The 2024 Budget proposals have numerous macro tax policy announcements such as the implementation of capital gains tax and global minimum tax, as well as technical developments.
This write-up briefly addresses how it impacts various aspects of business or people’s daily lives.
Technology Adoption
For businesses, the tax benefits of investing in ICT equipment will fully materialise within 2 years, with a 60% allowance in the first year and 40% in the second year. This is effective for costs incurred from a year of assessment (YA) 2024. For individuals, the personal relief of up to RM2,500 on the purchase of computers, smartphones, tablets, and internet subscriptions continues to encourage technology adoption.
Investors
The tax exemption provided on the value of investment made by angel investors as well as equity crowdfunding is extended until the end of 2026.
Imposition of capital gains tax (CGT) of 10% of gain from disposal of unlisted shares effective 1st March 2024. For existing assets disposed after 1st March 2024, taxpayers are given a choice to pay the tax at either 10% of net gain or 2% of gross proceeds.
As part of the property price control mechanism, foreign companies and non-citizen individuals have imposed a flat 4% stamp duty on the purchase of property, instead of a progressive rate of 1% to 4% imposed on Malaysians.
Multinational Corporations (MNCs)
For businesses with annual turnover exceeding RM100 million, it was announced earlier that e-invoicing would be made mandatory effective 1 June 2024. The 2024 Budget announcement gives these businesses a further 2 months of preparation time until 1 August 2024. Still, there is a lot to do for smooth integration of IT systems to obtain
LHDN’s validation prior to issuance of each invoice to the customer.
Implementation of a global minimum tax of 15% (more specifically, the qualified domestic minimum top-up tax (QDMTT)) has been deferred to the year 2025.
Proposals that benefit both MNCs and SMEs
For investment in high-value activities in the New Industrial Master Plan 2030, an investment tax allowance of either 60% or 100% of qualifying capital expenditure, is subject to approval by MIDA. The rate of allowance is determined by an outcome-based approach.
- The scope of sales tax exemption on costs incurred by manufacturers is widened to include manufacturing aids. This helps to avoid the problem of hidden taxation on goods manufactured for the local market as well as the export market. Tax deduction up to RM50,000 for expenses incurred in relation to ESG reporting, e-invoicing implementation, transfer pricing documentation, and reports related to tax corporate governance frameworks.
Consumer Spending & Healthy Choices
Instead of re-introducing Goods and Services Tax (GST) that would have had a widespread impact on consumer prices, the Government has decided to simply increase the service tax rate from 6% to 8%. Also, for F&B spending and telecommunication charges, the rate remains at 6%. This measure is aimed at raising additional fiscal revenue for the Government without burdening people excessively.
The introduction of Luxury Goods Tax (LGT) has been re-iterated with a new timeline in 2024, and tax rates of 5% to 10%, but much of the details are yet to be announced.
To encourage a healthier lifestyle, the excise duty on sugar-sweetened beverages is increased from 40 cents per litre to 50 cents per litre effective January 2024.
New excise duty is introduced at the rate of 5% of value plus RM27 per kilogram on chewing tobacco.
Thenesh Kannaa is an Executive Director at TRATAX Sdn Bhd, a tax consulting firm based in Kuala Lumpur. He is in-charge of international tax and indirect tax service lines, with diverse clientele base and wide-ranging nature of tax consulting and tax policy works.
