Budget 2020 (Tax: Personal Tax, Corporate Tax, Sales and Service Tax SST)
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NOTES – BUDGET 2020
This year, the Government has embarked on a comprehensive review and revamp of the existing incentive framework, comprising the Promotion of Investments Act 1986, Special Incentive Package and incentives under the Income Tax Act 1967. This new framework is expected to be ready by 1st January 2021.
Tax Identification Number (TIN)
Beginning January 2021, Malaysians above the age of 18 and corporate entities will be assigned a Tax Identification Number or TIN. In order to implement this initiative, engagement sessions with all stakeholders will commence next year.
Personal Income Tax
Personal Income Tax Rate
To ensure a more progressive personal income tax structure, it is proposed that a new band for taxable income in excess of RM2 million be introduced and taxed at 30%, which is a 2 percentage point increase from the current 28% rate.
Fertility Relief
The income tax relief of up to RM6,000 given on expenses incurred for medical treatment of serious illnesses will be expanded to include expenses incurred on fertility treatment.
Personal Tax Relief - Child
To ease the financial burden of parents who enroll their children in registered nurseries and kindergartens, individual tax relief for fees paid will be increased from RM1,000 to RM2,000.
Women
Women who have stopped working for a year or more, and are between 30 to 50 years old can enjoy the income tax exemption until 2023.
Corporate Tax
SME Tax Rate
The SME with paid-up capital of not more than RM2.5 million, income tax rate for Chargeable Income up to the first RM600,000 is 17%.
Electrical and Electronics (E&E) industry
The Government will also provide tax incentives to further promote high-value added activities in the Electrical and Electronics (E&E) industry to transition into 5G digital economy and Industry 4.0. These incentives include:
First: Income tax exemption up to 10 years to E&E companies investing in selected knowledge-based services
Second: Special Investment Tax Allowance to encourage companies in E&E sector that have exhausted the Reinvestment Allowance to further reinvest in Malaysia.
Automation
In addition, to encourage automation and to increase company’s productivity, it is proposed:
First: Accelerated Capital Allowance and automation equipment capital allowance for manufacturing sector on the first RM2 million and RM4 million incurred on qualifying capital expenditure is extended to the year of assessment 2023
Second: The incentive is also be expanded to include services sector on the first RM2 million incurred on qualifying capital expenditure from the year of assessment 2020 to the year of assessment 2023.
Building Digital Malaysians
To ensure gains arising from successful Digital Companies are shared with the Rakyat, the Government will introduce the concept of Digital Social Responsibility (DSR). DSR is the commitment by businesses, to contribute to digital economic development while improving the digital skills of the future workforce with initiatives such as technology scholarships, training and upskilling for digital skills for communities in need. Contributions towards DSR by the companies will be given tax deduction.
Strengthening Access to Financing for Businesses
To further encourage alternative sources of funding for start-ups companies and to attract more foreign investment to Malaysia, tax incentives given to venture capital and angel investors will be extended until the year 2023.
Angel Investors: http://lampiran2.hasil.gov.my/pdf/pdfam/PR_11_2015.pdf
Venture Capital: http://lampiran1.hasil.gov.my/pdf/pdfam/PR_2_2016.pdf
Growing Islamic Finance
The current tax deductions on the cost of issuance and additional deduction on sukuk issuance costs under the principle of Wakalah will be extended for 5 years until year of assessment 2025.
To further promote Islamic fund and Sustainable and Responsible Investment (SRI) fund management activity, the tax exemption for fund management companies managing Shariah compliant funds and SRI funds, and the tax deduction on the cost of issuing SRI Sukuk will be extended for another 3 years until year of assessment 2023.
Green Growth and Energy for the Future
The Government intends to attain Malaysia’s goal to generate 20% of our energy consumption from renewable sources by 2025. Green Investment Tax Allowance (GITA) and Green Income tax Exemption (GITE) incentives will be extended to 2023. A 70% income tax exemption of up to 10 years will be given to companies undertaking solar leasing activities.
Enhancing Research & Development (R&D) Framework
IP-generated income based on the Modified Nexus Approach (MNA) derived from patents and copyright software will be given tax exemption for a period of up to 10 years.
https://www.mida.gov.my/home/incentives-in-services-sector/posts/
Visit Malaysia 2020
First: Income tax exemption be given for organisers of approved arts and cultural activities, approved international sports recreational competitions, and conferences organisers
Second: New investments in international theme park projects will be given income tax exemption of 100% of statutory income or Investment Tax Allowance of 100% to be set off against 70% for 5 years
Third: Increasing tax deductions given to companies sponsoring arts, cultural and heritage activities in Malaysia from RM700,00 to RM1,000,000 per year
Fourth: Accelerated Capital Allowance for expenditure incurred on the purchase of new locally assembled excursion bus to be fully claimed within 2 years
Fifth: Excise duty exemption of 50% for locally assembled vehicles be given to tour operators for the purchase of qualified new tourism vehicles.
Apprentice
Government extend double tax deduction on expenses incurred by companies participating in Skim Latihan Dual Nasional (SLDN) for another two years.
The double tax deduction given to companies undertaking Structured Internship Programme (SIP) approved by Talent Corporation Malaysia Berhad (TalentCorp) will be expanded to include students from all academic fields rather than just engineering and technology.
Corporate Social Responsibility (CSR)
To further encourage the private sector to donate as part of their corporate social responsibility, Government will increase the donation reporting threshold to RM20,000 under Income Tax Act 1967 beginning 2020.
Donation
To inculcate philanthropy, tax deduction on donation for charitable and sports activities and projects of national interest will be increased to 10% from the aggregate income for tax payer. The tax deduction is expanded to:
First: Cash wakaf contribution to state religious authorities or a body established by state religious authorities administering wakaf
Second: Cash wakaf contribution to public universities allowed by the state religious authorities to receive wakaf
Third: Cash endowment contribution to public universities
Beginning 2020, tax exemption will be extended to religious institution or organization registered as a Company Limited By Guarantee with Companies Commission of Malaysia.
Real Property Gain Tax
In response to the public view regarding the Real Property Gain Tax (RPGT) imposed on disposal of properties after 5 years onwards, the Government will enhance RPGT treatment by revising the base year for asset acquisition at 1st January 2013 for asset acquired before 1st January 2013 as compared to the previous base year of 1 January 2000.
Sales and Service Tax
Digital Service Tax
Digital Service Tax will be implemented with effect from 1st January 2020, to include services such as, but not limited to downloaded software, music, video or digital advertising. Foreign service providers can commence registration with the Royal Malaysian Customs Department (RMC) as of 1st October 2019.
Training
All training and coaching services provided by training service provider to the disable persons will be exemption from service tax.
CHRISTMAS 2019
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Merry Christmas!!
Please be informed that both of our #Singapore and #Malaysia offices will be closed on the following dates:
25th December 2019 (Singapore & Malaysia - Christmas Day)
1st January 2020 (Singapore & Malaysia - New Year)
Remain SST: Respect Mandate Given by the People
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PUTRAJAYA: The decision to bring back the abolished Goods and Services Tax (GST) will be made by the Pakatan Harapan presidential council, says Lim Guan Eng.
The Finance Minister said until a decision is made, the mandate given by the people who voted for Pakatan, which among others promised to abolish the 6% GST, should be respected.
"Unless there is incontrovertible evidence that this (wanting GST back) is the will of the people, I think we have to respect the mandate given by the people of Malaysia in the last general election," he said after attending the ministry's monthly assembly on Friday (Oct 4).
Lim pointed out that in the last election, it was made very clear that the people rejected the 6% GST.
The Malaysian Institute of Economic Research had suggested that the government reintroduce the GST but at a lower rate of 3% and not the original 6%.
Lim said since GST was abolished last year, the government has managed to curb inflation and cost of living.
"Abolishing GST has its impact. We have one of the lowest inflations in the world at 1.5% last month and we expect not to exceed this for the whole year.
"If you allow GST to come back (at) 6%, then I think we will see inflation going up," he said.
Source: The Star
EA Form Preparation and Form E Filing for YA2019
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Malaysia: It’s time to prepare Form E and EA Form for YA2019.
What is Form E?
Form E (Borang E) is required to be submitted by every employer (company/ enterprise/ partnership) to LHDN (Inland Revenue Board, IRB) every year not later than 31 March (31/03/2020).
Who Needs to File Form E?
All companies. LHDN: “Every employer shall, for each year, furnish to the Director General a return in the prescribed form…”
DORMANT Companies must file FORM E
Companies which are dormant and/or have not commenced business are required to furnish the Form E with effect from year of assessment 2014.
Due Date for Submission of Form E
Subsection 83(1) of ITA 1967 stipulates that the form must be furnished by every employer before or on 31 March. Form E will only be considered complete if C.P. 8D is furnished before or on the due date for submission of the form.
Form C.P. 8A / C.P. 8C (EA / EC) to be Rendered to Employees
Pursuant to the provision under subsection 83(1A) of ITA 1967, employers are required to prepare Form C.P. 8A / C.P. 8C (EA / EC) for the year ended and render the completed form to all their employees before or on end of February (29/02/2020).
We do provide EA Form preparation and Form E filing service. Please feel free to contact us at +607- 225 4911 should you need more clarifications.
MALAYSIA BUDGET 2020
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Malaysia government has announced Malaysia Budget 2020 on 11th October 2019. Please let us summarize the key points on Trust 2.
SECOND THRUST: INVESTING IN MALAYSIANS - LEVELLING UP HUMAN CAPITAL
Strategy 5 - Enhancing Job Opportunities for Malaysians
First – Graduates @ Work
For the hiring of graduates who have been unemployed for more than 12 months
The graduates who secures work will receive a wage incentive of RM500 per month, for a duration of 2 years, while employers receive a hiring incentive up to RM300 per month for each new hire, for 2 years
Second – Women @ Work
For women who have stopped working for a year or more, and are between 30 to 50 years old
The wage incentive for returning women workers is RM500 per month for 2 years and hiring incentive for employers up to RM300 per month for 2 years
The current income tax exemption for women who return to work after a career break be extended for another 4 years until 2023
Third – Locals @ Work
Incentivising the shift away from low-skilled foreign workers dependency
The wage incentive for Malaysian who are hired to replace foreign workers is at either RM350 or RM550 per month (depending on the sectors) for a duration for 2 years and hiring incentive for employers up to RM250 per month for 2 years
Fourth – Apprentice @ Work
TVET incentive programme, encouraging more youth to enter TVET courses
Additional RM100 per month on existing allowance for trainees on apprenticeships
Individual Tax Relief
Parents who enroll their children in registered nurseries and kingdergartens, individual tax relief for fees paid will be increased from RM1,000 to RM2,000
Strategy 6 – Modernising the Labour Market – Review the Employment Act 1955
First - Increase maternity leave from 60 days to 90 days effective 2021
Second - Extend the eligibility to overtime from those earning less than RM2,000 to those earning less than RM4,000 per month
Third - Improve protection and procedures for handling sexual harassment complaints
Fourth - Introduce new provisions on the prohibition of discrimination on religion, ethnicity and gender
Proposes to increase the minimum wage rate only in major cities to RM1,200 per month effective 2020
Enhancing Social Protection
EPF - Extend coverage to contract workers for services and professionals. As a start, this will be a voluntary scheme for workers in the arts and entertainment industry
SOCSO - Current self-employment social security scheme will be expanded to enable by other self-employed groups across 18 key sectors, such as fishermen, farmers, sole-proprietors and partnerships
i-Suri for Spouse
In 2020, i-Suri programme will be expanded whereby husbands may voluntary elect to contribute 2% from his 11% EPF employee contribution to his wife’s EPF account
* For more information regarding i-Suri, please refer to the previous post
Reference: https://www1.treasury.gov.my/index.php/
