KUALA
LUMPUR, MALAYSIA – Media OutReach –
9 November 2020 – For 2021 Malaysia has earmarked its largest ever budget
spending allocation of RM322.5 billion with RM17bn committed to combating the
health consequences of COVID-19.
The
budget, running on the theme ‘Resilient as One, Together we Triumph’, accounts
for 22 per cent of the country’s gross domestic product and was seen as
necessary to support and stimulate an economy heavily impacted by the pandemic.
Tax
stimulus measures
Jagdev
Singh FCPA, Chairman of the Tax Committee at CPA Australia Malaysia Division
who is also Tax Leader, PwC Malaysia, says the budget has been crafted to
alleviate the economic burden of the people and promote investments in targeted
sectors in order to stimulate economic recovery.
“Measures
such as the one percentage point reduction in the personal tax rate chargeable
on income between RM50,000 and RM70,000, the expansion of personal reliefs
focusing on health and wellness matters and the extension of tax relief for
contribution to the Private Retirement Scheme would greatly benefit the M40
(middle income) bracket by reducing their tax burden. [These measures] will all
assist.”
“Cash
handouts remain the most relevant way of putting money into the pockets of the
B40 (lower income) group and it is good to see that the government has further
enhanced the Bantuan Prihatin Nasional.”
Jagdev
also adds that the government has announced a number of measures to support
economic recovery in the form of new and extended tax incentives to promote
investment, job retention and job creation.
Although
businesses have urged further relief including the reduction in the corporate
tax rate, and a review of the seven-year time limit for tax losses and loss
carry back provisions, the government has resisted the urge to tweak the tax
legislation.
A
budget for all
Meanwhile,
CPA Australia Malaysia Divisional Councillor Surin Segar FCPA, who is also
Maybank Group’s Head of Tax and CFO of the Maybank Foundation, said the budget
was comprehensive, containing a slice for almost everyone in each segment of
society, especially those impacted by the pandemic.
“It
is also a budget which the man on the street requires, covering medical needs
for self and parents, encouraging a healthy living as well as getting
government linked corporates to be involved in supporting online schooling and
environmental preservation,” says Surin.
Indirect
tax changes
Fellow
Divisional Councillor Alan Chung FCPA, who is Senior Executive Director Grant
Thornton Malaysia, notes there were few takeaways on the indirect tax segment.
“In
addition to a new tax imposed on cigarettes on duty free islands, there were
several indirect tax proposals in the appendices to the [budget] speech. One is
on the extension of an existing stamp duty exemption to revive abandoned
housing projects and the other is expanding tourism tax on accommodation booked
through online platforms from July 2021.”
EFP
withdrawals
Tan
Lay Keng FCPA, Partner, Ernst & Young Tax Consultants Sdn Bhd, who is also
a Divisional Councillor, says the
approval to withdraw RM500 per month from Employees Provident Fund (EPF)
Account 1 for 12 months (from January 2021), in addition to approval to
withdraw from EPF Account 2 under i-Lestari introduced in March 2020 will be
helpful in giving people cash to meet
immediate needs.
She
notes: “Employees’ EPF contribution rate reduced from 11 per cent to 9 per cent
(from January 2021 for 12 months) will also augur well for the people.”
Lay
Keng also points out benefits in tax relief announcements for health and
education. She says: “Tax relief available for medical expenses for serious
diseases pertaining to self, spouse and child to include expenses incurred for
specific vaccination (e.g. pneumococcal, influenza and COVID-19, when
available) would also broaden the scope of tax relief,” she adds.
“Tax
relief for technical education fees to include expenses incurred for
up-skilling and self-enhancement courses in fields of skills recognised by the
Department of Skills Development, Ministry of Human Resources would be helpful
to the nation,” she says.
Related infographic: See all the
highlights of the Malaysian Budget 2021
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