News & Articles

Review of Income Tax Rate for Resident Individual

It is proposed that chargeable income band exceeding RM2,000,000 be introduced and income tax rate for resident individual with chargeable income of more than RM2,000,000 be increased by 2 percentage points at 30%.

The fixed income tax rate for non-resident individual be increased by 2 percentage points from 28% to 30%.

YA 2020

Expansion of the Scope of Income Tax Relief for Medical Expenses

The scope of income tax relief on medical treatment expenses be expanded to cover the cost of fertility treatment.

YA 2020

Increase in the Limit of Tax Relief for Fees Paid to Childcare Centres and Kindergartens

Individual tax relief be increased from RM1,000 to RM2,000.

YA 2020

Income Tax Rebate for Departure Levy Imposed on Outbound Air Passenger Performing Umrah and Pilgrimage to Holy Places

Individual income tax rebate equivalent to the amount of departure levy paid for outbound air passengers performing umrah and pilgrimage to holy places be given and can be claimed twice in a lifetime.

YA 2019

Review of Tax Treatment on Donation for Charitable and Sports Activities and Projects of National Interest

Tax deduction on contribution for charitable and sports activities as well as projects of national interest currently capped at 7% of aggregate income for taxpayers other than company be increased to 10%.

The tax deduction is also expanded to include contribution as follows:

(i)cash wakaf contribution to state religious authority or body established by the state religious authority to administer wakaf;

(ii)cash wakaf contribution to public university approved by the state religious authority to receive wakaf; and

(iii)cash endowment contribution to public university.

YA 2020

Extension of Period of Income Tax Deduction on Perbadanan Tabung Pendidikan Tinggi Nasional Loan Amount Paid by Employers on behalf of Employees

Currently, repayment of PTPTN loan made by employers from 1 January 2019 until 31 December 2019 on behalf of their employees who are employed on full time basis are eligible for tax deduction.

 
It is proposed that the existing tax incentive be extended for a period of 2 years.

Repayment made from 1 Jan 2020 to 31 Dec 2021

Extension of Period of Tax Incentive for Women Returning to Work After Career Break

Currently, income tax exemption is given on employment income for a maximum of 12 consecutive months to women who return to work after a career break. This income tax exemption is eligible to be claimed in YA 2018 to YA 2020.

The existing tax incentive be extended for a period of 4 years.

Applications received from 1 Jan 2020 to 31 Dec 2023

Review of Income Tax Treatment for Small and Medium Enterprises

It is proposed that:

(i)the chargeable income limit which is subject to 17% tax rate be increased from up to RM500,000 to up to RM600,000; and

(ii)only companies with paid-up capital or LLP with capital contribution of up to RM2.5 million and having annual sales of not more than RM50 million are eligible for this tax treatment.

YA 2020

Review of Capital Allowance for Small Value Assets

It is proposed that:

(i)the value of each asset be increased from RM1,300 to RM2,000 for the purpose of claiming capital allowance by SME and non-SME; and

(ii)the limit of qualifying capital allowance eligible to be claimed by non-SME be increased from RM13,000 to RM20,000 for each year of assessment.

YA 2020

Review of Tax Treatment for Expenses Incurred on Secretarial Fee and Tax Filing Fee

Tax deduction limit on expenses incurred on secretarial fee and tax filing fee be combined and allowed up to RM15,000 each year of assessment.

YA 2020

Tax Deduction on Cost of Listing in Bursa Malaysia

Tax deduction of up to RM1.5 million be given on the following listing costs for listing in the ACE Market and LEAP Market:

(i)fees to authorities;

(ii)professional fees; and

(iii)underwriting, placement and brokerage fees.

YA 2020 to YA 2022

Income Tax Exemption to Religious Institution or Organisation Registered as a Company Limited By Guarantee (CLBG)

Currently, income tax exemption is given on all income received by religious institution or organisation established for the purpose of religious worship and advancement of religion and registered under the Registrar of Societies Malaysia or under any written law governing the institution or organisation.

It is proposed that this income tax exemption be extended to religious institution or organisation registered as CLBG with SSM. This exemption is subject to the income and profit received, and real property acquired is used solely in achieving the objective of the establishment for the purpose of religious worship and advancement of religion and not being operated primarily for the purpose of profit.

YA 2020

Special Investment Incentive for Electrical and Electronic Sector

E&E companies that have exhausted the eligibility period of 15 consecutive years to claim RA be given income tax exemption equivalent to ITA of 50% on qualifying capital expenditure incurred within a period of 5 years. This allowance can be set-off against 50% of statutory income for each year of assessment.

Applications received from 1 Jan 2020 to 31 Dec 2021

Tax Incentive for Development of Intellectual Property

Income tax exemption of 100% up to 10 years be given on qualifying intellectual property income derived from patent and copyright software of qualifying activities.

Applications received from 1 Jan 2020 to 31 Dec 2022

Review of Green Technology Incentive

Green Investment Tax Allowance

ITA of 100% on capital expenditure be extended for a period of 3 years for qualifying green activities. This allowance can be set-off against up to 70% of statutory income.

Green Income Tax Exemption

(i)Income tax exemption of 70% of statutory income for qualifying green services activities be extended for a period of 3 years of assessment; and

(ii)New tax incentive for solar leasing activities be introduced with income tax exemption of 70% of statutory income for a period of up to 10 years of assessment for solar leasing companies certified by Sustainable Energy Development Authority.

Applications received to 31 Dec 2023

Applications received from 1 Jan 2020 to 31 Dec 2023

Tax Incentive for the Purchase of Tourism Vehicles

It is proposed that licensed tour operators be given:

(i)ACA on expenses incurred on the purchase of new locally assembled excursion bus with initial allowance of 20% and annual allowance of 40% to be fully claimed within 2 years; and

(ii)excise duty exemption of 50% on the purchase of new locally assembled vehicles used as tourism vehicles.

YA 2020 to YA 2021

Applications received from 1 Jan 2020 to 31 Dec 2021

Tax Incentive for Organising Conferences in Malaysia

Currently, companies, associations or organisations in Malaysia whose main activities are promoting and organising conferences are eligible for income tax exemption of 100% of statutory income subject to the organiser bringing in at least 500 foreign participants annually.

It is proposed that this income tax exemption be expanded to any entities whose main activities are other than promoting and organising conferences provided that the organiser brings in at least 500 foreign participants annually.

YA 2020 to YA 2025

Tax Incentive for Organising Arts, Cultural, Sports and Recreational Activities in Malaysia

Income tax exemption of 50% be given on statutory income of the company that organise:

(i)arts and cultural activities approved by Ministry of Tourism, Arts and Culture; and

(ii)international sports and recreational competitions approved by Ministry of Youth and Sports.

YA 2020 to YA 2022

Review of Tax Deduction Limit for Sponsorship of Arts, Cultural and Heritage Activities in Malaysia

Tax deduction limit for companies sponsoring arts, cultural and heritage activities be increased up to RM1,000,000 a year.

YA 2020

Expansion of Scope of Tax Deduction on Contribution to Charity and Community Projects

It is proposed that the tax deduction under subsection 34(6)(h), ITA 1967 be enhanced to include:

(i)environmental preservation and conservation projects including forest, island, beach and national park; and

(ii)maintenance and conservation projects for heritage buildings designated by National Heritage Department under the National Heritage Act 2005.

YA 2020

Expansion of Scope of Tax Incentives for Tourism Projects

It is proposed that the scope of current tax incentives be expanded to include integrated tourism and sports tourism project.

In addition, it is proposed that new investment for international theme park be given tax incentive as follows:

(i)Pioneer Status with tax exemption of 100% of statutory income for 5 years; or

(ii)ITA of 100% on the qualifying capital expenditure incurred within 5 years. This allowance can be set-off against up to 70% of statutory income.

Applications received from 1 Jan 2020

Exemption of Entertainments Duty for Stage Performance

Full entertainments duty exemption be given on admission tickets for stage performances that include concerts, singing, music, dances and theatres including cultural and artistic performance by local and international artists held at any venue in the Federal Territory of Kuala Lumpur, Labuan and Putrajaya subject to approval by the relevant local authorities.

1 Jan 2020 to 31 Dec 2020

Review of Tax Incentives for Automation

Currently, manufacturing companies which incurs qualifying capital expenditure on automation equipment is given tax incentive as follows:

Category 1: Labour-intensive Industry (rubber, plastic, wood and textile products)

ACA for automation equipment of 100% on the first RM4 million for qualifying capital expenditure incurred from YA 2015 to YA 2020 and can be utilised within 1 year.

Category 2: Industries other than Category 1

ACA for automation equipment of 100% on the first RM2 million for qualifying capital expenditure incurred from YA 2015 to YA 2020 and can be utilised within 1 year.

It is proposed that:

(i)the incentive period for Category 1 and Category 2 be extended for 3 years until YA 2023; and

(ii)the scope of incentive for Category 2 be expanded to services sector.

Applications received to 31 Dec 2023

Applications received from 1 Jan 2020 to 31 Dec 2023

Extension of Period of Tax Incentive for Company Participating in National Dual Training Scheme

Currently, double deduction is given on expenses incurred by companies participating in National Dual Training Scheme for Industry4WRD programmes approved by Ministry of Human Resources. This incentive is for programmes approved from 1 January 2019 until 31 December 2019.

It is proposed that the existing tax incentive be extended for a period of 2 years.

Programmes approved from 1 Jan 2020 to 31 Dec 2021

Extension of Period of Tax Incentive for Issuance of Sukuk Wakalah

Currently, expenses incurred in issuing Sukuk under the principles of Ijarah and Wakalah are eligible for income tax deduction. A further deduction is also eligible to be claimed on additional costs incurred on the issuance of Sukuk under the principles of Ijarah and Wakalah.

It is proposed that the existing tax incentives be extended for a period of 5 years as follows:

(i)tax deduction for issuance cost of Sukuk under the principle of Wakalah; and

(ii)further deduction on additional issuance cost of Sukuk under the principle of Wakalah.

Tax deduction for issuance cost and further deduction on additional issuance cost of Sukuk under the principle of Ijarah are eligible to be claimed until YA 2020.

YA 2021 to YA 2025

Extension of Period of Tax Incentive on Issuance of Sustainable and Responsible Investments Sukuk

Currently, tax deduction is given on the issuance cost of Sustainable and Responsible Investments Sukuk either approved by, authorised by or lodged with the SC. This tax incentive is given from YA 2016 until YA 2020.

The existing tax incentive be extended for a period of 3 years.

YA 2021 to YA 2023

Extension of Period of Tax Exemption on Management Fee Income for Sustainable and Responsible Investment Funds

Currently, a company that provides conventional Sustainable and Responsible Investment and Shariah-compliant SRI fund management services to local investors, foreign investors and business trust investors or REITs in Malaysia, approved by SC is given tax exemption on management fee income in managing conventional SRI and Shariah-compliant SRI funds. This tax incentive is effective from YA 2018 until YA 2020.

The existing income tax exemption be extended for a period of 3 years.

YA 2021 to YA 2023

Extension of Period of Tax Exemption on Management Fee Income for Shariah-Compliant Fund

Currently, a company that provides Shariah-compliant fund management services approved by SC, is given tax exemption on the following income:

(i)statutory income derived from business of providing fund management services to foreign investors in Malaysia. This exemption is effective from YA 2007 until YA 2020;

(ii)statutory income derived from business of providing fund management services to local investors in Malaysia. This exemption is effective from YA 2008 until YA 2020; and

(iii)statutory income derived from business of providing fund management services to business trusts or REITs in Malaysia. This exemption is effective from YA 2014 until YA 2020.

The existing income tax exemption be extended for a period of 3 years.

YA 2021 to YA 2023

Review of Export Duty Rate on Crude Palm Oil

Export duty rate on CPO after taking into consideration of partial export duty exemption be reviewed as follows:

From 1 Jan 2020

Tax Measures

Proposal

Effective Date

Introduction of Approved Major Exporter Scheme under the Sales Tax Act 2018

It is proposed that Approved Major Exporter Scheme be introduced under the Sales Tax Act 2018. Through this scheme, the approved traders and manufacturers of exempted goods are:

(i)eligible for full sales tax exemption on the importation and purchase of goods or raw materials, components and packaging materials; and

(ii)not required to determine the quantity of goods to be exported at the time of importation or purchase of goods.

Sales tax shall be paid for:

(i)the portion of trading goods or manufactured exempted goods that are not exported or sold in local market, based on the prescribed formula; and

(ii)waste or refuse of raw materials, components and packaging materials used for the manufacturing of exempted goods that are disposed or sold in the local market.

Traders or manufacturers of exempted goods are eligible to apply for the scheme subject to an export of not less than 80% of their annual sales.

From 1 Jul 2020

Improvement on Group Relief Facility under Service Tax

Group relief be allowed for the taxable services under professional group provided by a company to a third party who is not within the same group of company. This facility is subject to a condition that the value of services provided to the third party does not exceed 5% of the total value of services provided by that company within 12 months.

From 1 Jan 2020

Service Tax Exemption on Provision of Training and Coaching Services for Disabled Person

Service tax exemption be given on training and coaching services to disabled persons with hearing, visual, physical, speech, mental, and learning disabilities provided by the service providers as follows:

(i)training and coaching centres registered with Ministry of Health Malaysia or Department of Social Welfare; or

(ii)training and coaching centres endorsed by any national association for disabled persons registered with Registrar of Societies Malaysia.

From 1 Jan 2020

Tax Measures

Proposal

Effective Date

Review of Real Property Gain Tax Treatment

Currently, for real properties acquired prior to year 2000, the market price on 1 January 2000 is used as the acquisition price for the disposal of real properties subject to tax under Part 1, Schedule 5, Real Property Gains Tax Act 1976. The tax treatment is effective from 1 January 2019.

It is proposed that the determination of market value as of 1 January 2000 for real properties acquired before year 2000 be amended to market value as of 1 January 2013 as the acquisition price for the disposal of real properties acquired prior to year 2013 for the purpose of RPGT computation.

Disposal of real properties made from 12 Oct 2019

Tax Measures

Proposal

Effective Date

Stamp Duty Exemption on Rent-To-Own Scheme

Full stamp duty exemption be given on the instrument of transfer of first residential home priced up to RM500,000 for the following transactions:

(i)transfer of residential home from housing developer to financial institution; and

(ii)transfer of residential home from financial institution to buyer.

The above stamp duty exemption is subject to:

(i)financial institutions regulated by BNM that provide home financing under this RTO scheme must obtain approval from BNM; and

(ii)housing developers collaborating with financial institutions that provide RTO schemes must be registered with NHD, KPKT.

SPA and rental agreement executed from 1 Jan 2020 to 31 Dec 2022

Stamp Duty Remission for Transfer of Property by Way of Love and Affection

Stamp duty remission of 50% on the instrument of real property transfer between parents and children and vice versa by way of love and affection is restricted to Malaysian citizen only.

Instrument of real property transfer executed from 1 Jan 2020

Review of Stamp Duty on Foreign Currency Loan Agreement

The maximum amount of stamp duty on foreign currency loan agreements be increased from RM500 to RM2,000.

Loan agreements executed from 1 Jan 2020

Tax Measures

Proposal

Effective Date

Extension of Period of Tax Incentive for Angel Investor

Currently, Angel Investors who invests in investee company in the form of ordinary shares is eligible for tax exemption equivalent to the amount of investment made.

It is proposed that the tax incentive application period for Angel Investors be extended for a period of 3 years.

Applications received to 31 Dec 2023

Extension of Period of Tax Incentives for Venture Capital

Currently, the enhanced tax incentives for venture capital effective from year 2018 are as follows:

Venture Capital Management Corporation (VCMC)

Income tax exemption inclusive of management fees, performance fees and income from the portion of profit (profit sharing) received on investment made by Venture Capital Company.

Venture Capital Company (VCC)

Income tax exemption is given on statutory income from all sources of income excluding interest income from savings or fixed deposits and profits from Shariah-compliant deposits.

Exemption is given for a period of 5 years of assessment from the date of the first confirmation by SC for investment in VC. VCC must be registered with the SC and needs to invest at least 50% of its funds in the early stage, seed and start-up. The remaining 50% is allowed to be invested at other stages of investment. VCC and VC are not related companies.

Investment in VCC

Companies or individuals with business income investing into VCC funds created by VCMC are given tax deduction equivalent to the amount of investment made in VCC, limited to a maximum of RM20 million a year.

Investment in VC

Companies or individuals with business income investing in VC are given tax deduction equivalent to the amount of investment in VC.

This incentive is effective for applications received by SC from 1 January 2019 to 31 December 2019. The qualifying investment period is until YA 2023.

It is proposed that the existing tax incentives be extended for a period of 4 years. The qualifying investment period is extended until 31 December 2026.

Applications received to 31 Dec 2023

Expansion of Tax Incentive for Structured Internship Programme

Currently, double deduction is given on qualifying expenditure incurred by companies that implement Structured Internship Programme approved by Talent Corporation Malaysia Berhad.

It is proposed that the existing tax incentive be expanded to include Bachelor’s Degree, Diploma, Vocational (DKM Level 4 and 5) and SKM Level 3 students in all academic fields and be extended for a period of 2 years.

YA 2020 to YA 2021

Extension of Tax Treatment for Real Estate Investment Trusts

Currently, investors in REITs are subject to the following tax treatment:

(i)resident corporate investors receiving profit distribution from REITs listed on Bursa Malaysia are subject to current corporate tax rate;

(ii)non-resident corporate investors receiving profit distribution from REITs listed on Bursa Malaysia are subject to a final withholding tax at the current corporate tax rate;

(iii)foreign institutional investors, particularly pension funds and collective investment funds receiving profit distribution from REITs listed on Bursa Malaysia are subject to a final 10% withholding tax from YA 2009 until YA 2019; and

(iv)non-corporate investors including resident and non-resident individuals and other local entities receiving profit distribution from REITs listed on Bursa Malaysia are subject to a final 10% withholding tax from YA 2009 until YA 2019.

It is proposed that the existing tax treatment be extended for a period of 6 years.

YA 2020 to YA 2025