Cover Story: Highlights of Budget 2024
The Edge, 26 October 2023
This article first appeared in The Edge Malaysia Weekly on October 16, 2023 - October 22, 2023
TAXES AND DUTIES
Service tax increased from 6% to 8%, and expanded to logistics, brokerages, underwriting and karaoke, but does not cover services such as F&B and telecommunications.
Luxury goods tax of 5%-10% on certain high-value goods such as jewellery and watches, but foreign tourists exempted.
Global minimum tax for companies with a global revenue of at least €750 million (RM3.74 billion) in 2025.
Capital gains tax of 10% on unlisted shares.
Global Services Hub tax incentive to be introduced, at an income tax rate incentive of 5% or 10% based on results, for a period of up to 10 years.
Special income tax of 0%-10% for film production companies, foreign film actors and crew who make movies in Malaysia.
Entertainment duty for federal territories to be reduced from 25% to full exemption for stage performances by local artistes; 5% for theme parks, family recreation centres, indoor game centres and simulators; and 10% for stage performances by international artistes.
Excise duty for sugary drinks raised from 40 sen to 50 sen per litre.
Excise duty on chewing tobacco products imposed at a rate of 5% and RM27 per kg.
TAX RELIEF AND INCENTIVES
Tax deduction of up to 10% of an individual or company’s aggregate income if it contributes to institutions, organisations or funds that conduct educational programmes, including sports.
Tax relief limit for the purchase of sports equipment and activities raised from RM500 to RM1,000. Relief expanded to include fees paid for sports training.
To encourage upskilling and venturing into new fields, tax relief of up to RM2,000 for participation in self-improvement courses extended until 2026. Scope for lifestyle relief to cover fees for personal development courses such as language, photography and sewing.
Scope of automation tax incentives expanded to cover commodity sector under the Ministry of Plantation and Commodities, to increase productivity of plantation products and reduce dependence on foreign labour.
Additional tax deduction of up to RM300,000 proposed for companies that spend on measurement reporting and verification (MRV) related to the development of carbon projects.
EASING THE PEOPLE’S BURDEN
Total cash handout raised from RM8 billion to RM10 billion.
Monthly rebates of RM40 to be given to severely poor households with an allocation of RM55 million.
Diesel subsidies to be rationalised, targeting specific users only such as freight operators.
Ceiling prices on chicken and eggs to be removed, allowing prices to float.
Targeted subsidies to be implemented in phases next year.
Discounts announced for PTPTN loan repayments starting from Oct 14, 2023, until end-March 2024 — 10% discount on outstanding debt for full loan settlement, 10% discount for payment of at least 50% of the remaining debt in one payment, and 15% discount for payment by salary deduction.
Allocation for Rahmah Cash Aid (STR) raised from RM8 billion in 2023 to RM10 billion for 2024 to benefit nine million recipients. Maximum rate increased to RM3,700, from RM3,100.
RM58.1 billion for various social welfare initiatives, including subsidies, incentives and assistance, with 50% of the allocation for control of prices of goods and services.
An EPF Flexible Account, which can be accessed any time by members, to be introduced.
Monthly wage ceiling for Socso contribution raised from RM5,000 to RM6,000.
RM2,000 initial incentive payment to all civil servants of grade 56 and below, including contractual appointments, and RM1,000 to all key public sector posts, including the police, firefighters, soldiers, armed forces and uniformed members.
Incentive payment of RM1,000 extended to all government pensioners, to be paid in one lump sum at end-February 2024.
RM100 million to support NGOs and civil society organisations, including Yayasan Hasanah.
The Special Task Force on Agency Reform (STAR) to expedite maintenance of government quarters with a total of RM2.4 billion allocated to build, maintain and refurbish the quarters of civil servants, teachers, hospitals, police, soldiers and firefighters.
RM19.7 billion for Ministry of Defence.
RM19 billion for Ministry of Home Affairs.
Up to 10% of the total New Industrial Master Plan (NIMP) 2030 investment (RM95 billion) allocated to drive the NIMP mission with an initial fund of RM200 million in 2024.
RM510 million for research and development (R&D) funds under Ministry of Science, Technology and Innovation (Mosti) and Ministry of Higher Education.
RM1.9 billion for the management and development of Islamic affairs.
RM100 million for Chinese new villages for basic and social infrastructure.
ENERGY, E&E AND EVS
Implementation of targeted subsidies for electricity consumption this year where the top 10% of consumers are no longer subsidised, saved more than RM4.6 billion from the projected RM20 billion electricity subsidy bill.
To build a wider ecosystem for the electrical and electronics (E&E) cluster in the northern region, a high-tech industrial area in Kerian, in northern Perak, will be opened.
Up to RM2,500 income tax relief for electric vehicle (EV) charging facility expenses for a period of four years, and tax deduction for EV rental cost for two years.
Prasarana to acquire 150 electric buses and build three bus depots at a cost of RM600 million.
Up to RM2,400 rebate for the purchase of electric bikes to buyers with annual income below RM120,000 under the Electric Motorcycle Use Promotion Scheme.
Putrajaya to serve as Malaysia’s low-carbon city model, with solar panels installed in partnership with Tenaga Nasional Bhd (Tenaga) and Gentari on government buildings.
EVs will be adopted as official vehicles by federal government, as Tenaga, Gentari and Tesla invest over RM170 million to establish EV charging stations.
Threshold for residents’ agreement for en-bloc sales reduced from 100% to a consistent level based on international practices, to encourage urban renewal and promote the redevelopment of old buildings in the city.
Stamp duty at a flat rate of 4% imposed on transfer of ownership of real estate by non-citizen individuals and foreign-owned companies (except permanent residents in Malaysia) aimed at controlling the price of real estate.
A stamp duty of only RM10 instead of the ad-valorem rate for real estate transfer documents involving a beneficiary giving up his/her rights to an eligible beneficiary.
Putrajaya to take over the development of Bandar Malaysia to include affordable housing projects for veterans, taking into account the interests of bumiputeras in the federal territories, as well as the provision of parks and green spaces that can be used by all Klang Valley residents.
Housing Credit Guarantee Scheme to be expanded by up to RM10 billion, benefiting 40,000 borrowers.
RM2.47 billion allocated for the implementation of people’s housing projects in 2024.
CONSTRUCTION AND INFRASTRUCTURE
Tender process for 19 work packages for Sabah Pan Borneo Highway project (Phase 1B) involving RM15.7 billion to be completed by November 2023.
Sarawak Pan Borneo Highway to be completed in 2024.
Implementation of Sarawak-Sabah Link Road project Phase 2 involving RM7.4 billion to start end-2023.
North South Highway (PLUS) from Sedenak to Simpang Renggam to be widened to six lanes at a cost of RM931 million.
Resumption of the proposed construction of five Light Rail Transit 3 (LRT3) stations that were cancelled previously, namely the Tropicana, Raja Muda, Temasya, Bukit Raja and Bandar Botanik stations, for RM4.7 billion.
RM1.1 billion to resolve water supply issues, particularly in Kelantan, Sabah and Labuan.
SABAH AND SARAWAK
Putrajaya negotiating with Sarawak to realise the handover of Bintulu Port and rural air service operations to the state government.
Putrajaya to support the generation of hybrid solar energy and the construction of an electricity transmission line network in south Sabah.
Sabah and Sarawak’s technical agencies authorised to implement development projects below RM50 million.
Transfer of regulatory powers for Sabah’s electricity supply to the state government to take effect on Jan 3, 2024.
Rates for interim special grants for both Sabah and Sarawak increased to RM300 million, from RM16 million for Sabah and RM125.6 million for Sarawak.
Development allocation to Sabah and Sarawak to be increased, to RM6.6 billion (previously RM6.5 billion) for Sabah, and RM5.8 billion (previously RM5.6 billion) for Sarawak.
GLCS AND GLICS
Bumiputera investment institutions to be consolidated, including Ekuiti Nasional Bhd, under Bumiputera Investment Foundation or Yayasan Pelaburan Bumiputera.
Government-linked investment companies (GLICs) to provide funds of up to RM1.5 billion to encourage start-ups, including small and medium enterprise (SME) entrepreneurs, to venture into high-growth, high-value (HGHV) areas.
Pelaburan Hartanah Bhd to be parked under Permodalan Nasional Bhd (PNB) and strengthened by the injection of government strategic land in KL for housing projects.
RM2.4 billion for Federal Land Development Authority (FELDA), Federal Land Consolidation and Rehabilitation Authority (Felcra) and Rubber Industry Smallholders Development Authority (Risda) to boost agri-commodity activities and socioeconomic development for smallholders.
SMES AND HUMAN TALENT
RM100 million in digitalisation grants — RM5,000 to 20,000 micro, small and medium enterprises (MSMEs) — to fund upgrades of sales, inventory and digital accounting systems. Under Bank Negara Malaysia, RM900 million in loan funds made available to SMEs for automation and digitalisation.
Financial facilities amounting to RM2.4 billion to be made available to MSMEs via Bank Negara, Bank Simpanan Nasional (BSN) and National Entrepreneurial Group Economic Fund (Tekun).
Micro lender Amanah Ikhtiar Malaysia (AIM) to be provided with a funding allocation of RM100 million for the provision of small business capital. Its non-performing loan rate stood at 0.26% in 2022.
To stimulate companies to invest in HGHV areas, a tiered reinvestment tax incentive in the form of an investment tax allowance of 70% to 100% to be offered.
RM6.8 billion allocation for technical and vocational education and training (TVET) courses.
HRD Corp will utilise RM1.6 billion to provide 1.7 million training exercises in 2024.
WELCOME TO MALAYSIA
Government to relax conditions of Malaysia My Second Home (MM2H) applications to increase the arrival of foreign tourists and investors.
Government to introduce new initiatives under the Malaysia Visa Liberalisation Plan.
2026 set as Visit Malaysia Year, targeting 26.1 million foreign tourists and an estimated domestic spending of RM97.6 billion.
RM350 million to boost tourism promotion and activities in Malaysia.
(Web source: https://theedgemalaysia.com/node/686441)