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Key Tax Proposals

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Corporate Tax

Capital Gains Tax on Disposal of Unlisted Shares

In line with the Budget 2023 announcement to implement Capital Gains Tax (CGT) on the disposal of unlisted shares for companies,  CGTwill be imposed at the following rates with effect as of 1 March 2024 : 
   
​Shares Acquisition Date
​CGT Rate
​Before 1 March 2024
​The taxpayer may choose: 
  1. 10 % on the net gain of the disposal of shares; or
  2. 2 % on the gross sales value.
​As of 1 March 2024
​10 % on the net gain of the disposal of shares
    
To ensure the smooth implementation of CGT and to reduce the cost of doing business, it is proposed that CGT exemption be given on the disposal of shares related to the following activities:
  1. Initial Public Offering (IPO) approved by Bursa Malaysia; 
  2. Restructuring of shares within the same group; and
  3. Venture capital company.
    

Implementation of E-Invoicing 

The implementation of mandatory e-invoicing for taxpayers with an annual turnover or revenue exceeding RM100 million will be deferred from 1 June 2024 to 1 August 2024. Taxpayers in the other income categories will be required to comply in phases starting as of 1 July 2025. 
   
In addition, the use of the Tax Identification Number (“TIN”) will be expanded to support the e-invoice implementation. This is expected to widen the tax net and to encourage voluntary tax compliance, eventually reducing tax leakage.
   

Implementation of Global Minimum Tax (“GMT”) 

The implementation of GMT and Domestic Top Up Tax is proposed to be realized in 2025 instead of 2024 as previously announced. GMT will only apply to companies with a global income of at least EUR750 million in at least two out of four preceding years, which is in line with international tax standards.
    

Capital Allowance on Information and Communication Technology Equipment and Computer Software

To support companies in remaining competitive in tandem with the current technological advancement, it is proposed that capital allowance rates be revised as follows: 
    
​Qualifying Expenditure
​Capital Allowance Rate
​Purchase of ICT equipment and computer software packages
​Initial Allowance: 40 % 
Annual Allowance: 20 %
​Consultation, licensing and incidental fees related to customised computer software development
​​Initial Allowance: 40 % 
Annual Allowance: 20 %
   
With the revised rates, the capital allowance claim period will be reduced from 4 years to 3 years.

Tax Deduction on Environmental, Social and Governance (“ESG”) Related Expenditures

To encourage more participation in complying with ESG standards, it is proposed that a tax deduction up to RM50,000 for each year of assessment be given on ESG related expenditure as follows:
   
ESG Related Expenditure
​Description
​Enhanced Sustainability Reporting Framework
​ESG reporting by companies listed on the Bursa Malaysia stock exchange
​Climate Risk Management and Scenario Analysis 
​ESG reporting by financial institutions regulated by the Bank Negara Malaysia
​Tax Corporate Governance Framework (TCGF) of Lembaga Hasil Dalam Negeri Malaysia (LHDNM)
​Preparation of reports related to TCGF by companies 
​Transfer Pricing Documentation
​Preparation of transfer pricing documentation by companies
​E-Invoicing Implementation
​Consultation fee for implementing e-invoicing incurred by Micro, Small and Medium Enterprises (MSME)
​Any reporting requirement related to ESG
​ESG reporting by companies to approved regulator by the Ministry of Finance
    
Effective from the year of assessment (“YA”) 2024 until YA 2027.
    

Tax Deduction on Contribution for Environmental Preservation and Conservation Projects 

Tax deduction will be granted for contributions or sponsorships related to tree planting or environmental preservation and conservation awareness projects verified by the Forest Research Institute Malaysia (“FRIM”), for applications received by the Ministry of Finance from 1 January 2024 to 31 December 2026.
    

Further Tax Deduction for Voluntary Carbon Market (“VCM”)

In line with the Government's aspiration to become a carbon-neutral nation by 2050, and to encourage more companies to participate in VCM, further tax deduction of up to RM300,000 will be granted to companies for expenditure incurred in the Development and Measurement, Reporting and Verification (“MRV”) related to the development of carbon projects. The further tax deduction is deductible from the carbon credits income traded on BCX.
    
This will apply to applications received by the MGTC from 1 January 2024 until 31 December 2026.
   

Extension of Tax Incentive for Rental of Electric Vehicles (EV) 

The proposed tax deduction granted on the rental of non-commercial EV (up to RM300,000) will be extended for a period of two (2) years, i.e., up to YA 2027 (previously proposed from YA 2023 to YA 2025). 
    

Sustainable and Responsible Investment (“SRI”)

  • Income tax exemption on management fees income for companies providing SRI funds management services will be extended for a period of 4 years, i.e., from YA 2024 to YA 2027.
  • Tax deduction on issuance costs of SRI sukuk approved, authorised or lodged with the Securities Commission Malaysia (“SC”) will be extended for a period of 4 years, i.e., from YA 2024 to YA 2027.
  • Income tax exemption on the SRI Sukuk Grant and Bond Grant Scheme will be expanded to include SRI-Linked Sukuk Grants and bonds issued under the ASEAN Sustainability-Linked Bond Standards (ASEAN SLBS) approved by SC. This will apply to applications received by SC from 1 January 2024 to 31 December 2025.
    

Review of Conditions for Institutions/ Organisations/ Funds Approved Under Section 44(6) of the Act

Effective YA 2024, the approval conditions for the above entities are proposed to be reviewed as follows: 
  1. The accumulated funds utilisation limit of not more than 25 % for participation in business activities be increased up to 35 %;
  2. The institutions/ organisations/ funds may choose either of the following options to continue qualifying for income tax exemption under Section 44(6):

    ​Option
    		​Utilisation of Accumulated Funds
    		​Threshold of Charitable Activity Expenditure
    ​1
    		Up to 25 %​
    		​At least 50 %
    ​2
    		​Over 25 % and up to 35 %
    		​At least 60 %
  3. In the event any of the conditions are breached, DGIR will not withdraw the approval during the validity period. The approval status is upheld to ensure that donors remain eligible for tax deductions on contributions made to institutions/organisations/funds throughout the approval period; and
  4. For any breach of conditions within the approval period, the institutions/organisations/funds will not be eligible for tax exemption and DGIR will raise tax assessment on all income received by the institutions/organisations/funds in the year of assessment the breach of conditions occurred.
    

Income tax exemption for Islamic Financial-Related Trading Activities under Labuan International Business and Financial Centre (“IBFC”)

As an initiative to develop IBFC as an Islamic and Shariah-compliant financial centre, full income tax exemption for a period of 5 years i.e., YA 2024 to YA 2028 for a Labuan entity that undertakes Islamic financial-related trading activities such as Islamic digital banking, Islamic digital bourses, ummah-related companies and Islamic digital token issuers has been proposed.
     

Tax Incentives

Review of Green Technology Tax Incentive

In line with Malaysia’s aspiration to be inclusive, sustainable and carbon neutral by 2050, it is proposed that green technology tax incentives be reviewed as follows: 

​Qualifying Activities
​Incentive
​Incentive Period

​Tier 1
Green Hydrogen
  • ​GITA of 100 % on the Qualifying Capital Expenditures (“QCE”)
  • To be set off against up to 70 % or 100 % of Statutory Income (“SI”)
​

up to 10 years 
(5 + 5)
​Tier 2
  1. Integrated Waste Management
  2.  Electric Vehicle Charging Station
  • ​GITA of 100 % on the QCE
  • To be set off against up to 100 % of SI
​
5 years
​Tier 3
  1. Biomass
  2. Biogas
  3. Mini hydro
  4. Geo thermal
  5. Solar
  6. Wind energy
​



  • GITA of 100 % on the QCE 
  • To be set off against up to 70 % of SI





​5 years
     
For applications received by MIDA from 1 January 2024 until 31 December 2026. 
    

GITA Asset (Own Consumption)


​Qualifying 
Activities
​Incentive
​Incentive 
Period
​Tier 1
  1. List of qualifying assets ap-proved by Minister of Finance
  2. Battery Energy Storage System
  3. Green Building
​
  • GITA of 100 % on the QCE 
  • To be set off against up to 70 % of SI



​QCE incurred from 1 January 2024 to 31 December 2026
​Tier 2
  1. List of qualifying assets ap-proved by Minister of Finance
  2. Renewable Energy System
  3. Energy efficiency

  • ​GITA of 60 % on the QCE
  • ​To be set off against up to 70 % of SI


​QCE incurred from 1 January 2024 to 31 December 2026
     
Effective from QCE as verified by the Malaysian Green Technology and Climate Change Corporation for the purchase of green technology assets starting from 1 January 2024 until 31 December 2026.
    

Green Income Tax Exemption (“GITE”) Solar Leasing

   
​Tier (Capacity)
​Incentive
​Incentive 
Period
​>3MW - ≤10MW
​Tax exemption of 70 % on SI
​5 years
​>10MW - ≤30MW
​​Tax exemption of 70 % on SI
​10 years
   
For applicants received by MIDA from 1 January 2024 until 31 December 2026.
   

Reinvestment Under the New Industrial Master Plan 2030

To encourage existing companies that have exhausted their Reinvestment Allowance (“RA”) eligibility period, and to increase capacity and investment in high-value activities under the New Industrial Master Plan 2030, it is proposed that tax incentives be granted as follows:
   
​Investment Tax Allowance
​Tier 1
​Tier 2
​Qualifying Capital Expenditure
​100 %
​60 %
​Statutory Income to be Set Off
​100 %
​70 %
   
The eligible Investment Tax Allowance rate will be determined by an outcome-based approach for appli-cations received by the Malaysian Investment Development Authority from 1 January 2024 until 31 De-cember 2028.
   

Review of Tax Incentives for Automation in Manufacturing, Services and Agriculture Sectors

To increase agricultural productivity and to minimise dependency on foreign labour, it is proposed that the scope of Accelerated Capital Allowance (“ACA”) be expanded to include the commodity sector under the Ministry of Plantation and Commodities (KPK) (for applications received by KPK from 14 October 2023 until 31 December 2027). ACA rates be revised to an initial allowance of 40 % and an annual allowance of 20 %.
    

Tax Incentive for Global Services Hub

To maintain Malaysia's competitiveness as a key player in the global services sector in the region, and to establish the country as a high-impact strategic services hub, it is proposed that a Global Services Hub tax incentive based on an outcome-based approach be introduced as follows:
   
​
​
​ ​New Company
​ ​Exiting Company
​Tier 1
Tier 2​Tier 1​​Tier 2
​Exemption
​5+5
​5+5
​5
​5
​Incentive
​Tax Rate 5 %
​Tax Rate 10 %
​Tax rate at 5 % on the value added income
​Tax rate at 10 % on the value added income
​Types of Inome Exemption
  1. ​Service income; or
  2. Service and trading income ​
​Qualifying Services & Additional Services
​Undertake the following activities: 

  1. Regional P&L / Business Management Unit
  2. Strategic business planning
  3. Corporate development

AND 

Any 2 qualifying activities under the services category as follows: 

a) Strategic services; 
b) Business services; 
c) Shared services; 
d) Other services
​Conditions
(Outcome-based)
  1. ​Annual operating expenditures; 
  2. High value full-time employees; 
  3. C-suite with a minimum monthly salary of RM35,000; 
  4. Local ancillary services; 
  5. Collaboration with higher education institution/TVET; 
  6. Training for Malaysian students/citizen; 
  7. Environmental, Social and Governance (ESG) elements; or
  8. Other conditions as determined by the Minister of Finance.
   
The determination of the eligibility for the Income Tax rate that a company will enjoy for each year of assessment is based on the outcome-based approach.
   
In addition, it is proposed that an Income Tax rate of 15 % be granted for a period of 3 consecutive years of assessment, limited to 3 non-citizen individuals holding key/C-Suite positions with a monthly salary of at least RM35,000 appointed by a new company approved with the Global Services Hub tax incentive.
   
Applicable for applications received by the Malaysian Investment Development Authority from 14 October 2023 until 31 December 2027.
     

Special tax rate for promoting production of foreign film in Malaysia 

It is proposed that a special Income Tax rate ranging from 0 % to 10 % will be granted to film production companies, foreign actors, and film crews who carry out filming activities in Malaysia.
   

Tax Incentive for Pengerang Integrated Petroleum Complex (PIPC)

Tax incentives in the form of a special tax rate or ITA are proposed to be granted to transform PIPC into a hub for the development of the chemical and petrochemical sectors.

Extension of Tax Incentives

   
​Activities
​Number of years extended
​Details
​Tax Incentive for Equity Crowdfunding
​3 years
​This is applicable for investments made from 1 January 2024 until 31 December 2026. The scope of tax incentive is also expanded to investments made by individual investors through a Limited Liability Partnership nominee company.
​Tax Incentive for Angel Investors
​3 years
​For investments made from 1 January 2024 until 31 December 2026.
​Tax incentive for Social Enterprise
​2 years
​Income tax exemption on all income for applications received by the Ministry of Finance from 1 January 2024 until 31 December 2025.
​Shariah-compliant fund management services
​4 years
​From YA 2024 until YA 2027.
The income tax exemption on SI is reduced from 100 % to 60 %.
   

Islamic Securities Selling and Buying (ISSB)

Currently income (other than dividends, manufactured payments, lending fees and interest earned on collateral) arising from transactions under conventional Securities Borrowing and Lending Agreement (SBL) is exempt from tax. 
   
To increase the overall volume of securities trading and the liquidity of the Shariah-compliant stock market, it is proposed that effective as of YA 2024, tax exemption be granted to income from ISSB, aligning with tax exemption for conventional SBL transactions. 
  

Indirect tax 

Increase in Service Tax Rate and Expansion to the Scope of Prescribed Taxable Services

It is proposed that the Service Tax rate be increased from 6 % to 8 %. In order to not burden the people, the increase of Service Tax will exclude services such as food and beverage as well as telecommunications. 
    
The Government will also expand the scope of taxable services to include logistics services, brokerage services, underwriting services and karaoke services. 
    

High Value Goods Tax (“HVGT”) 

In the re-tabled Budget 2023, on 23 February 2023, it was announced that the Government would introduce the luxury goods tax from 2023, but it has not yet been implemented. 
  
The Budget stated that the Government will enact a new legislation to implement the HVGT at a rate of 5 to 10 % on certain high value items such as jewelry and watches, based on the threshold value of the goods price. 
   
The mechanics and date of implementation have yet to be announced. 
    

Import Duty and Sales Tax Exemptions on Manufacturing Aids 

It is proposed that effective 1 January 2024, import duty and sales tax exemptions will be grantedto eligible manufacturers on imported and locally purchased manufacturing aids, depending on the types of industry and the category of goods.
   

Imposition of Excise Duty on Chewing Tobacco

With effect as of 1 January 2024, the Government has proposed to impose an excise duty on chewed tobacco under the tariff code 2403.99.5000, at a rate of 5 % plus RM27/kg. 
    

Tightened control on the smuggling of alcoholic beverages and cigarettes

With effect as of 1 January 2024, the Government will impose stricter measures to control the movement of critical goods, and also expand the control measures to intoxicating liquor, in addition to cigarettes and tobacco products.
    
The proposed measures are: 
  • Limiting transhipment activities for intoxicating liquor to be carried out in certain ports only; 
  • Using Bukit Kayu Hitam Immigration, Customs, Quarantine and Security Complex as the single point-of-exit for the Northern Region; 
  • Importation of cigarettes for domestic market shall be made by way of full container load.

    

Review of Excise Duty Rate on Sugar Sweetened Beverages

Effective 1 January 2024, the excise duty rate on sugar sweetened beverages will be increased from RM0.40 per litre to RM0.50 per litre.
     

Entertainment Duty Exemption in the Federal Territories

For applications received by the Ministry of Finance (“MOF”) from 1 January 2024 to 31 December 2028, entertainment duty in Federal Territories is to be reduced as follows: 
   
​Type of Entertainment
​
​Entertainment Duty Rate
​
​Current
​After Exemption
​Stage performance by international artist/light shows/circus
​ ​ ​ ​ ​





​25 %
​10 %
​Film screening (cinema)/theatre
​10 %
​Exhibition/zoo/aquarium
​10 %
​Sports event/E- sports/bowling/ snooker/pool/billiard/karaoke
​10 %
​Theme park/Family recreation centre/indoor games centre/ simulator
​5 %
​Stage performance by local artist
​0 %
     

Individual tax

Expansion of Scope of Income Tax Relief for Medical Treatment Expenses for Self, Spouse and Child

It is proposed that the scope of tax relief be expanded to cover dental examination and treatment expenses from dental practitioners registered with the Malaysian Dental Council limited to RM1,000 from YA 2024. 
    

Expansion of Scope of Income Tax Relief for Medical Treatment, Special Needs and Carer Expenses for Parents 

It is proposed that from YA 2024, the scope of tax relief be expanded to full medical examination for parents limited to RM1,000. 
    

Review of Income Tax Relief for Lifestyle 

It is proposed that from YA 2024, the scope be expanded to include fees for self-skills enhancement courses. The purchase of sports equipment and gymnasium membership fees are removed from the scope of lifestyle relief and introduced under the new “Sports Equipment and Activities” as detailed below.
    

Income Tax Relief for Sports Equipment and Activities 

The amount of tax relief for sports equipment and activities is limited to RM1,000. This would cover the purchase of sports equipment, rental or entry fees to sport facilities, registration fees for participating in sports competitions, gymnasium membership fees and sports training fees from YA 2024.  
    

Extension of Individual Income Tax Relief for Up-Skilling and Self-Enhancement Courses Fees

To further encourage Malaysian citizens to improve and enhance their skills as well as to venture into new areas of income, it is proposed that the income tax relief be extended for a period of 3 years, i.e., from YA 2024 to YA 2026.
    

Extension of Individual Income Tax Relief for EV Charging Facilities

It is proposed that the Individual Income Tax relief of up to RM2,500 for purchase, installation, rental and sub-scription fees for EV charging facilities, will be extended for a period of four (4) years, from YA 2024 until YA 2027.
    

Review of Income Tax Exemption for Childcare Allowance Under Perquisites from Employment

With effect from YA 2024, the Income Tax exemption on childcare allowances received by employees or paid directly by employers to childcare centres be increased from RM2,400 to RM3,000 per year.
    

Tax Incentives for Returning Expert Programme 

To further encourage global talent circulation and to attract professional Malaysian diaspora to return, it is proposed that the tax incentive be reviewed as follows:

  • Income Tax at a fixed rate of 15 % on employment income received by an individual for 5 consecutive years of assessment; and
  • Exemption on excise duty for the purchase of a Completely Knocked Down (“CKD”) vehicle subject to an exemption amount of up to RM100,000.
    
Effective for applicants received by the Talent Corporation Malaysia Berhad from 1 January 2024 until 31 December 2027.  
    

Review of Tax Incentive for Women Career Comeback Programme

It is proposed that the scope of eligibility criteria be enhanced as follows: 

  • Women returning to work after a career break of at least 2 years before the date of application received by the Talent Corporation Malaysia Berhad; and
  • Employment income received from the year of assessment 2025 until the year of assessment 2028.
     
Effective for applications received by the Talent Corporation Malaysia Berhad from 1 January 2024 to 31 December 2027.
    

Stamp Duty

Stamp Duty for Transfer of Property Ownership by Renunciation of Rights 

For the instrument of property ownership transfer executed from 1 January 2024, a fixed stamp duty of RM10 will be imposed on the transfer of property ownership by renunciation of rights from an eligible beneficiary to another eligible beneficiary in accordance with a will/faraid or the Distribution Act 1958.  

Stamp Duty for Property Ownership by Non-Citizen 

A flat rate stamp duty rate of 4 % will be imposed on the instrument of property ownership transfer executed by foreign-owned companies and non-citizen individuals (except Malaysian permanent residents). This is effective for instruments of transfer of property executed as of 1 January 2024.   

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