Malaysia's Budget 2024: A Glimpse into Tax Incentives Updates

Malaysia's Budget 2024: A Glimpse into Tax Incentives Updates

The budget for the year 2024, outlining a series of strategic tax incentives designed to invigorate various sectors and drive economic growth. These proposals reflect Malaysia's commitment to fostering a vibrant and inclusive economy while achieving key developmental goals.

Key highlights of these forward-looking tax incentives proposals:

1. Reinvestment under New Industrial Master Plan 2030

This proposal is a key component of the New Industrial Master Plan 2030, aimed at driving economic growth and fostering high-value activities within the industrial sector. The objective is to incentivise existing companies to reinvest in their operations, thereby boosting capacity, productivity, and competitiveness.

Key Details:

• Investment Tax Allowance

i. Qualifying Capital Expenditure

  • Tier 1 - 100%

  • Tier 2 - 60%

ii. Statutory Income to be Set-Off

  • Tier 1 - 100%

  • Tier 2 -70%

• Applications received by the Malaysian Investment Development Authority from 1 January 2024 until 31 December 2028

2. Global Services Hub

This incentive aims to establish Malaysia as a competitive hub for strategic services by adopting an outcome-based approach to enhance global competitiveness. This incentive scheme (in table) can be found in the Appendix 20 of Budget 2024.

Key Details:

• Tax rate

For new company

i. Tier 1 at 5 %

ii. Tier 2 at 10%

For existing company

i. Tier 1 at 5% on the value-added income

ii. Tier 2 at 10% on the value-added income

• for a exemption period of 5 years for existing company and additional 5 years for new company.

• Additional proposal tax rate of

i. Tax rate at 15% be given for a period of 3 consecutive YA

ii. limited to 3 non-citizen individuals holding key/C-Suite positions with a monthly salary of at least RM35,000

iii. appointed by a new company approved with Global Services Hub tax incentive

• Applications received by the Malaysian Investment Development Authority (MIDA) from 14 October 2023 until 31 December 2027

3. Automation in manufacturing, services and agricultural sectors

This initiative is designed to facilitate the adaption of Industry 4.0 principles across different sectors. It focuses on expanding the scope of Accelerated Capital Allowance (ACA) to drive technological adoption and automation, which can increase agricultural productivity and reduce reliance on foreign labour.

Key Details:

• Expanded the scope of ACA to include the commodity sector under the Ministry of Plantation and Commodities (KPK).

• Applications received by KPK from 14 October 2023 until 31 December 2027

4. Returning Expert Programme

This program is designed to review and improve the existing initiative with the goal of encouraging global talent circulation and attracting professional Malaysian expatriates to return to their home country.

Key Details:

• Reviewed criteria

i. Income tax at a fixed rate of 15% on employment income received by an individual for 5 consecutive YA;

and

ii. Exemption on excise duty for the purchase of a Completely Knocked-Down (CKD) vehicle subject to an exemption amount of up to RM100,000

• Extended the applications received by the Talent Corporation Malaysia Berhad from 1 January 2024 until 31 December 2027

5. Equity Crowdfunding (ECF)

This initiative aims to offer individual investors opportunities to invest in startup companies through the ECF platform, thereby supporting entrepreneurial endeavors and fostering economic growth.

Key Details:

• Expanded

- investment made by individual investor

- through Limited Liability Partnership (LLP) nominee company

• Extended the investment made from 1 January 2024 until 31 December 2026 (3 years)

6. Green Technology

In line with Malaysia’s aspiration to become an inclusive, sustainable and carbon neutral nation by 2050, the green technology incentives for both projects and asset bases have undergone a review. Detailed information about this incentive scheme (in table) can be found in the Appendix 26 of Budget 2024.

Green Investment Tax Allowance (GITA) Project (Business Purposes)

Green Income Tax Exemption (GITE) Solar Leasing

Key Takeaways

In summary, the Budget 2024 tax incentive proposals aim to further encourage investment in programs, activities, or sectors that align with Malaysia’s ambitious goals of achieving desired social and environmental outcomes. These incentives not only bolster the nation’s economy but also pave the way for sustainable and equitable future.

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-companies-updates-/18oct23

Tax Exemption https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-tax-exemption-updates/19oct23

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