KUALALUMPUR, MALAYSIA - Media OutReach -9 November 2020 - For 2021 Malaysia has earmarked its largest ever budgetspending allocation of RM322.5 billion with RM17bn committed to combating thehealth consequences of COVID-19.

Thebudget, running on the theme 'Resilient as One, Together we Triumph', accountsfor 22 per cent of the country's gross domestic product and was seen asnecessary to support and stimulate an economy heavily impacted by the pandemic.

Taxstimulus measures

JagdevSingh FCPA, Chairman of the Tax Committee at CPA Australia Malaysia Divisionwho is also Tax Leader, PwC Malaysia, says the budget has been crafted toalleviate the economic burden of the people and promote investments in targetedsectors in order to stimulate economic recovery.

"Measuressuch as the one percentage point reduction in the personal tax rate chargeableon income between RM50,000 and RM70,000, the expansion of personal reliefsfocusing on health and wellness matters and the extension of tax relief forcontribution to the Private Retirement Scheme would greatly benefit the M40(middle income) bracket by reducing their tax burden. [These measures] will allassist."

"Cashhandouts remain the most relevant way of putting money into the pockets of theB40 (lower income) group and it is good to see that the government has furtherenhanced the Bantuan Prihatin Nasional."

Jagdevalso adds that the government has announced a number of measures to supporteconomic recovery in the form of new and extended tax incentives to promoteinvestment, job retention and job creation.

Althoughbusinesses have urged further relief including the reduction in the corporatetax rate, and a review of the seven-year time limit for tax losses and losscarry back provisions, the government has resisted the urge to tweak the taxlegislation.

Abudget for all

Meanwhile,CPA Australia Malaysia Divisional Councillor Surin Segar FCPA, who is alsoMaybank Group's Head of Tax and CFO of the Maybank Foundation, said the budgetwas comprehensive, containing a slice for almost everyone in each segment ofsociety, especially those impacted by the pandemic.

"Itis also a budget which the man on the street requires, covering medical needsfor self and parents, encouraging a healthy living as well as gettinggovernment linked corporates to be involved in supporting online schooling andenvironmental preservation," says Surin.

Indirecttax changes

FellowDivisional Councillor Alan Chung FCPA, who is Senior Executive Director GrantThornton Malaysia, notes there were few takeaways on the indirect tax segment.

"Inaddition to a new tax imposed on cigarettes on duty free islands, there wereseveral indirect tax proposals in the appendices to the [budget] speech. One ison the extension of an existing stamp duty exemption to revive abandonedhousing projects and the other is expanding tourism tax on accommodation bookedthrough online platforms from July 2021."

EFPwithdrawals

TanLay Keng FCPA, Partner, Ernst & Young Tax Consultants Sdn Bhd, who is alsoa Divisional Councillor, says theapproval to withdraw RM500 per month from Employees Provident Fund (EPF)Account 1 for 12 months (from January 2021), in addition to approval towithdraw from EPF Account 2 under i-Lestari introduced in March 2020 will behelpful in giving people cash to meetimmediate needs.

Shenotes: "Employees' EPF contribution rate reduced from 11 per cent to 9 per cent(from January 2021 for 12 months) will also augur well for the people."

LayKeng also points out benefits in tax relief announcements for health andeducation. She says: "Tax relief available for medical expenses for seriousdiseases pertaining to self, spouse and child to include expenses incurred forspecific vaccination (e.g. pneumococcal, influenza and COVID-19, whenavailable) would also broaden the scope of tax relief," she adds.

"Taxrelief for technical education fees to include expenses incurred forup-skilling and self-enhancement courses in fields of skills recognised by theDepartment of Skills Development, Ministry of Human Resources would be helpfulto the nation," she says.

Related infographic: See all thehighlights of the Malaysian Budget 2021

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