On October 23 2009, the Malaysian Prime Minister unveiled the Malaysian Budget for the year 2010. The theme was ‘1Malaysia, Together We Prosper’.
The April 1 2007 real property gains tax (RPGT) exemption has been lifted. A 5% fixed rate is imposed on gains from disposal of property from January 1 2010. Exemptions will be given for first time disposal of residential property in a lifetime, transfer between parent and child, husband and wife, grandparent and grandchild. However, the issue of the disposal of shares in real property companies is not addressed. It was a chargeable asset but it is likely that the exemption for such disposals will be lifted.
The top income tax rate for resident individual and non-resident individuals has been dropped from 27% to 26%. From YA 2010, personal relief has been increased from RM8,000 to RM9,000. The relief for Employees Provident Fund contributions and life insurance premiums has been increased from RM6,000 to RM7,000. Employment income of Malaysian and foreign knowledge workers residing in Iskandar Malaysia and working in qualifying activities will be taxed at 15% indefinitely.
The government has decided not to announce any implementation of goods and services tax (GST) although GST is necessary in plugging the deficit. The GST will be lower than the current the sale tax and service tax.
From YA 2010 until YA 2014, small and medium enterprises will be allowed to deduct expenses incurred in the registration of patents and trade marks in Malaysia.
Companies with the Green Building Index certificate may enjoy exemption on either capital expenditure incurred or stamp duty.
Numerous tax incentives which were granted previously to promote Islamic finance in Malaysia have now been extended in terms of scope and effective period. The main changes are the extension to include the Labuan regime.
Service tax will be imposed on credit cards and charge cards, including those issued free of charge, at RM50 per year on the principal card and RM25 per year on each supplementary card.
Adeline Wong
Managing Partner
Tel: +603 2298 7880
E: adeline.wong@wongpartners.com
Chong Mun Yew
Tax Manager
Tel: +603 2298 7936
E: mun.yew.chong@wongpartners.com