The 2022 Budget was tabled by Tengku Zafrul Minister of Finance and was regarded as the mother of all Budgets involving an estimated Government expenditure of RM334.1 billion, the largest ever budget in our nation’s history.
As promised, a number of very innovative announcements were made in line with numerous consultations by the private sector and industry groups with the Ministry of Finance, for which all the rakyat would be extremely grateful.
One of the more interesting proposals is the one-off “Cukai Makmur”, which can be loosely translated to a “Prosperity Tax”. Many had speculated that a special windfall tax would be imposed on certain sectors that had enjoyed super profits in recent times as a result of the pandemic. This one-off Tax announced is not targeted at any specific sector but rather to non-SME companies that have chargeable income in excess of RM100 million. While the first RM100 million will still be taxed at the standard 24% tax rate, any excess will be taxed at a rate of 33%.
The very high threshold set for this Tax to apply – i.e. RM100 million in chargeable income – is unlikely to affect most Malaysian companies and thus, will be applauded by the Malaysian public in general. Whilst some may argue the fact that such a tax is a concern to large corporate taxpayers, the fact that it has been announced as a one-off Tax for Year of Assessment 2022 should not result in a significant change in mood for investors and businesses alike. That said, it is absolutely critical that the Government keeps to its word that it is really a “one-off Tax” during this time of need.
By Tai Lai Kok, Head of Tax at KPMG in Malaysia