Ensuring the well-being of Malaysians
The Government will implement a broad range of measures to reduce the impact of higher cost of living, particularly among the lower income group. In this regard, the Government has announced various measures which include:
- Tax rebate to be increased from RM 350 to RM 400 for those with taxable income of RM 35,000 and below.
- All interest income for individuals deposited with the financial institutions to be tax exempt.
- Travel allowance for commuting to work provided by employers to be given full tax deduction, while the employees receiving such an allowance will be given tax exemption up to RM 2,400 per year.
- Tax exemption on mobile phones, telephone and Internet bills paid by employer.
- Tax exemption on staff discounts up to RM 1,000 a year on employers’ own goods.
- Tax exemption on childcare allowance paid by employer of up to RM 2,400 per year.
- Tax exemption on medical benefits to cover maternity, traditional medicine namely acupuncture and ayurvedic.
- Limitation of deduction for companies contributing to charitable organisations to be increased from 7% to 10% of aggregate income.
- Full import duty exemption on several food items, including vermicelli, biscuits, fruit juices and canned sweet corn, which currently attract import duties of between 2% and 20%.
- In line with the Government’s effort to encourage healthy lifestyle and curb social problems due to smoking, excise duty on cigarettes to be increased by 3 sen from 15 sen per stick to 18 sen per stick.
- 50% stamp duty exemption to be extended to loan agreements for the purchase of medium cost houses of up to RM 250,000.
| Developing quality human capital
In order to intensify human capital development and enhance workforce competitiveness, substantial allocations have been made. Some of the tax measures announced to create a knowledge-based economy are as follows:
- Individual tax rate to be reduced from 28% to 27% effective year of assessment 2009 in order to increase the number of professionals serving in Malaysia and to minimise brain drain.
- Marginal tax rate for individuals will also be reduced from 13% to 12% which will benefit the middle income group.
- Recruitment costs incurred before the commencement of operations, such as payments to employment agencies and participation in job fairs to be tax deductible.
Strengthening the nation’s resilience
In order to strengthen the nation’s resilience, the Government will provide a conducive environment for growth in selected sectors of the Malaysian economy. From the tax perspective, the following measures were proposed:
- Group relief is enhanced by allowing the percentage of current year losses for the offsetting to be increased from 50% to 70%.
- 4-star and 5-star hotel operators in Sabah and Sarawak to be given Pioneer Status with 100% income tax exemption or Investment Tax Allowance of 100% for five years.
- A venture capital company that invests at least 30% of its funds in start-up, early stage financing or seed capital be eligible for a five-year tax exemption.
- SMEs to be given Accelerated Capital Allowance (i.e. 100% capital allowance in the year of acquisition) on all plant and machinery acquired in the years of assessment 2009 and 2010.
- Withholding tax rate for dividends received by foreign institutional investors from REITs to be reduced from 20% to 10%, and from 15% to 10% for dividends received by individuals.
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