eKTP 46

Budget 2018 Proposal Highlight
Part 1 of 3


According to The Ministry of Finance (MOF) had announced the Malaysian Budget 2018 on 27 October 2017. Let us share some information as below:



Presently, existing income tax structure for Malaysian resident individuals is based on progressive tax rates ranging 0% to 28% on chargeable income (CI). Non-resident individuals are taxed at a flat rate of 28%

To increase the disposable income of the middle income group and to address the rising cost of living and has proposed that the individual income tax rates be reduced by two (2) percentage points for the three (3) CI bands as follows:

1. Reduction of individual income tax rates


Effective date: From year of assessment 2018


2. Tax Exemption on rental income from residential homes received by Malaysian resident individuals

Currently, rental income from residential home received by a Malaysian (MY) resident individual is subject to income tax under Section 4(d), Income Tax Act 1967. As per MY MOF, to encourage MY resident individuals to rent out the said property at reasonable charges, it is proposed that 50% income tax exemption be given on rental income received by MY resident individuals subject to the following conditions:

  1. Rental income received not exceeding RM 2,000 per month for each residential home

  2. The residential home must be rented under a legal tenancy agreement between the owner and the tenant; and

  3. Tax exemption is given for a maximum period of 3 consecutive year of assessment

Effective date: From Year of assessment 2018 to year of assessment 2020


3. Extension of period for resident individual income tax relief on net savings in the National Education Savings Scheme (SSPM)

Presently, a MY resident individual is eligible for tax relief on net savings in the SSPM up to RM 6,000 from year of assessment 2012 until year of assessment 2017.

In order to encourage savings, It is proposed that the relief up to RM 6,000 on the SSPM be extended for another 3 years

Effective date: From year of assessment 2018 until year of assessment 2020


4. Tax incentive for women returning to work after career break

Presently, there is no exemption on income tax charged on a MY resident individual has an income derived from sources of Malaysia.

However, to encourage women who have been on a career break to return to the workforce, it is proposed that their employment income up to maximum of 12 consecutive months be given income tax exemption.

The incentive is given for women who return to the workforce after being on a career break for 2 years on 27 October 2017. The said incentive is eligible to be claimed in year of assessment 2018 to year of assessment 2019.

Effective date: Application submitted to Talent Corporation Malaysia Berhad from 1 January 2018 to 31 December 2019.