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The Prime Minister and Minister of Finance, YAB Dato’ Sri Mohd Najib Tun Abdul Razak presented the 2011 Budget on 15 October 2010. The Budget themed “Transformation Towards a Developed and High-Income Nation” emphasised on the following 4 key strategies with some of the tax measures laid out as follows:
- Reinvigorating private investment
- Intensifying human capital development
- Enhancing quality of life of Malaysians
- Strengthening public service delivery
- Relief of RM6,000 given to resident individuals for contributions made to the Employee Provident Fund and life insurance premium be extended to contributions made to the Private Pension Fund.
- Widening the scope of tax relief for parents’ medical expenses of RM5,000 to include expenses on day care centres, employment of caretakers for parents and other daily needs.
- Allowing 50% stamp duty exemption on instruments of transfer and loan agreement for first time house buyer who purchase a house not exceeding RM350,000.
- Abolishing import duties ranging from 5% to 30% on approximately 300 items of tourism products and daily use products.
- Increasing service tax rate from 5% to 6% effective from 1 January 2011. The scope of service tax will be widened to include paid television broadcasting services.
- The existing Investment Allowance incentive and exemptions for import duty and sales tax on imported broadband equipment for last mile broadband service providers be extended until 31 December 2012.
- Exempting mobile phones from sales tax.
- Allowing 100% exemption for both import duty and excise duty until 31 December 2011 for hybrid cars, electric cars as well as hybrid and electric motorcycles.
- Increasing the exemption of excise duty from 50% to 100% on national vehicles purchased by disabled persons.
- Extension of the existing Investment Tax Allowance incentive, Pioneer Status incentive and exemption of import duty and sales tax for those involved in the generation of energy from renewable sources or engaged in energy efficiency activities.
- The existing incentives for food production activities be extended for another 5 years until 2015.
- Allowing tax deduction on expenditure incurred on the issuance of Islamic securities which adopt the principles of Murabahah and Bai’ Bithaman Ajil based on tawarruq.
- Allowing double deduction on takaful contributions for export credit takaful.
The main focus of 2011 Budget is on a macro economy with not much of tax measures affecting individuals and companies directly. Overall, the announcements on tax issues are mainly for housekeeping and fine-tuning of the existing tax system. |
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