Summary of budget 2020 Malaysia
Introduction of budget 2020 Malaysia:
Finance minter of Malaysia YB Tuan Lim Guan Eng presented this budget on the 11th of October 2019 with a theme of “Driving Growth and Equitable outcomes Towards Shared Prosperity.”
What is, are the central taxes in budget 2020 Malaysia?
Personal tax detailing:
- Income tax will be increased from 28% to 30% for the individuals having chargeable income more than 2000000 RM, and this increase will also apply to non-residents.
- Scope of income tax is reduced on medical treatments so that couples looking for fertility treatment had a less economic burden
- Individual tax relief will be increased from 1000 RM to 2000 RM to reduce the burden of the parents, which are providing child care and early education to their children.
- Because Umrah and another pilgrimage to holy places were performed only for a religious purpose, it is decided that income tax rebate, which is equal to levy paid, can only be claimed twice in a whole lifetime. The rebate is claimed with proof of boarding pass and subject to either Umrah wise or confirmation letter on the pilgrimage to the holy places from a religious body. This is recognized by the Committee for the Promotion of inter Religious Understanding and Harmony among Adherents, department of national unity and integration, Prime Minister’s Department.
- To further encourage the philanthropic culture among the people of Malaysia to organize the tax system between companies and individuals, it is suggested that tax deduction should be increased to 10% from 7% only for those people who are contributing for charitable and sports events and in the projects of national interests.
- Women who are on career break were encouraged more through the present tax incentive in which income tax is exempted for 12 months should be extended for four years period.
Corporate tax detail:
For the support of the growth rate of SME and to confirm that only eligible SME can get the benefits of the lower income tax rate, it is suggested that the people who have an income of 600 000 RM or above that were will not get an exemption from the allocated 17% tax rate.
Companies having capital contribution or paid-up capital or LLP up to 2.5 million RM per annum and an annual sale of less than or equal to 50 million RM are eligible for this tax treatment. To provide claim capital allowance to non-SME and SME value of every asset is enhanced to 2000 RM from 1300 RM. While the limit for the qualification of capital allowance for non-SME will also be increased to 20, 000 RM from 13,000 RM for the assessment of each year, it is proposed that tax deductions will be increased to 1.5 million RM so that small and medium enterprises and technology-based companies by gathering addition capital via listing in LEAP market or ACE market.
Major tax incentives in budget 2020 Malaysia:
Such electronic and electrical companies that have used the eligibility period of consecutive 15 years for the claim of RA should be given exemption on income tax. That exemption will be equal to the Investment tax allowance of 50% on qualifying for capital expenditure incurred within five years. 100% income tax exemption for ten years will be given if someone will be eligible for intellectual property income derived from the copyright and patent software of qualifying activities. This is done to promote development activities regarding intellectual properties. To attract more investment in renewable sources of energy, it is suggested that the present tax incentives for green technology should be extended for three years. In addition to it, a new incentive of tax for the activities of solar leasing is introduced in which they put an income tax exemption on statutory income for ten years. In these ten years, solar leasing companies certified with (SEDA) Sustainable Energy Development Authority can be analyzed.
Conclusion: Budget 2020 Malaysia is a balanced budget overall. Finance Ministry of Malaysia has tried its level best to cover all the aspects. They have two main goals one is how they can grow their economy more and more, and the other is to make life financially more comfortable for the people who have less income though not many such people are present in the country. They tried to accommodate them by allowances and a few tax exemptions.