 until 31 December 2025.
8. EXTENTION OF TAX INCENTIVE FOR SHIP BUILDING AND SHIP REPAIRING INDUSTRY
To position Malaysia as a regional hub for ship building and ship repairing (SBSR), it is proposed that the tax
incentive as follows be extended for a period of 5 years.
i) new company
a) Pioneer status with income tax exemption of 70% of statutory income for a period of 5 years; or
b) Investment Tax Allowances of 60% on qualifying capital expenditures incurred within 5 years and can be
set off against up to 70% of the statutory income for each year of assessment.
ii) existing company
ITA of 60% on qualifying capital expenditure incurred within 5 years and can be set-off against up to 70% of
the statutory income for each year of assessment.
Effective date : For SBSR applications received by MIDA from 01 January 2023 until 31 December 2027.
9. EXTENTION OF TAX INCENTIVE FOR AEROSPACE INDUSTRY
In line with the 12th Malaysia Plan to transform Malaysia as a key player in the aerospace industry, it is
proposed the tax incentive be extended for a period of 3 years for companies undertaking high-value
activities such as manufacturing or assemble of systems, devices, parts or components and engineering &
design / services related in Malaysia as follows :-
i) new company
- income tax exemption of 70% to 100% for a period between 5 to 10 years; or
- ITA of 60% to 100% for a period of 5 years and can be set-off against 70% to 100% of statutory income
for each year of assessment.
ii) existing company
- investment tax allowance of 60% for a period of 5 years and can be set-off against 70% of statutory
income for each year of assessment.
Effective date : For applications received by MIDA from 01 January 2023 until 31 December 2025.
10. EXTENSION OF TAX INCENTIVE FOR BIONEXUS STATUS COMPANY
To attract more biotechnology industry players, it is proposed tax incentives be reviewed as follows :-
a) income tax exemption rate on statutory income of BioNexus status company be increased from 70% to
100% ; and
b) application period for tax incentives be extended for 2 years.
Effective date :
For applications received by Malaysian Bioeconomy Development Corporation from 01 January 2023 until
31 December 2024.
INDIRECT TAX
1. GOOD AND SERVICE TAX (GST)
The malaysia's government is not planning to implement GST in view of the current backdrop of low wages,
rising cost of living and inflationery pressures.
2. INTRODUCTION OF LUXURY GOODS TAX
The Malaysia government proposed to introduce a Luxury Goods Tax starting this year (i.e. Year 2023) with
a certain threshold value, based on the type of luxury items. Luxury goods includes of expensive cars,
private jets, luxury branded watches, branded fashion goods, jewellery and etc.
Effective date : Effective from year 2023, however, no specific implementation date was mentioned.
3.REVIEW OF EXCISE DUTY AND SALES TAX EXEMPTION ON THE SALES, TRANSFER AND DISPOSAL OF TAXI
Extension of excise duty and sales tax exemption on the sales / transfer / private use / disposal of taxis
owned by individuals, including executive taxi and Teksi 1 Malaysia ("TEKS1M") and airport taxis (budget
and family). Besides, the qualifying age of the vehicles is proposed to be reduced from 7 years to 5 years
from the registration date.
Effective date : For application received by the Royal Malaysian Customs Departments from 01 March 2023.
4. EXTENSION OF TAX INCENTIVES TO SUPPORT THE DEVELOPMENT OF ELECTRIC VEHICLE INDUSTRY
To spur domestic demand and encourage the growth of locally assembled Electric Vehicle (EV) activity, it is
proposed tax incentives for EV be extended as follows :-
Tax Measures	Incentive Period Extension
1. Full import duty exemption on
components for locally assembled
EV	Until 31/12/2027
2. Full excise duty and sales tax
exemption on locally assembled
CKD EV
3. Full import duty and excise duty
exemption on imported CBU EV	Until 31/12/2025
5. IMPORT DUTY AND SALES TAX EXEMPTION ON NICOTINE REPLACEMENT THERAPY
To support the mQuit Programme and encourage the use of Nicotine Replacement Theraphy (NRT) as an
option for smoking cessation, it is proposed that the import duty and sales tax exemption be given to
nicotine gum and nicotine patch for a period of 3 years.
Effective date : For applications received by the Ministry of Finance (MOF) from 01 April 2023 until 31
March 2026.
6. IMPORT DUTY AND SALES TAX EXEMPTION ON STUDIO AND FILMING PRODUCTION EQUIPMENT
Import duty and sales tax exemption on studio and filming production equipment be given to providers of
studio equipment, production and post-production services for a period of 3 years.
Effective date : For application received by Ministry of Finance from 01 April 2023 until 31 March 2026.
STAMP DUTY
1. STAMP DUTY TREATMENT FOR TRANSFER OF PROPERTY BY WAY OF LOVE AND AFFECTION
In order to reduce the cost of stamp duty for the transfer of property by way of love affection between
parents and children, granparents and grandchildren, it is proposed that stamp duty on the instruments of
transfer of property be fully exempted, limited to the first RM 1 million of the property's value. Any amount
in excess of RM 1 million , it is 50% remission on the stamp duty imposed.
The stamp duty treatment applies to the recipients who are Malaysian citizens.
Effective date : For instruments of transfer of property executed from 01 April 2023.
2. STAMP DUTY TREATMENT FOR EDUCATIONAL LOAN / SCHOLARSHIP AGREEMENTS
It is proposed that the imposition of a fixed duty of RM10 be expanded to include educational loan/
scholarship agreement to pursue education at all levels including certificate (education/skills/professionals)
in any educational and training institutions.
Effective date : For educational loan / scholarship agreement executed from 01 June 2023.
3. EXTENDED PERIODS OF STAMP DUTY EXEMPTION ON RESTRUCTURING OR RESCHEDULING OF LOAN/
FINANCING AGREEMENT
To reduce the cost of borrowing and to improve borrowers' cash flow, it is proposed that full stamp duty
exemption on restructuring / rescheduling of the loan/financing agreement be extended for a period of 2
years.
Effective date : For restructuring or rescheduling of loan / financing agreement executed from 01 January
2023 until 31 December 2024.
4. STAMP DUTY TREATMENT FOR FACTORING AGREEMENTS ON THE ABSOLUTE BILL OF SALE OF
ACCOUNT RECEIVABLES OR BOOK DEBTS
It is proposed a fixed duty of RM10 on the absolute bill of sale of any accounts receivables or book debts
will be expanded to include any statutory body, agency of the Government or of the State Government, or
any company in which the Government or the state Government has interest, which provides financing to
a small and medium enterprise (MSME).
Effective date : The above proposal is effective on the coming into operation of the Finance Act.
5. SESCURITY INSTRUMENTS RELATING TO DISCOUNTING INVOICES OR HIRE PURCHASE RECEIVABLES OR
FACTORING AGREEMENT ENTERED BY SME
It is proposed that the stamp duty at the fixed rate of RM10 be extended to similar instruments entered
with any statutory body, agency of the Government or the State Government, or any company in which the
Government has interest, which provides financing to small and medium enterprise (MSME).
Effective date : The above proposal is effective on the coming into operation of the Finance Act.
REAL PROPERTY GAIN TAX
1. TRANSFER OF ASSETS BETWEEN FORMER SPOUSES
It is proposed that the scope of "no gain no loss" transactions be expanded to include the transfer of assets
between former spouses pursuant to an order of any court in consequences of the dissolution or
annulment of their marriage. The transfer of assets shall involve assets owned by a citizens.
Effective date : The above proposal is effective on the coming into operation of the Finance Act.
2. TRANSFER OF ASSETS TO CONTROLLED COMPANIES INCORPORATED OUTSIDE OF MALAYSIA
Currently, a transfer of real property by an individual / wife of the indivdual / the individual jointly with his
wife of the individual / the individual jointly with his wife or with a connected person / a nominee / trustee
for the individual, the wife or both to a controlled company incorporated in Malaysia or outside  Malaysia
for a consideration consisting of shares in that controlled company will be deemed to be a "no gain no loss"
transactions for RPGT purpose.
It is proposed that the "no gain no loss" treatment will only be applicable if the real property is transferred
to a controlled company incorporated in Malaysia. If the controlled company is incorporated outside
Malaysia, then the transfer of the real property will not be eligible for the "no gain no loss" treatment and
will be subjected to RPGT at the prevailing rates set out in Part 1, Schedule 5 of the RPGT Act 1975.
Effective date : The above proposal is effective on the coming into operation of the Finance Act.
OTHERS
1. SPECIAL VOLUNTARY DISCLOSURE PROGRAM
Penalties will be waived for voluntary disclosure from 01 June 2023 to 31 May 2024 by the IRB and RMCD.
2. TAX EXEMPTION FOR CHARITABLE HOSPITAL AND TAX DEDUCTION FOR DONORS
Charitable hospital that are registered as Companies Limited by Guarantee be given an income tax
exemption equivalent to the expenses incurred for charity purpose.
Donors who donate to the charitable hospitals would be given a tax deduction up to 10% of aggregate
income.
3. CONTRIBUTION TO THE FILM INDUSTRY
Tax deduction on contributions made to Tabung Komuniti Filem and Pembangunan Filem Kenegaraan under
National Film Development Corporation Malaysia ("FINAS").
The highlights are for general guidance only. It is prepared based on the information available as at
10.03.2023.