eKTP 90

BUDGET 2019
Part 3 of 3

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2019 Budget: Tax Implications on Businesses

Other Tax Developments in 2019 Budget for Businesses

* The Government acknowledges that Goods and Services Tax (“GST”) refunds amounting to RM19.4 billion is payable to businesses. The GST Repeal Act 2018 provides the Government up to 6 years’ time to make refund to businesses.In the Budget, the Government has expressed commitment to make the GST refunds (RM19.4 billion) along with the income tax refunds (RM16 billion) to businesses in 2019.

* Increase investment of companies already participating in Principle Hub incentive by charging a concessionary 10% income tax rate on the overall statutory income related to Principle Hub activities for a period of 5 years.

* Existing tax incentives on special deduction on cost (and additional cost) of issuance of sukuk under the principles of Ijarah and Wakalah as well as additional costs on retail bonds and sukuk under certain Islamic financing principles are extended by two years, i.e. until YA 2020.

* Venture capital tax incentives extended by a year, i.e. applications are accepted until 31st December 2019.

* Tax exemption for interest earned on wholesale money market funds and these funds will be cease effective 1st January 2019.

* Similar to donations to approved institutions, any contributions to social enterprise is to qualify for deduction subject to a maximum 10% of aggregate income for a company (7% in the case of individuals).

* Any employer who bear PTPTN payments on behalf of full-time employee is entitled for a deduction amounting to 100% of any payments made during the calendar year 2019, provided such payment is not recoverable from the employee.

* Remuneration of full-time employees whom are either senior citizens (i.e. above 60 years old) and ex-convicts qualifies for deduction amounting to 200% of the remuneration for YAs 2019 and 2020. This is applicable only in respect of remuneration to employees whose monthly remuneration does not exceed RM4,000.

* Stamp duty waiver on all Tenang Insurance products for 2 years beginning 1 January 2019.

* Increase of taxes, fees and levy on the gaming industry, and number of special draws is reduced by half.

* Step up enforcement against cigarette smuggling, from which the Government expects to collect additional RM1 billion.

* Departure levy of RM20 (on departures to ASEAN Countries) and RM40 (on other international departures) effective from 1st June 2019.

* The Government supports the development and growth of Kota Perdana Special Border Economic Zone in Kayu Hitam, Kedah as a strategic trading and logistics hub between Malaysia and Thailand.

* Duty free shops in Penang’s Swettenham Pier to cater its booming cruise tourist.

* Declare Pulau Pangkor as duty free island while the duty-free island status of Pulau Langkawi is to be enhanced and further expanded.
 
* New tiered levy system where the levies charged will be higher for employers with a higher percentage of foreign workers.

* For the foreign workers who have served the agriculture and plantation sector for 10 years or more, the extension levy is reduced from RM10,000 to RM3,500 (per worker per annum).
 

* Source: Thenesh, Renga & Associates (TraTax Malaysia) Tax e-Alert @03 Nov 2018