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BUDGET 2018: TAXATION HIGHLIGHTS

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The 2018 Budget, with the theme of ‘Prospering an inclusive economy, balancing between worldly (duniawi) and hereafter (other-wordly), for the wellbeing of rakyat, towards the TN50 aspiration’ was tabled in Parliament on 27 October 2017 by The Honourable Prime Minister and Minister of Finance YAB Datuk Seri Najib Tun Razak.

The 2018 Budget theme aims to prioritise the following:

THRUSTS 1:  Invigorating Investment, Trade and Industries

THRUSTS 2:  Towards TN50 Aspiration

THRUSTS 3:  Empowering Education, Skills and Training, and Talent Development

THRUSTS 4:  Driving Inclusive Development

THRUSTS 5:  Prioritising the Wellbeing of Rakyat and Providing Opportunities to Generate Income

THRUSTS 6:  Fortifying the Fourth Industrial Revolution and Digital Economy

THRUSTS 7:  Enhancing Efficiency and Delivery of GLC Companies and Public Service

THRUSTS 8:  Balancing Between The Par Excellence of Worldly and Hereafter

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Outlined below are some of the key tax changes from Budget 2018:

 Income Tax

  • Reduction of income tax rates by 2% (RM20,000-RM70,000 income bands)
  • Income range of RM20,000 – RM70,000 : tax reduction from 5% to 3%
  • Income range of RM35,000 – RM50,000 : tax reduction from 10% to 8%
  • Income range of RM50,000 – RM70,000 : tax reduction from 16% to 14%
  • Tax exemption of 12 months for women re-entering the workforce after 2 years work break
  • 50% rental tax exemption for rent up to RM2,000
  • Employer tax deduction for hiring Persons With Disabilities certified by SOCSO
  • Individual tax relief for SSP1M for the next 3 years
  • Relief on tax imposed on venture capital companies equivalent to the amount of investment
  • Tax deduction for angel investors in venture capital
  • Income tax exemption for Sukuk Green SRI social grant receiver
  • Income tax exemption on management fee extended to conventional SRI fund managers

 Tax Incentives

  • Extending the period for Accelerated Capital Allowance on automation equipment from 2018-2020
  • Accelerated Capital Allowance Incentive of up to 200% for manufacturing and manufacturing-related-services sectors
  • Capital Allowance Incentive for ICT equipment beginning 2018-2020
  • Tax incentive for investment in new 4-star and 5-star hotels extended for 2 years
  • Tax incentive for tour operating companies extended to 31 December 2020
  • Investment Tax Allowance for medical tourism extended until 31 December 2020
  • Double tax deduction on expenditure incurred for dental and ambulatory services

GST

  • No GST on services provided by local authorities.
  • No GST on all reading materials including all types of magazines, comics, journals and periodicals, beginning 1 January 2018.
  • No GST on management and maintenance of stratified residential buildings.
  • Full GST relief for construction of school buildings and places of worship from donations.
  • GST relief for cruise operators.
  • GST relief for imports of oil and gas-related equipment under lease agreement.
  • GST relief for imports of big ticket items such as aircraft and ship by airlines and shipping companies.
  • Pulau Pangkor declared free tax zone, but excludes alcohol, tobacco and vehicles.

To find out more on plans and allocation of Budget 2018, you can read the full speech text of Budget 2018 here: http://www.treasury.gov.my/index.php/en/budget/annual-budget.html

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DISCLAIMER:

The above is meant as a guide only. This is not a substitute for professional advice. Please do not hesitate to contact us at salwa@khr.com.my or clientcare@khr.com.my for any further enquiries.

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