1. Budget 2015 (SELCK) - SAL GROUP · Mudhrabah, Musyarakah, Ijarah, Istisna’, Murabahah, Bai’ Bithaman Ajil based on tawarruq and Wakalah approved by the Securities Commission

PREPARED EXCLUSIVELY FOR

CLIENTS, ASSOCIATES AND STAFF OF

SE LAI CK AND ITS AFFILIATES

28 OCT 2014

BUDGET 201BUDGET 201BUDGET 201BUDGET 2015555

PEOPLE ECONOMY (TABLED ON 10 OCTOBER 2014)

BizComm TaxBizComm TaxBizComm TaxBizComm Tax

Sdn BhdSdn BhdSdn BhdSdn Bhd (839888(839888(839888(839888----H)H)H)H)

SSSSEEEE LLLLaaaaiiii CCCCKKKK Index (i)

INDEX

SECTION A - BUDGET 2015 PAGE

BUDGET 2015

STRATEGIES A.1

FISCAL SNAPSHOTS A.1

CURRENCY RESERVES A.1

REVENUE & ALLOCATIONS A.2

I CORPORATE AND BUSINESS TAXATION

1.0 TAX INCENTIVE UNDER INVESTMENT ACCOUNT PLATFORM (IAP) A.3

2.0 EXTENSION OF TAX INCENTIVE FOR THE ISSUANCE OF SUKUK A.4

3.0 TAX INCENTIVE FOR MEDICAL TOURISM A.5

4.0 TAX INCENTIVE FOR SCHOLARSHIPS A.6

5.0 TAX INCENTIVE FOR STRUCTURED INTERNSHIP PROGRAMME (SIP) A.7

6.0 TAX INCENTIVE FOR TRAINING A.8

7.0 SKIM LATIHAN 1MALAYSIA (SL1M) A.9

8.0 REDEFINITION OF SMES FOR CP204 ESTIMATE FILING EXEMPTION A.10

9.0 EXTENSION OF DUE DATE FOR MONTHLY TAX INSTALMENT A.10

10.0 SMALL VALUE ASSETS A.11

11.0 ALLOWANCES FOR BUILDINGS PROVIDED AS LIVING ACCOMMODATIONS A.11

12.0 INCREASE IN PENALTY FOR OFFENCES A.12

13.0 DEFINITION OF QUALIFYING FOREST EXPENDITURE A.12

14.0 TREATMENT OF REINVESTMENT ALLOWANCES (RA) WITHDRAWN A.13

15.0 1ST STRATEGY/MEASURE 5 : INCENTIVES FOR INDUSTRIAL AREA MANAGEMENT A.13

16.0 1ST STRATEGY/MEASURE 6 : CAPITAL ALLOWANCE TO INCREASE AUTOMATION

IN LABOUR INTENSIVE INDUSTRIES A.14

17.0 MITIGATION OF CORPORATE INCOME TAXATION WITH GST IMPLEMENTATION A.14

II PERSONAL TAXATION

1.0 REVIEW OF RELIEF ON MEDICAL EXPENSES FOR SERIOUS DISEASES A.15

2.0 REVIEW OF RELIEF FOR THE DISABLED CHILD A.15

3.0 REVIEW OF INDIVIDUAL RELIEF FOR PURCHASE OF BASIC SUPPORTING

EQUIPMENT FOR THE DISABLED A.16

4.0 INCREASE IN PENALTY FOR LEAVING MALAYSIA WITHOUT PAYMENT OF TAX A.16

5.0 MONTHLY TAX DEDUCTION (MTD) AS FINAL TAX A.17

6.0 TAX TREATMENT OF CONTROLLED TRANSACTIONS & TRANSACTIONS

BETWEEN RELATIVES A.18

7.0 MITIGATION OF INDIVIDUAL INCOME TAXATION WITH GST IMPLEMENTATION A.18

SSSSEEEE LLLLaaaaiiii CCCCKKKK Index (ii)

INDEX

III INDIRECT AND OTHER TAXES, AND MISCELLANEOUS

1.0 SELF-ASSESSMENT FOR REAL PROPERTY GAINS TAX A.19

2.0 RETENTION SUM FOR REAL PROPERTY GAINS TAX A.19

3.0 EXTENSION OF STAMP DUTY EXEMPTION FOR THE PURCHASE OF FIRST

RESIDENTIAL PROPERTY A.20

4.0 1ST STRATEGY/MEASURE 1 : INVIGORATING SERVICES SECTOR

1ST STRATEGY/MEASURE 10 : SPURRING CREATIVE INDUSTRY A.21

5.0 1ST STRATEGY/MEASURE 8 : ACCELERATING PUBLIC AND PRIVATE

INVESTMENT A.22

6.0 1ST STRATEGY/MEASURE 13 : DEVELOPING SMES A.23

7.0 1ST STRATEGY/MEASURE 14 : DEVELOPING INNOVATION AND COMMERCIALISATION A.24

8.0 2ND STRATEGY/MEASURE 1 : IMPLEMENTING GST A.24

9.0 3RD STRATEGY/MEASURE 7 : NATIONAL EDUCATION SAVINGS SCHEME (SSPN-I) A.26

10.0 3RD STRATEGY/MEASURE 9 : IMPROVING THE WELLBEING OF EMPLOYEES A.26

11.0 3RD STRATEGY/MEASURE 12: PROMOTING START-UPS A.26

12.0 6TH STRATEGY : YOUTH HOUSING SCHEME A.27

13.0 7TH STRATEGY : SCHOOLING ASSISTANCE A.27

14.0 7TH STRATEGY : STRENGTHENING FOOD SUPPLY CHAIN A.28

15.0 BANTUAN RAKYAT 1MALAYSIA (BR1M) A.28

SECTION B - TAX INFORMATION YA 2014/2015 PAGE

1.0 CORPORATE AND INDIVIDUAL TAX RATES B.1

2.0 REAL PROPERTY GAINS TAX RATES B.2

3.0 PERSONAL RELIEFS AND TAX REBATES B.3

4.0 BENEFITS-IN-KIND (BIK) - MOTOR VEHICLES B.4

5.0 TAX EXEMPTION ON ALLOWANCES, OTHER BIK AND PERQUISITES B.5

6.0 CAPITAL AND INDUSTRIAL BUILDING ALLOWANCES B.7

7.0 TAX DEADLINES B.12

8.0 IRB PUBLIC RULINGS B.13

Note:

This Budget 2015 highlights is extracted from the following sources:

(a) Budget 2015 Speech and Appendices (“BS 2015”)

(b) Finance Bill (No.2) 2014 (“FB 2014”)

(c) Economic Report 2014/2015 (“ER”)

(d) Income Tax Act, 1967 (“ITA”)

(e) Other relevant tax legislatures and regulations

CORPORATE SERVICES 28 OCTOBER 2014

BUDGET 2015 ~ PEOPLE ECONOMY

SSSSEEEE LLLLaaaaiiii CCCCKKKK Page A.1

SECTION A

BBBBUDGET UDGET UDGET UDGET 2015201520152015 –––– SSSSTRATEGIESTRATEGIESTRATEGIESTRATEGIES

FIRST STRENGTHENING ECONOMIC GROWTH

SECOND ENHANCING FISCAL GOVERNANCE

THIRD DEVELOPING HUMAN CAPITAL AND ENTREPRENEURSHIP

FOURTH ADVANCING BUMIPUTERA AGENDA

FIFTH UPHOLDING ROLE OF WOMEN

SIXTH DEVELOPING NATIONAL YOUTH TRANSFORMATION PROGRAMME

SEVENTH PRIORITISING WELL-BEING OF RAKYAT

BBBBUDGET UDGET UDGET UDGET 2015201520152015 –––– FFFFISCAL ISCAL ISCAL ISCAL SSSSNAPSHOTSNAPSHOTSNAPSHOTSNAPSHOTS

Year 2015

Forecast

Year 2014

Estimate

Real GDP growth 5.0% - 6.0% 5.5% - 6.0%

Global economic growth 3.9% 3.3%

Emerging and developing economies 5.0% 4.5%

Gross Domestic Product (GDP)

– Current value (RM ‘billion) 1,290.0 1,097.1

Per Capita Income RM37,486 RM34,682

% growth over the prior year + 8.1% +8.9

Budget Deficit (RM ‘billion) - 38.7 - 38.4

Budget Deficit as a % of GDP - 3.0% -3.5%

CCCCURRENCY URRENCY URRENCY URRENCY RRRRESERVES ESERVES ESERVES ESERVES @@@@ 15151515 OOOOCTOBERCTOBERCTOBERCTOBER 2012012012014444

RM416.3 billion (14 Oct 2013: RM444.9 billion)

Able to finance - 8.6 (2012: 9.7) months of retained imports or

1.2 (2013: 3.9) times of short-term external debt



SECTION A

BBBBUDGET UDGET UDGET UDGET 2015201520152015 RRRREVENUE EVENUE EVENUE EVENUE &&&& AAAALLOCATIONSLLOCATIONSLLOCATIONSLLOCATIONS

In RM’billion

Year 2015

Forecast

Year 2014

Estimate1

Revenue 235.2 100.0% 225.0 100.0%

Operating Expenditure

Emoluments 65.6 29.4% 65.4 29.6%

Debt service charges 24.4 10.9% 23.2 10.5%

Grants to state governments 7.4 3.3% 6.7 3.0%

Pensions and gratuities 16.3 7.3% 16.2 7.3%

Supplies and services 38.1 17.1% 36.4 16.5%

Subsidies 37.7 16.9% 40.5 18.3%

Grants to statutory bodies 16.7 7.5% 16.7 7.5%

Refunds and write-offs 1.7 0.7% 1.3 0.6%

Asset acquisition 1.4 0.7% 1.4 0.6%

Other operating expenditure 14.1 6.2% 13.3 6.1%

223.4 100% 221.1 100%

Development Expenditure

Economic sector to meet requirements for

infrastructure, agriculture and industry 29.3 60.3% 26.8 63.4%

Social sector, including education,

training, health and housing 12.6 26.0% 10.4 24.6%

Security sector 4.9 10.2% 4.0 9.4%

General administration 1.7 3.5% 1.1 2.6%

Contingencies 2.0 2.0

50.5 100% 42.3 100%

Total Net Expenditure 273.9 263.4

Budget Deficit - 38.7 -38.4

Budget Deficit as a % of GDP - 3.0% - 3.5%

Note:

(1) Revised estimate



SECTION A

BBBBUDGET UDGET UDGET UDGET 2015201520152015 ---- PPPPROPOSALSROPOSALSROPOSALSROPOSALS

I CORPORATE AND BUSINESS TAXATION

1.0 TAX INCENTIVE UNDER INVESTMENT ACCOUNT PLATFORM (IAP) (App 1 BS 2015)

1.1 Current Position

IAP is a new funding model based on syariah principles with the aim to finance projects and

venture companies. The objective of IAP is to attract participation from individual and

institutional investors to boost development of small and medium enterprises (SMEs) as well as

entrepreneurs through a funding system which is efficient, simple and transparent.

1.2 Proposal

To ensure IAP is able to facilitate the provision of funding for the benefit of both parties namely

investors and SMEs as well as entrepreneurs through effective projects financing, it is proposed

that profit earned by individual investors from investments made through IAP be accorded

income tax exemption.

This incentive is subject to the following conditions:

(a) Tax exemption shall only be accorded for 3 consecutive years starting from the first year

profit is earned;

(b) The investment is made for a period of 3 years starting from the operation date of IAP;

(c) Tax incentive shall only be accorded for investment activities in Malaysia, in venture

companies owned by Malaysian or locally incorporated companies;

(d) Tax exemption shall only be accorded for investments made in SMEs and venture

companies in any sectors; and

(e) Definition for SMEs is as per the latest definition issued by SME Corporation Malaysia.

Effective Date

From the operational date of IAP scheduled to be from 1 September 2015 to 31 August 2018



SECTION A

2.0 EXTENSION OF TAX INCENTIVE FOR THE ISSUANCE OF SUKUK (App 2 BS 2015)


Deduction is given on expenses incurred for the issuance of sukuk under the principles of

Mudhrabah, Musyarakah, Ijarah, Istisna’, Murabahah, Bai’ Bithaman Ajil based on tawarruq

and Wakalah approved by the Securities Commission or the Labuan Financial Services

Authority.

This incentive is given from year of assessment 2003 to year of assessment 2015.

2.2 Proposal

To expand the sukuk market at the international level, it is proposed that deduction on the

expenses incurred for the issuance of sukuk under the principles of Ijarah and Wakalah be

extended for another 3 years.

Effective Date

From year of assessment 2016 to year of assessment 2018



SECTION A

3.0 TAX INCENTIVE FOR MEDICAL TOURISM (App 3 BS 2015)


A company that provides private healthcare facilities services to healthcare traveller is given

exemption on income equivalent to Investment Tax Allowance of 100% of qualifying capital

expenditure for a period of 5 years. This incentive is given to new companies as well as existing

ones engaged in expansion, modernization or refurbishment.

Eligible companies must be:

(a) licensed by the Ministry of Health; and

(b) registered with the Malaysian Healthcare Travel Council.

Qualified healthcare traveller is as follows:

(a) Malaysia My Second Home participant and his dependents;

(b) Expatriate holding a Malaysian work permit and his dependents; or

(c) Non-Malaysian citizen who visits and receives treatment from private healthcare facilities in

Malaysia.

This incentive is for applications received by Malaysian Investment Development Authority

(MIDA) from 1 January 2010 to 31 December 2014.

3.2 Proposal

In view that Malaysia has the potential to be a hub for medical tourism in the region and to

further stimulate its growth, it is proposed that new companies and existing companies engaged

in expansion, modernization and refurbishment that provide private healthcare facilities to at least

5% healthcare traveller from their total patients be given exemption on income equivalent to

Investment Tax Allowance of 100% of qualifying capital expenditure for a period of 5 years.

Effective Date

For applications received by MIDA from 1 January 2015 to 31 December 2017



SECTION A

4.0 TAX INCENTIVE FOR SCHOLARSHIPS (App 4 BS 2015)


Scholarships awarded by companies to students pursuing diploma or bachelor degree course at

higher educational institution are given double deduction. Scholarships eligibility criteria for

students are:

(a) Malaysian citizen and resident in Malaysia;

(b) pursuing full time course;

(c) have no source of income; and

(d) whose parents or guardian total monthly income does not exceed RM5,000.

Double deduction is given on allowable expenses as follows:

(a) Fee on course of study required by higher educational institution; and

(b) Educational aid and cost of living expenses throughout the student’s period of study at

higher educational institution.

This incentive takes effect from year of assessment 2011 until year of assessment 2016.

4.2 Proposal

To encourage companies to provide scholarships in the field of vocational and technical, it is

proposed that the scholarships awarded by the company to Malaysian students studying in the

vocational and technical fields in institutions recognised by the Government be given double

deduction. Eligibility criteria for the incentives are maintained.

Effective Date




SECTION A

5.0 TAX INCENTIVE FOR STRUCTURED INTERNSHIP PROGRAMME (SIP) (App 5 BS 2015)

5.1 Current position

The Ministry of Education in collaboration with Talent Corporation Malaysia Berhad

(TalentCorp) has implemented a programme called SIP that provides practical experience which

emphasizes on the development of specific knowledge or skills, including technical,

communication or business skills. The SIP programme has to be approved by TalentCorp.

Companies that implement SIP are eligible to claim double deduction on the expenses incurred.

The eligibility criteria for the students and conditions for companies under SIP programme are as

follows:

(a) The students are Malaysian citizens;

(b) The students are pursuing full-time first degree programme in higher education institution

registered with the Ministry of Education;

(c) The students complete the approved internship programme before the completion of final

semester of his first degree;

(d) Internship programme is for a minimum period of 10 weeks; and

(e) Monthly allowance for the students of not less than RM500.

Double deduction is given on the following allowable expenses:

(a) Minimum monthly allowance of not less than RM500;

(b) Expenditure incurred for the provision of training to the students;

(c) Meals, transport and accommodation allowances; and

(d) Payment to the appointed third party to run the SIP programme.

This incentive is effective from year of assessment 2012 until year of assessment 2016.

5.2 Proposal

To encourage companies to extend the SIP programme to full time students pursuing training at

the vocational and diploma levels, it is proposed that expenses incurred in implementing SIP

programme for students in vocational and diploma courses be given double deduction. The

eligibility criteria for students and conditions for the companies under the current SIP programme

is to be maintained.

Effective Date




SECTION A

6.0 TAX INCENTIVE FOR TRAINING (App 6 BS 2015)


Expenses incurred by a company to send employees for training at approved training institutions

are eligible for further deduction subject to:

Manufacturing companies

(a) Training programs approved by the Malaysian Investment Development Authority

(MIDA); or

(b) Training programs conducted by training institutions approved by the Minister of Finance.

Non-manufacturing companies

(a) Training programs approved by the Minister of Finance or any agencies appointed by the

Minister of Finance; or


Companies carrying on hotel or tour operating business

(a) Training programs approved by the Minister of Tourism and Culture; or


Incentives are effective from year of assessment 1991.

6.2 Proposal

Incentives should be provided to employers on training cost incurred to enhance skills,

knowledge and qualifications of their employees and thus support the Government’s effort to

strengthen the development of human capital. It is proposed further deduction be given on the

training expenses incurred by companies for the employees to obtain industry recognized

certifications and professional qualifications such as in the field of accounting, finance and

project management. Training programs are those approved by agencies appointed by the

Minister of Finance.

Effective Date

From year of assessment 2015



SECTION A

7.0 SKIM LATIHAN 1MALAYSIA (SL1M) (Para 97 BS 2015)


Double deduction incentive granted to companies, up to 31 December 2016 for the following

qualifying training expenditure to provide soft-skills training and on-the-job training to

unemployed graduate:

(a) Monthly training allowance of not less than RM1,000 paid to trainees for a maximum

period of 12 months;

(b) Expenditure incurred for the training provided to the trainees *

(c) Expenditure incurred for food, travelling and accommodation allowances for the trainees *

(d) Fees paid to trainer to conduct soft-skills training *

(*) Restricted to RM5,000 for each trainee for each training scheme.

7.2 Proposal

The double deduction incentive is extended to 31 December 2020

Effective Date

Effective for applications made to the Prime Minister’s Department between 1 June 2012 to 31

December 2020



SECTION A

8.0 REDEFINITION OF SMES FOR CP204 TAX ESTIMATE FILING EXEMPTION (Clause 15(a) FB 2014 ~ Amending S107(C)(4A) ITA)


(a) Current definition of SMEs:

Company with paid-up capital of RM2.5 million and below at the beginning of the basis

period for the relevant year of assessment, and not more than 50% of the paid-up capital:

(i) of the company is directly indirectly owned by a related company;

(ii) of the related company is directly or indirectly owned by the first mentioned

company; or

(iii) of the first mentioned company and the related company is directly or indirectly

owned by another company.

“Related company” is defined as a company which has paid-up capital of more than RM2.5

million at the beginning and end of the basis period for the relevant year of assessment.

(b) Current regulations for filing of CP204 Tax Estimate for SMEs

SMEs are exempted from filing CP204 for a period of 2 years commencing from the year

of assessment in which the SME commences operations.

8.2 Proposal

It is proposed that a SME must be a tax resident and incorporated in Malaysia for the 2-year

CP204 filing exemption to apply.

Effective Date

Upon the coming into operation of FB 2014

9.0 EXTENSION OF DUE DATE FOR MONTHLY TAX INSTALMENT (Clause 15(b) FB 2014 ~ Amending S107(C) ITA)


The due date for payment of tax instalments for a company, limited liability partnership (LLP) or

cooperative is on the 10th of each month.

9.2 Proposal

It is proposed that the due date be extended from the 10th to the 15th day of each month.

Effective Date

1 January 2015



SECTION A

10.0 SMALL VALUE ASSETS (Clause 21(b)(ii) FB 2014 ~ Amending Schedule 3 Para 19A(1) ITA)


Small value assets qualify for 100% capital allowance provided:

(a) Each asset has a value of not more than RM1,000; and

(b) The total small value assets qualifying for the special allowance is limited to RM10,000 in

a year of assessment (RM10,000 limitation does not apply to SMEs).

10.2 Proposal

It is proposed as follows:

(a) Value of each asset be increased from RM1,000 to RM1,300; and

(b) The limitation of RM10,000 be increase from RM10,000 to RM13,000.

Effective Date

Year of assessment 2015

11.0 ALLOWANCES FOR BUIDLINGS PROVIDED AS LIVING ACCOMODATIONS (Clause 21(b)(iii) FB 2014 ~ Amending Schedule 3 Para 42(1) ITA)


The cost of construction of new buildings, which will used as living accommodations,

constructed by a person enjoying the industrial building, agriculture and forest allowances, will

also qualify for the same allowances at the following rates:

Allowance Rate

Industrial building allowance Initial allowance: 40%

Annual allowance: 3%

Agriculture allowance 20% per year of assessment

Forest allowance 20% per year of assessment

Elections to claim the allowances must however be made in writing to the LHDN within 3

months of the beginning of the year of assessment for which the qualifying expenditure are

incurred.

11.2 Proposal

Election to claim the allowances shall be made in the tax return for the year of assessment for

which the qualifying expenditure are incurred.

Effective Date




SECTION A

12.0 INCREASE IN PENALTY FOR OFFENCES (Clauses 17& 19 FB 2014 ~ Amending S112(1) & S120(1) ITA)


The maximum fine for offences specified in the following sections of the ITA is RM2,000:

(a) S112(1) Failure to furnish return or give notice of chargeability

(b) S120(1) Other offences

12.2 Proposal

It is proposed that the maximum fine be increased from RM2,000 to RM20,000.

Effective Date


13.0 DEFINITION OF QUALIFYING FOREST EXPENDITURE (Clause 21(a) FB 2014 ~ Amending Schedule 3 Para 8(1) ITA)


Qualifying forest expenditure is defined as capital expenditure incurred by a person on the

construction in a forest of roads, buildings used wholly or partly for the extraction of timber

from the forest (including buildings for the accommodation and welfare of workers employed).

13.2 Proposal

The definition of qualifying forest expenditure is narrowed to comprise capital expenditure

incurred only by a person who has a concession or license to extract timber.

With the proposed changes, Logging subcontractors who do not directly hold the timber

extraction concession or license will be unable to claim forest allowances.

Effective Date




SECTION A

14.0 TREATMENT OF REINVESTMENT ALLOWANCES (RA) WITHDRAWN (Clause 23 FB 2014 ~ Amending Schedule 7a Paras 2A(2) and 4A ITA)


The Act required that, where assets are disposed off within 5 years of the date of acquisition, and

RA had been claimed:

(a) The RA is deemed to be withdrawn; and

(b) Prior years’ tax returns are required to be revised and adjusted for the RA withdrawn.

However, as a concession, the LHDN allows the RA withdrawn and assessed to tax in the year

the asset is disposed (Public Ruling 6/2012 – Reinvestment Allowance).

14.2 Proposal

(a) Schedule 7 Para 2A(2)

It is proposed that concession allowed under Public Ruling 6/2012 be legislated i.e. the RA

withdrawn is deemed as statutory income in the year of assessment in which such asset is

disposed off.

(b) Schedule 7 Para 4A

It is proposed that RA may only be claimed against statutory income from a business in

respect of the qualifying project.

Effective Date


15.0 1st STRATEGY: STRENGTHENING ECONOMIC GROWTH

MEASURE 5: INCENTIVES FOR INDUSTRIAL AREA MANAGEMENT (Para 48 BS 2015)

15.1 Among the key factors that support the development of industries is by having systematically

maintained public facilities/infrastructure.

15.2 The following incentives are proposed:

(a) incentive of 100% income tax exemption for a period of five years will be made available

to encourage the private sector to manage, maintain and upgrade industrial estates in less

developed areas; and

(b) incentive of 70% income tax exemption for a period of five years will be made available to

the private sector to manage industrial estates in other areas.



SECTION A

16.0 1st STRATEGY: STRENGTENING ECONOMIC GROWTH

MEASURE 6: CAPITAL ALLOWANCE TO INCREASE AUTOMATION IN LABOUR

INTENSIVE INDUSTRIES (Para 49 BS 2015)

16.1 The Government will provide incentives in the form of capital allowance on automation

expenditure to encourage automation in the manufacturing sector, according to the following

categories:

(a) First Category - For high labour intensive industries (such as rubber products, plastics,

wood, furniture and textiles)

An automation capital allowance of 200% will be provided on the first RM4 million

expenditure incurred within the period from 2015 to 2017; and

(b) Second Category - For other industries

Automation capital allowance of 200% will be provided on the first RM2 million

expenditure incurred within the period from 2015 to 2020.

17.0 MITIGATION OF CORPORATE INCOME TAXATION WITH

GST IMPLEMENTATION

Please refer to Section A Part III Para 8.3(b).



SECTION A

II PERSONAL TAXATION

1.0 REVIEW OF RELIEF ON MEDICAL EXPENSES FOR SERIOUS DISEASES (App 7 BS 2015)


Relief up to RM5,000 is claimable by an individual taxpayer on medical expenses for treatment

of serious diseases for oneself, spouse and children. Eligible expenses are for medical treatment

of serious diseases such as cancer, kidney failure, heart disease, acquired immune deficiency

syndrome (AIDS), Parkinson's disease and leukemia.

1.2 Proposal

To reduce the burden of medical expenses and treatment of serious diseases, it is proposed that

the current relief be increased from RM5,000 to a maximum of RM6,000.

Effective Date


2.0 REVIEW OF RELIEF FOR THE DISABLED CHILD (App 8 BS 2015)


A taxpayer with disabilities or with disabled dependents is eligible for the following reliefs:

(a) Personal relief of RM9,000.

(b) Additional relief of RM6,000 for the disabled taxpayer.

(c) Relief of RM3,000 for the spouse.

(d) Additional relief of RM3,500 for the disabled spouse.

(e) Relief of RM5,000 for each disabled child.

(f) Additional relief of RM6,000 for each disabled child aged 18 years and above pursuing

tertiary education at local or overseas institutions.

2.2 Proposal

To alleviate the cost of living of a taxpayer with disabilities or taxpayer with a disabled child, it

is proposed that the tax relief for each disabled child be increased from RM5,000 to RM6,000.

Effective Date




SECTION A

3.0 REVIEW OF INDIVIDUAL RELIEF FOR PURCHASE OF BASIC SUPPORTING

EQUIPMENT FOR THE DISABLED (App 9 BS 2015)


Individual taxpayer is given tax relief of up to RM5,000 for the purchase of basic supporting

equipment for the use of the disabled tax payer, spouse, child and parents. Basic supporting

equipment includes haemodialysis machine, wheelchair, artificial limbs and hearing aids.

3.2 Proposal

To reduce the cost of living, it is proposed that the relief for purchase of basic supporting

equipment for the disabled taxpayer, spouse, child and parents be increased from RM5,000 to a

maximum of RM6,000.

Effective Date


4.0 INCREASE IN PENALTY FOR LEAVING MALAYSIA WITHOUT PAYMENT OF TAX (Clause 18 FB 2014 ~ Amending S115 ITA)


Taxpayer who knowingly leaves or attempts to leave Malaysia after the issuance of the S104 ITA

certificate without settlement of all the tax specified in the certificate or furnishing security to the

DGIR, shall, upon conviction, be liable to a fine of between RM200 and RM2,000 or

imprisonment not exceeding 6 months or to both.

4.2 Proposal

It is proposed that the maximum fine be increased from RM2,000 to RM20,000.

Effective Date




SECTION A

5.0 MONTHLY TAX DEDUCTION (MTD) AS FINAL TAX (Clause 12 FB 2014 ~ Amending S77C(1)(a)&(c) ITA)


MTD is considered the final tax paid for the employees who do not furnish a tax return for a year

of assessment, and who meets the following criteria:

(a) Who received employment income under S13(1) ITA under:

(i) Subsection (a) Wages, salaries, leave pay, fees commission, bonus, gratuity,

perquisite or allowance

(ii) Subsection (d) Any amount received from a pension or provident fund, scheme or

society not approved for under the ITA

(iii) Subsection (e) Any amount received by way of compensation for loss of

employment

(b) Whose MTD are made under S107 ITA and the Income Tax (Deduction from

Remuneration) Rules 1994, and whose MTD are not borne by the employer;

(c) Who serves under the same employer for a period of 12 months; and

(d) Who have not elected for joint assessment

5.2 Proposal

It is proposed that MTD as a final tax shall also apply to the following employment income under

S13(1) ITA:

(a) Subsection (b) Amount equal to the value of the use or enjoyment of any benefit or

amenity (not convertible into money) provided by the employer excluding

exemptions provided therein

(b) Subsection (d) Amount in respect of the use or enjoyment of living accommodations in

Malaysia

Effective Date




SECTION A

6.0 TAX TREATMENT OF CONTROLLED TRANSACTIONS &

TRANSACTIONS BETWEEN RELATIVES (Clause 5(b) FB 2014 ~ Amending S29 ITA)


Income receivable in a year of assessment (other than gross income from a business and

dividends), are generally taxed at the time when such income is actually received, by revising the

tax return for the relevant year of assessment.

6.2 Proposal

Income receivable in a year of assessment (referred to as Year 1) (other than gross income from

a business and dividends), arising from transactions between the following, shall be deemed to be

obtainable on demand in the following year of assessment (referred to as Year 2) and shall be

treated as gross income in Year 2.

(a) Persons on of whom has control over the other;

(b) Individuals who are relatives of each other; or

(c) Persons both of whom are controlled by some other persons

A revision of the tax return for Year 1 shall subsequently not be required:

“Relative” refers to parent, child (including stepchild, adopted child), brother, sister, uncle,

aunt, nephew, niece, cousin, ancestor or lineal descendent (S140(8) ITA).

Effective Date


7.0 MITIGATION OF INDIVIDUAL INCOME TAXATION WITH GST IMPLEMENTATION

Please refer to Section A Part III Para 8.3(a).



SECTION A

III INDIRECT AND OTHER TAXES, AND MISCELLANEOUS

1.0 SELF-ASSESSMENT FOR REAL PROPERTY GAINS TAX (Para 154 BS 2015)


Gains from the disposal of property under the Real Property Gains Tax Act 1976, are assessed

formally.

1.2 Proposal

The Government has implemented the Self- Assessment System for individual and company

income tax effective from the year 2001 and 2004, respectively.

In tandem with the Government's aspiration to modernise the tax system and given that people

are more responsible, it is proposed that tax on gains from the disposal of property be self-

assessed by the taxpayer.

Effective Date

Year 2016

2.0 RETENTION SUM FOR REAL PROPERTY GAINS TAX (Clause 23 FB 2014 ~ Amending S21B Real Property Gains Tax Act, 1976)


The acquirer of chargeable assets is required to withhold whichever lower of the following and

remit the same to the LHDN within 60 days from the date disposal:

(a) 2% of the total value of the consideration; or

(b) whole amount of monies (where the consideration consists part of money).

2.2 Proposal

It is proposed that the % of value of the consideration required to be retained be increased from

2% to 3%.

Effective Date

1 January 2015



SECTION A

3.0 EXTENSION OF STAMP DUTY EXEMPTION FOR THE PURCHASE OF

FIRST RESIDENTIAL PROPERTY (App 10 BS 2015)


To encourage home ownership, the Government had provided stamp duty exemptions on the

following instruments:

Year Tax incentive for Home Ownership Exemption Period

2008 Budget 50% stamp duty exemption on instrument of

transfer for the purchase of residential property

priced not exceeding RM250,000

For SPAs executed:

From: 8 Sep 2007

To: 31 Dec 2010

2009 Budget 50% stamp duty exemption on loan agreement

for the purchase of residential property priced

not exceeding RM250,000

For SPAs executed:

From: 30 Aug 2008

To: 31 Dec 2010


transfer and loan agreement for the purchase of

residential property priced not exceeding

RM350,000

For SPAs executed:

From: 1 Jan 2011

To: 31 Dec 2012


transfer and loan agreement for the purchase of

residential property priced not exceeding

RM400,000

For SPAs executed:

From: 1 Jan 2013

To: 31 Dec 2014

SPA – Sale and Purchase Agreement

3.2 Proposal

To reduce the cost of ownership of the first residential property and in light of increasing price of

residential property, it is proposed that 50% stamp duty exemption on instrument of transfer and

loan agreement be extended to the purchase of the first residential property priced not exceeding

RM500,000.

The stamp duty exemption is only eligible for Malaysians who has never owned a residential

property.

Effective Date

For SPAs executed from 1 January 2015 to 31 December 2016



SECTION A


MEASURE 1: INVIGORATING SERVICES SECTOR (Para 39 BS 2015)

MEASURE 10: SPURRING CREATIVE INDUSTRY (Para 55 BS 2015)

4.1 The Government will boost the services sector by implementing the following initiatives:

First: Implementing the Services Sector Blueprint.

Second: Setting up a Services Sector Guarantee Scheme amounting to RM5 billion for SMEs

in the services sector, with a maximum financing of RM5 million together with 70%

Government guarantee.

Third: Establishing a Research Incentive Scheme for Enterprises (RISE) with an allocation

of RM10 million to encourage companies to set up research centres in high

technology, ICT and knowledge-based industries.

Fourth: Reintroducing the Services Export Fund (SEF) totalling RM300 million to encourage

SMEs to conduct market feasibility studies and undertake export promotion to

penetrate new markets; and

Fifth: Strengthening the Franchise Development Scheme under the Ministry of Domestic

Trade, Co-operatives and Consumerism in collaboration with the Malaysian

Franchise Association. A sum of RM20 million is allocated for the scheme.

4.2 A Digital Industry Fund of RM100 million will also be set-up under the Communications and

Multimedia Commission to provide and develop the creative industries such as animation, filming,

designing and cultural heritage.



SECTION A


MEASURE 8: ACCELERATING PUBLIC AND PRIVATE INVESTMENT (Paras 51-53 BS 2015)

5.1 The following infrastructure projects will be implemented in 2015:

S/N Project Estimated Cost (RM)

1. 59km Sungei Besi-Ulu Klang Expressway (SUKE) 5.30 billion

2. 276km West Cost Expressway (Taiping to Banting) 5.00 billion

3. 47km Damansara-Shah Alam Highway (DASH) 4.20 billion

4. 36km Eastern Klang Valley Expressway (EKVE) 1.60 billion

5. East Cost railway line (Gemas – Tumpat) upgrading 0.15 billion

6. 56km 2nd MRT Line (Selayang-Putrajaya) 23.00 billion

7. LRT-3 link (Bandar Utama – Shah Alam/Klang) 9.00 billion

5.2 Additional investments/initiatives include:

(a) The Pengerang Integrated Petroleum Complex with a total investment of RM69 billion; and

(b) Establishment under SME Bank of the Sustainable Mobility Fund of RM70 million to

develop the electric vehicle manufacturing industry.

5.3 Infrastructure projects in East Malaysia to be implemented (Para 109 BS 2015) include the

1,663km Pan-Borneo Highway comprising 936km in Sarawak and 727km in Sabah for a total

estimated cost of RM27 billion.

5.4 Other significant projects proposed include:

S/N Project BS 2015 Estimated Cost (RM)

1. Construction of 635 km of rural roads Para 155 0.94 billion

2. Air Langat 2 Water Treatment Plant Para 157 3.00 billion



SECTION A


MEASURE 13: DEVELOPING SMES (Paras 59-61 BS 2015)

6.1 SME Investment Partner

Under this programme, SMEs will be given financing assistance in the form of loans, equity or

both, particularly at the startup stage:

(a) an initial fund totalling RM375 million will be provided for a period of five years, of which

RM250 million is from SME Bank and RM125 million from private investors; and

(b) in addition, RM10 million will be allocated for the Business Accelerator Programme under

SME Corp.

6.2 Soft Loan Scheme for Automation and Modernisation of SMEs

Under this scheme, RM80 million is allocated under MIDF to enhance the use of new

technology, automation and innovation in the development of SMEs.

6.3 RM500 million of additional funds will be distributed as follows:

Funds Financing allocation for

RM350 million Bumiputera entrepreneurs to benefit an additional 33,000 bumiputera

borrowers

RM50 million The Young Indian Entrepreneurs Financing Scheme to benefit at least

5,000 borrowers

RM50 million The Young Professional Women Entrepreneurs Development Programme

that will benefit 5,000 professional women

RM50 million The Armed Forces Veteran Entrepreneur Development Programme that

will benefit 5,000 veterans who are not on a pensionable scheme.

6.4 Additionally, to assist SME entrepreneurs from the Chinese community, the Government will

provide soft loans totalling RM50 million, and RM30 million for hawkers and petty traders.



SECTION A


MEASURE 14: DEVELOPING INNOVATION AND COMMERCIALISATION (Para 63 BS 2015)

7.1 RM1.3 billion will be allocated to the Ministry of Science, Technology and Innovation to

implement programmes, including:

(a) a target of 360 high-impact innovative products to be commercialized within the next five

years;

(b) provision of research funds of RM290 million to implement high-impact R&D&C

programmes’

(c) Rebranding of SIRIM together with the implementation of an SME Technology Penetration

and Upgrading programme;

(d) an allocation of RM50 million to initiate a new Public Private Research Network to be

spearheaded by the Ministry of Education in collaboration with the Malaysian Technology

Development Corporation; and

(e) an additional allocation of RM50 million to strengthen the Technology Commercialisation

Platform programme under Agensi Invasi Malaysia.

8.0 2nd STRATEGY: ENHANCING FISCAL GOVERNANCE

MEASURE 1: IMPLEMENTING GST (Paras 65~70 BS 2015)

8.1 Widening of the scope of items exempted from GST

The following items are added to the existing list of GST-exempt goods and supplies

(a) All types of fruits whether local or imported;

(b) White bread and wholemeal bread;

(c) Coffee powder, tea dust and cocoa powder;

(d) Yellow mee, kuey teow, laksa and meehoon;

(e) The National Essential Medicine covering almost 2,900 medicine brands. These medicines

are used to treat 30 types of diseases including heart failure, diabetes, hypertension, cancer

and fertility treatment;

(f) Reading materials such as children’s coloring books, exercise and reference books, text

books, dictionaries and religious books; and

(g) Newspapers.



SECTION A

8.2 Other GST concessions

(a) Electricity consumption that is not subject to GST will be increased from the first 200 units

to 300 units.

(b) Retail sale of RON95 petrol, diesel and LPG will be given relief from the payment of GST

8.3 Mitigation of income taxation with GST Implementation

(a) Individuals and households (effective YA2015)

(i) Individual income tax rates be reduced by 1 to 3 percentage points.

(ii) Chargeable income subject to the maximum rate will be increased from exceeding

RM100,000 to exceeding RM400,000. The current maximum tax rate at 26% will be

reduced to 24%, 24.5% and 25%.

(iii) Taxpayers with family and income of RM4,000 per month will not have tax liability.

(b) Companies and other business entities

(i) Corporate income tax rate be reduced by 1 percentage point from 25% to 24%.

Whereas income tax rate for small and medium companies will be reduced by 1

percentage point from 20% to 19% (effective YA2016).

(ii) Cooperative income tax rate be reduced by 1 to 2 percentage points (effective

YA2015).

(iii) Accelerated Capital Allowance on purchase of ICT equipment and software (until YA

2016*).

(iv) Expenses incurred for training in accounting and ICT relating to GST given double

tax deduction (for YA2014 and YA2015*).

(v) Secretarial fees (up to RM5,000 per year) and tax filing fee (up to RM10,000 per

year) are allowed as tax deductions (effective YA 2015).

Notes:

o The above measures have been proposed in Budget 2014.

(*) Effective date as proposed in Budget 2014

o Details of changes in individual and corporate tax rates are analysed in Appendix B.

8.4 GST Implementation Assistance Packages

(a) Training grant of RM100 million will be provided to businesses for their employees to

attend GST courses (in years 2013 and 2014*).

(b) Financial assistance amounting to RM150 million will be provided to SMEs for the

purchase of accounting software (in years 2014 and 2015*).

Notes:

o The above measures have been proposed in Budget 2014.

(*) Effective date as proposed in Budget 2014



SECTION A

9.0 3rd STRATEGY: DEVELOPING HUMAN CAPITAL & ENTREPRENEURSHIP

MEASURE 7: NATIONAL EDUCATION SAVINGS SCHEME (SSPN-I) (Para 93 BS 2015)

9.1 Since 2005, National Education Savings Scheme (SSPN-i), SSPN-i account holders with a

monthly household income not exceeding RM2,000 have been enjoying matching grants.

9.2 To encourage more parents to become depositors and obtain the same benefits, the Government

proposes contributors’ monthly household income limit be increased to RM4,000.


MEASURE 9: IMPROVING THE WELLBEING OF EMPLOYEES (Paras 96~97 BS 2015)

10.1 The following measures will be initiated to safeguard the welfare of workers:

(a) The Employment Act 1955 and related labour acts will be reviewed, including better terms

and conditions of employment, appointment and dismissal, flexible working arrangements

and termination benefits;

(b) The JobsMalaysia portal will be improved to meet the needs of an increasingly dynamic

labour market;

(c) The Government will introduce an Employment Insurance System aimed at assisting

retrenched workers by giving temporary financial assistance as well as providing

opportunities for reskilling and up-skilling; and

(d) Technical training and education assistance will be provided to Indian youth, particularly

those from low-income families with an allocation of RM30 million.


MEASURE 12: PROMOTING START-UPS (Para 100 BS 2015)

11.1 Malaysian Global Innovation & Creative Centre (MaGIC) established to create a more conducive

ecosystem to facilitate Start-ups to commence operations in Malaysia.

11.2 Additionally, the following are proposed to attract more expatriate Start-ups in Malaysia:

(a) Paid-up capital for Start-ups is set at RM75,000; and

(b) 1-year Work Pass granted to eligible Startup entrepreneurs



SECTION A

12.0 6th STRATEGY: DEVELOPING YOUTH TRANSFORMATION PROGRAMME

YOUTH HOUSING SCHEME (Paras 128-132 BS 2015)

12.1 The scheme, partnership between the Government, Bank Simpanan Nasional, Employees

Provident Fund and Cagamas, provides the following:

(a) monthly financial assistance of RM200 to borrowers for the first two years to reduce the

burden of monthly instalments;

(b) 50% stamp duty exemption on the instrument of transfer agreements and loan agreements

(Section XX); and

(c) a 10% loan guarantee to enable borrowers to obtain full financing including cost of

insurance; and

(d) borrowers can also withdraw from EPF Account 2 to top up their monthly instalment and

other related costs.

12.2 Eligibility

The eligibility for the scheme, which is offered on a “First-Come-First Served” basis and is

limited to 20,000 units only, is subject to the following:

(a) married youth aged between 25 and 40 years with household income not exceeding

RM10,000; and

(b) financing in respect of 1st home whose cost does not exceed RM500,000, and where the

loan period is 35 years or less.

13.0 7th STRATEGY: PRIORITISING WELL-BEING OF THE RAKYAT

SCHOOLING ASSISTANCE (Paras 135~136 BS 2015)

13.1 To ease the burden of school expenses incurred by the parents and guardians of students,

particularly for low-income group, the Government will continue the schooling assistance

programme. Starting January 2015, a RM100 each will be given to all primary and secondary

school students (RM540 million allocated).

13.2 In addition, for the purpose of purchasing reference books and instruments the Government will

continue to implement the 1Malaysia Book Voucher Programme with the assistance of RM250

per student (RM250 million allocated).



SECTION A

14.0 7th STRATEGY: PRIORITISING WELL-BEING OF THE RAKYAT

STRENGTHENING FOOD SUPPLY CHAIN (BS 2015)

14.1 Farmers Organisation Authority (Para 137)

RM100 million matching grant will be provided to the Farmers’ Organisation Authority to enable

members to obtain loans to improve farm productivity and marketing channels.

14.2 Malaysian Rubber Board (Para 143)

RM6.4 million provided as soft loans to smallholder cooperatives as working capital to purchase

rubber directly from rubber smallholders.

14.3 Oil Palm Smallholders (Para 144)

(a) RM41 million allocated as incentives for new planting and replanting.

(b) Export duty exemption for CPO extended until December 2014.

15.0 BANTUAN RAKYAT 1MALAYSIA (BR1M) (Para 181~184 BS 2015)

15.1 BR1M for 2015 will be increased as follows:

Eligibility

Monthly

income Assistance

Payable in

Jan May Sept

Households RM3,000 and

below

Increased from RM650 to

RM950

RM300 RM300 RM350

Between

RM3,000 and

RM4,000


RM750

RM200 RM200 RM350

Singles aged 21

and above

RM2,000 and

below


RM350

Lump sum to be disbursed

in early 2015

15.2 Next of kin of deceased BR1M recipients are eligible to receive RM1,000 for a year under the

Family Bereavement Scheme.


SSSSEEEE LLLLaaaaiiii CCCCKKKK Page B.1

SECTION B

TTTTAX AX AX AX IIIINFORMATION NFORMATION NFORMATION NFORMATION –––– YAYAYAYA 2014/20152014/20152014/20152014/2015

1.0 CORPORATE AND INDIVIDUAL TAX RATES

1.1 TAX RATES – RESIDENT INDIVIDUALS

Chargeable income YA 2010 to 2012 YA 2013 & 2014 YA 2015

Range RM

Tax

Rate

(%)

Tax

Payable

(RM)

Tax

Rate

(%)

Tax

Payable

(RM)

Tax

Rate

(%)

Tax

Payable

(RM)

First

Next

2,500

2,500

0

1

0

25

0

0

0

0

0

0

0

0

On

Next

5,000

5,000

3

25

150

2

0

100

1

0

50

On

Next

10,000

10,000

3

175

300

2

100

200

1

50

100

On

Next

20,000

15,000

7

475

1,050

6

300

900

5

150

750

On

Next

35,000

15,000

12

1,525

1,800

11

1,200

1,650

10

900

1,500

On

Next

50,000

20,000

19

3,325

3,800

19

2,850

3,800

16

2,400

3,200

On

Next

70,000

30,000

24

7,125

7,200

24

6,650

7,200

21

5,600

6,300

On

Next

100,000

150,000

26

14,325

39,000

26

13,850

39,000

24

11,900

36,000

On

Next

250,000

150,000

26

53,325

39,000

26

52,850

39,000

24.5

47,900

36,750

On 400,000 92,325 91,850 84,650

Exceeding 400,000 26 26 25

1.2 NON-RESIDENT INDIVIDUALS

YA2013 & 2014 26%

YA2015 25%

1.3 COMPANIES

YA 2009 TO 2015 YA 2016

Small & medium Enterprise (SME)

companies *

1st RM500,000 20% 19%

>RM500,000 25% 24%

Non-SME companies 25% 24%

(*) SMEs – Malaysian resident company with paid-up share capital of RM2.5m or less at the beginning of

the basis period, and not controlled or not controlled by another company with paid-up share capital of

> 2.5m.



SECTION B

2.0 REAL PROPERTY GAINS TAX RATES

2.1 RPGT rates for disposals of chargeable assets from 27 October 1995 to 31 March 2007:

Holding period

Disposals from 27 Oct 1995 to 31 Mar 2007

Companies

Individuals

(Citizens & PRs)

Individuals

(Non-Citizens)

Within 2 yrs 30% 30% 30%

In the 3rd yr 20% 20% 30%

In the 4th yr 15% 15% 30%

In the 5th yr 5% 5% 30%

In the 6th and subsequent yrs 5% 0% 5%

Individuals were allowed to claim RPGT exemption on a residential property once in a lifetime.

2.2 Disposals after 31 March 2007

(a) RPGT is EXEMPTED with regards to any disposal of chargeable assets after 31 March 2007 pursuant to

the Real Property Gains Tax (Exemption) (No 2) Order 2007.

(b) Waiver withdrawn in Budget 2010 (wef 1 January 2010)

2.3 Disposals on 1 January 2010 and 31 December 2011(Budget 2010)

(a) RPGT taxed at fixed rate of 5% within 5 years of acquisition.

(b) Exemption of up to RM10,000 or 10% of gains, whichever is higher, granted to individuals.

(c) Tax collected through a withholding tax mechanism whereby purchaser withholds 2% of purchase

value, and pays to the IRB.

(d) Existing exemptions under the RPGT Act, 1976 are retained:

i. Gifts between parent and child, husband and wife, grandparent and grandchild

ii. disposal of a residential property once in a lifetime for an individual who is a citizen or permanent

resident of Malaysia

2.4 Disposals from 1 January 2012 (Budget 2012) & from 1 January 2013 (Budget 2013)

Holding period

Disposals from

1 Jan 2012 (Budget 2012) 1 Jan 2013 (Budget 2013)

Within 2 years of acquisition 10% 15%

3rd to 5th year of acquisition 5% 10%

In 6th year of acquisition or thereafter 0% 0%

2.5 Disposals commencing from 1 January 2014 (Budget 2014)

Holding period

Disposals from 1 Jan 2014 (Budget 2014)

Companies

Individuals

(Citizens & PRs)

Individuals

(Non-Citizens)

Within 3 yrs 30% 30% 30%

In the 4th yr 20% 20% 30%

In the 5th yr 15% 15% 30%

In the 6th and subsequent yrs 5% 0% 5%



SECTION B

3.0 PERSONAL RELIEFS AND TAX REBATES

3.1 PERSONAL RELIEFS FOR RESIDENT INDIVIDUALS RM

Taxpayer 9,000

Wife/Husband – if she/he has no total income or elects for combined assessment 3,000

Children

Each child (<18 years old) 1,000

Disabled child 5,000

(wef YA2015 – RM6,000)

Child studying in local universities, colleges at diploma level and above 6,000

Child studying in overseas universities, colleges at degree level and above 6,000

Disabled child studying in local universities, colleges at diploma level and above or

overseas universities, colleges at degree level and above(additional reliefs) 6,000

Insurance premiums

Life insurance premiums/approved fund contributions 6,000

Education or medical benefits 3,000

Contributions to private retirement scheme approved by Securities Commission 3,000

and annuity premium

Medical expenses

Parents (Max) 5,000

Taxpayer, spouse and children on serious diseases

(Max - include RM500 for medical examination expenses) 5,000

(wef YA2015 – RM6,000)

Disabled person (additional reliefs)

Taxpayer 6,000

Spouse 3,500

Supporting equipment for disabled taxpayer, spouse, children or parent 5,000

(wef YA2015 – RM6,000)

Fees for acquiring technical, vocational, industrial, scientific, technological

Accountancy, law and Islamic financing, skill or qualifications at tertiary

level or post graduate level 5,000

Purchase of books, magazines etc for use of taxpayer, spouse or children 1,000

Purchase of personal computer - once in 3 years and each taxpayer eligible 3,000

Purchase of sports equipment 300

Amount deposited into Skim Simpanan Pendidikan National for own children 6,000

(wef YA2012 to YA2017)

Relief for middle income group (aggregate income ≤RM96,000 per year) 2,000

3.2 INCOME TAX REBATES RM Rebate to individual whose chargeable income is RM35,000 or less 400

Further rebate for wife/husband with no total income or

elects for combined assessment 400

Rebate for Zakat, Fitrah or any other Islamic Religious dues Full



SECTION B

4.0 BENEFITS-IN-KIND (BIK) – MOTOR VEHICLES

Cost of Car (when new) Annual Value of Private Usage Fuel per annum RM RM RM 50,000 and below 1,200 600

50,001 - 75,000 2,400 900

75,001 - 100,000 3,600 1,200

100,001 - 150,000 5,000 1,500

150,001 - 200,000 7,000 1,800

200,001 - 250,000 9,000 2,100

250,001 - 350,000 15,000 2,400

350,001 - 500,000 21,250 2,700

500,001 and above 25,000 3,000

(a) Where car is > 5 years old, the annual value assessed will be halved. There is however no change to

the fuel consumption assessed.

(b) Where an exclusive driver is provided, value of benefit is fixed at RM600 per month



SECTION B

5.0 TAX EXEMPTIONS ON ALLOWANCES, OTHER BIK AND PERQUISITES

No. Subject Restricted Limit

1 Petrol card, petrol allowance, travelling allowance or toll payment or any of its

combination for official duties. If the amount received exceeds RM6,000 a year,

the employee can make a further deduction in respect of the amount spent for

official duties. Records pertaining to the claim for official duties and the exempted

amount must be kept for a period of 7 years for audit purpose.

RM6,000

2 Child care allowance in respect of children up to 12 years of age. RM2,400

3 Gift of fixed line telephone, mobile phone, pager or Personal Digital Assistant

(PDA) registered in the name of the employee or employer including cost of

registration and installation.

Limited to only 1

unit for each

category of assets

4 Monthly bills for subscription of broadband, fixed line telephone, mobile phone,

pager and PDA registered in the name of the employee or employer including cost

of registration and installation.

Limited to only 1

line for each

category of assets

5 Perquisite (whether in money or otherwise) provided to the employee pursuant to

his employment in respect of:

(i) past achievement award;

(ii) service excellence award, innovation award or productivity award; and

(iii) long service award (provided that the employee has exercised an

employment for more than 10 years with the same employer).

RM2,000

6 Consumable business products of the employer provided free of charge or at a

partly discounted price to the employee, his spouse and unmarried children. The

value of the goods is based on the sales prices. Benefits received by the employee

from a company within the same group of companies as his employer are not

exempted from tax.

RM1,000

7 Services provided free or at a discount by the business of the employer to the

employee, his spouse and unmarried children. Benefits received by the employee

from a company within the same group of companies as his employer are not

exempted from tax.

Restricted to the

amount of discount

or amount of

services provided

free

8 Parking rate and parking allowance. This includes parking rate paid by the

employer directly to the parking operator.

9 Meal allowance received on a regular basis and given at the same rate to all

employees. Meal allowance provided for purposes such as overtime or outstation /

overseas trips and other similar purposes in exercising an employment are only

exempted if given based on the rate fixed in the internal circular or written

instruction of the employer.

10 Tax exempt medical benefits are extended to include traditional medicine and

maternity expenses. Traditional medicine means Malay, Chinese and Indian

Traditional Medicine given by a medical practitioner registered with bodies which

are certified or registered in accordance with the rules governing traditional

medicine as laid down by the Ministry of Health. Examples : Malay traditional

massage, ayurvedic or acupuncture. Complimentary medicine and homeopathy

such as aromatherapy, reflexology, spa and Thai traditional massage are not

included in this exemption.

Restricted to the

actual amount

expended



SECTION B

5.0 TAX EXEMPTIONS ON ALLOWANCES, OTHER BIK AND PERQUISITES – CONT’D

11 Subsidised interest for housing, education or car loan is fully exempted from tax if the total amount of

loan taken in aggregate does not exceed RM300,000. If the total amount of loan exceeds RM300,000, the

amount of subsidized interest to be exempted from tax is limited in accordance with the following

formula:

Where;

A = is the difference between the amount of interest to be borne by the employee and the amount of

interest payable by the employee in the basis period for a year of assessment;

B = is the aggregate of the balance of the principal amount of housing, education or car loan taken by

the employee in the basis period for a year of assessment or RM300,000, whichever is lower;

C = is the total aggregate of the principal amount of housing, education or car loan taken by the

employee

The above exemptions are NOT applicable to an employee having control over his employer

If the employee has control over his employer, the allowances/ perquisites/ gifts/ benefit received by him is taken to

be part of his employment income and subject to tax.

‘Control over his employer’ means

(a) For a company, the power of the employee to secure, by means of the holding of shares or the possession of

voting power in or in relation to that or any other company, or by virtue of powers conferred by the articles of

association or other document regulating that or any other company, that the affairs of the first mentioned

company are conducted in accordance with the wish of the employee;

(b) For a partnership, the employee is a partner of the employer; or

(c) For a sole proprietor, the employee and the employer is the same person.

A x B

C



SECTION B

6.0 CAPITAL AND INDUSTRIAL BUILDINGS ALLOWANCES

Impt Note The rates of allowances provided below represent the basic rate applicable. However, its application will be subject

to the applicable qualifying expenditure, the nature and circumstance of the asset and other regulatory provisions.

Taxpayers are advised to seek appropriate assistance of a qualified tax agent where necessary. 6.1 CAPITAL ALLOWANCES

Type of Asset Initial Allowance

Rate

Annual Allowance

Rate

Heavy machinery and motor vehicles 20% 20%

Plant and machinery (general) 20% 14%

Others 20% 10%

Assets with a life span of not exceeding two years - Replacement basis

* Accelerated capital allowances (ACA) be given to ALL

qualifying plant expenditure under Sch 3 of the Act

incurred between the period of 10 March 2009 to 31

December 2010. This ACA does not apply to a person

which has been granted incentives under the Promotion of

Investments Act (PIA) 1986; reinvestment allowance;

exemption under S. 127(3)(b) or S.127(3A) of the ITA

1967; or who qualifies for an allowance at a higher rate

under the ITA 1967.

20% 40%

6.2 SPECIAL RATES FOR PLANT


Rate

Annual Allowance

Rate

Buses using natural gas in business of public transportation

and natural gas refuelling equipment in a natural gas refuelling

outlet.

40% 20%

Imported prescribed heavy machinery used in construction,

mining, plantation and timber industries.

10% 10%

Machinery and plant (other than imported heavy machinery)

used in specific industries:

� Building and construction

� Timber

� Tin mining

Unless election made in writing.

30%

60%

60%

20%/14%

20%/14%

20%/14%

Prescribed equipment and facility for collecting wastes,

limiting pollution of the environment, checking excessive

pollution and securing more efficient use of the equipment.

40% 20%

Plant and machinery used for recycling of wastes or for

further processing of wastes into finished products. This

accelerated capital allowance (ACA) does not apply to a

company which is granted incentives under PIA 1986 (except

for deductions for promotion of exports), or granted

reinvestment allowance.

40% 20%



SECTION B

6.0 CAPITAL AND INDUSTRIAL BUILDINGS ALLOWANCES– CONT’D

6.2 SPECIAL RATES FOR PLANT – CONT’D


Rate

Annual Allowance

Rate

Plant and machinery used for the purpose of a qualifying

project in respect of a promoted activity. This ACA does not

apply to a company which is granted reinvestment allowance,

pioneer status or reinvestment tax allowance, or where it fails

to submit a confirmation letter from the Malaysian Investment

Development Authority (MIDA) concerning the activity or

products.

40% 20%

ACA on the purchase of pre-cast concrete mould used in the

production of industrialised building system component.

40% 20%

QE on private motor vehicles restricted to:

(a) RM50,000

(b) RM100,000 – applies only to new vehicle with total cost

not exceeding RM150,000 purchased on or after 28 Oct

2000

20%

20%

ACA on machinery and equipment used in the agricultural

sector including plantations.

Equipment eligible for ACA shall be determined by the

Minister of Finance.

20% 40%

ACA be given to small value assets not exceeding RM1,000

each but not exceeding a total value of RM10,000. (The

maximum limit of RM10,000 is not applicable to small and

medium enterprises (SMEs) with effect from Y/A2009.)

[Note : Taxpayers are given the option to either claim the

ACA (100%) or the normal CA].

- 100%

ACA be given to:

(i) security control equipment [other than the Global

Positioning System (GPS)] for a factory where the

company is approved under the Industrial Co-ordination

Act 1975; or

(ii) any GPS for vehicle tracking for a container lorry of company bearing Carried Licence A and for a cargo lorry

of the company bearing Carrier Licence A or C issued

under the Commercial Vehicles Licensing Board Act 1987

(Act 334).

(Note : The rules are effective from Y/A2009 to 2012.)

New rules have extended ACA to Y/A 2015 and it is enhanced

to include:

(a) companies that install security control and surveillance

equipment in residential areas; and

(b) safety mirrors and panic buttons.

20%

80%



SECTION B




Rate

Annual Allowance

Rate

ACA be given to information and communication technology

(ICT) equipment including computer and software. This ACA

does not apply to a company which has been granted

incentives under PIA 1986; or reinvestment allowance.

Note: The rules are effective from Y/A 2009 to 2016.)

20% 80%

ACA be given for equipment certified by the Ministry of

Energy, Water and Communications and used exclusively to

control the quality of electric power. The ACA does not apply

to a company which has been granted incentives under the PIA

1986 (except for deduction for promotion of exports); or

reinvestment allowance

20% 40%

ACA to be given to a Tun Razak Exchange Marquee status

company in respect of renovation costs incurred on a building

located in the Tun Razak Exchange (Note: The rules are

effective from 1 January 2014 until 31 Dec 2020)

20% 40%

ACA be given on qualifying plant expenditure incurred for the

purpose of carrying out petroleum operations in a marginal

field. This Rules do not apply to a person who has been

granted investment allowance, operates in a Joint

Development Area, operates in an area under a Government

to Government agreement for joint exploration or the plant is

used in both marginal and non-marginal fields. The Rule come

into operation on 30 Nov 2010 and are effective from Y/A

2010 until Y/A 2024.

25% 15%

Machinery and equipment used in the agricultural sector

including plantations

20%

40%

Security control equipment

(i) Security control equipment [other than the Global

Positioning System (GPS) for a factory where the

company is approved under the Industrial Co-ordination

Act 1975 [Act 156]; or

(ii) Any GPS for vehicle tracking for a container lorry of company bearing Carrier Licence A and for cargo lorry

of the company bearing Licence A or C issued under

Commercial Vehicles Licensing Board Act 1987 [Act

334]

Budget 2013 has extended ACA to Y/A 2015 and enhanced it

to include:

(a) companies that install security control and surveillance

equipment in residential areas; and

(b) safety mirrors and panic buttons.

The above is also extended to housing development

20%

80%



SECTION B

6.0 CAPITAL AND INDUSTRIAL BUILDINGS ALLOWANCES – CONT’D


Type of Assets Initial Allowance

Rate

Annual Allowance

Rate

Information and communication technology (ICT) equipment

including computer and software

(The rules are effective for the Y/A 2009 to 2016)

20% 80%

Small value assets

ACA be given to small value assets not exceeding RM1,000

each but not exceeding a total value of RM10,000. (The

maximum limit of RM10,000 is not applicable to small and

medium enterprise (SME) with effect from YA 2009)

[Note: Taxpayers are given the option to either claim the ACA

(100%) or the normal CA]

20%

80%

6.3 INDUSTRIAL BUILDING ALLOWANCES

Type of Buildings Initial Allowance

Rate

Annual Allowance

Rate

Industrial building(standard rate unless special rate apply) 10% 3%

Building constructed and provided as living accommodation

for individuals employed in a business where an industrial

building is in use and excludes a director, an individual having

control or an administrative staff.

40% 3%

Capital expenditure on public roads and ancillary structures

recoverable through toll collection.

10% 6%

Building (constructed or purchased) for the provision of child

care facilities (1 Jan 1994 onwards).

0 10%

Building (constructed or purchased used for providing living

accommodation to employees by a person engaged in a:

- Manufacturing business (1 Jan 1994 onwards)

- Hotel or tourism business or approved service project

(Y/A 1997 onwards).

0

0

10%

10%

Building (constructed or purchased) used for a school or an

educational institution approved by the Minister of Education

or any relevant authority or for the purposes of industrial,

technical or vocational training approved by the Minister (Y/A

1996 onwards).

0 10%

Building (constructed or purchased) used as warehouse for the

storage of goods, for export or for the storage of imported

goods to be processed and distributed or re-exported (Y/A

1998 onwards).

0 10%

Building constructed pursuant to an agreement entered into

with the Government on build-lease-transfer basis on lease to

the Government (Y/A 2000 (pyb) onwards).

10% 6%



SECTION B


6.3 INDUSTRIAL BUILDING ALLOWANCES – CONT’D

Type of Buildings

Initial Allowance

Rate

Annual Allowance

Rate

Building (constructed or purchased) used as an old folks care

centre approved by Social Welfare Department (21 Sep 2002

onwards).

0 10%

Building (constructed or purchased) used by a BioNexus status

company solely for its new business or expansion project (2

Sep 2006 onwards).

0 10%

Building (constructed or purchased) in a Cyberjaya Flagship

Zone used by a MSC status company or rented to a MSC

status company (Y/A 2006 onwards).

0 10%

Buildings constructed under a privatisation project and private

financing initiatives approved by the relevant authorities (Y/A

2009 onwards)

10% 6%

Building (constructed or purchased) used for the purpose of a

kindergarten approved by the Ministry of Education (Y/A

2013 onwards)

0 10%

Building (constructed or purchased) used for the purpose of a

child care centre registered with the Department of Social

Welfare (Y/A 2013 onwards)

0 10%

A commercial building (constructed or purchased) used for the

purpose of a specified business by a Tun Razak Exchange

Marquee status company in the Tun Razak Exchange

(Effective Y/A 2014 for qualifying building expenditure

incurred on or before 31 Dec 2020)

0 10%

6.4 AGRICULTURE ALLOWANCES

Rate (Fraction of Expenditure Incurred)

Capital expenditure incurred on:

(a) the clearing and preparation of land for the purposes of agriculture

(b) the planting (but not replanting) of crops on land cleared for planting

(c) the construction on a farm of a road or bridge

(d) building for the welfare of persons or as living accommodation for a

person employed for the working of a farm

(e) any other building

1/2

1/2

1/2

1/5

1/10



SECTION B

7.1 INDIVIDUALS (INCLUDING PARTNERSHIPS)

� Income Tax Return Forms

� Taxpayers with employment income On or before 30 April of following year

Income Tax Return Form BE

� Taxpayers with business income On or before 30 June of following year

Income Tax Return Form B, P

(wef YA 2004)

� MTD deduction from salaries by employers By 10th day of following month

� Tax instalments (non-STD) Bi-monthly within 30 days due date

� Balance of tax payable (in excess of tax By 30 Apr or 30 June of the following year STD

deductions or non-STD instalments)

7.2 COMPANIES

� Income Tax Return Form C and R Within 7 months from end of financial year

� Estimate of Tax (CP204)

� Operating companies 30 days before beginning of financial year

� New company Within 3 months from date of commencement of

operation (NOT require to provide estimate tax

payable)

� Revisions of Estimates Allowed in the 6th and 9th month of financial year

� Tax instalments (under CP204) By 10th day of every month beginning from the 2nd

month of financial year

� Balance of tax payable (in excess of The last day of the 7th month from the end of the

CP204 estimate) financial year

7.0 TAX DEADLINES



SECTION B

8.0 IRB PUBLIC RULINGS

RULINGS Date of Issue

Year 2000

1/2000 Basis Period for a Non-business Source *1 01.03.2000

2/2000 Basis Period for a Business Sources (Companies & Co-operatives) *1 01.03.2000

3/2000 Basis Period for a Business Sources

(Individuals & Person others than Companies & Co-operatives) *1 01.03.2000

4/2000 Keeping sufficient records (Companies & Co-ops) *2 30.06.2001

5/2000 Keeping sufficient records (Individuals & Partnerships) *2 30.06.2001

6/2000 Keeping sufficient records (Persons other than Companies

and Individuals) *2 30.06.2001

7/2000 Providing Reasonable Facilities and Assistance 16.06.2001

8/2000 Wilful Evasion of Tax and Related Offences 30.12.2000

Year 2001

1/2001 Ownership of Plant and Machinery for the purposes of claiming

Capital Allowances *1 18.01.2001

2/2001 Computation of Initial and Annual Allowances in respect Of

Plant and Machinery 18.01.2001

3/2001 Appeal against an Assessment *1 18.01.2001

Addendum to PR 3/2001 18.05.2009

Addendum No.2 to PR 3/2001 04.05.2012

4/2001 Basis Period for a Non-Business Source

(Individuals & Persons other than Companies) 30.04.2001

5/2001 Basis Period for a Business Source (Co-ops) 30.04.2001

6/2001 Basis Period for a Business Source

(Individuals and Persons other than Companies/Co-ops) 30.04.2001

7/2001 Basis Period for Business and Non-Business Sources (Companies) 30.04.2001

Year 2002

1/2002 Deduction for Bad & Doubtful Debts and Treatment of Recoveries 02.04.2002

2/2002 Allowable Pre-Operational and Pre-Commencement of Business expenses

for Companies *1 08.07.2002

Year 2003

1/2003 Leave Passages 05.08.2003

Addendum to PR 1/2003 23.08.2007

2/2003 Tax treatment of “Key-man” Insurance 30.12.2003



SECTION B

8.0 IRB PUBLIC RULINGS – CONT’D


Year 2004

1/2004 Income from Letting of Real Property *1 30.06.2004

2/2004 Benefits-In-Kind *1 08.11.2004

Addendum to PR 2/2004 20.05.2005

Addendum No. 2 to PR 2/2004 17.01.2006

Addendum No. 3 to PR 2/2004 17.04.2009

Addendum No. 4 to PR 2/2004 19.04.2010

3/2004 Entertainment Expenses *1 [Addendum to PR3/2004] 08.11.2004

4/2004 Employee Share Option Scheme Benefit *1 09.12.2004

5/2004 Double Deduction Incentive on Research Expenditure 30.12.2004

Addendum to PR 5/2004 03.04.2008 Year 2005

1/2005 Computation of Total Income for Individual 05.02.2005

2/2005 Computation of Income Tax Payable by a Resident Individual 06.06.2005

Addendum to PR 2/2005 06.07.2006

Addendum No. 2 to PR 2/2005 03.01.2008

3/2005 Living Accommodation Benefit Provided for the

Employee by the Employer 11.08.2005

Addendum to PR 3/2005 05.02.2009

4/2005 Withholding tax on Special Classes of Income *1 12.09.2005

Addendum to PR 4/2005 30.11.2007

Addendum No. 2 to PR 4/2005 04.10.2010

5/2005 Deduction for Loss of Cash and Treatment of Recoveries *1 14.11.2005

Addendum to PR/2005 01.06.2012

6/2005 Trade Association 08.12.2005

Addendum to PR 6/2005 01.07.2009 Year 2006

1/2006 Perquisites from Employment *1 17.01.2006

Addendum to PR 1/2006 30.08.2007

Addendum No. 2 to PR 1/2006 25.02.2009

Addendum No. 3 to PR 1/2006 30.07.2009

2/2006 Tax Borne by Employers 17.01.2006

3/2006 Property Development and Construction Contracts *1 13.03.2006



SECTION B



Year 2006 (Cont’d)

4/2006 Valuation of Stock in Trade and Work in Progress Part 1 31.05.2006

5/2006 Professional Indemnity Insurance *1 31.05.2006

6/2006 Tax Treatment of Legal and Professional Expenses 06.07.2006

Year 2008

1/2008 Special Allowances for Small Value Assets 27.03.2008

2/2008 Reinvestment Allowances *1 03.04.2008

3/2008 Entertainment Expense *2 22.10.2008

Year 2009

1/2009 Property Development *2 22.05.2009

2/2009 Construction Contracts *2 22.05.2009

3/2009 Professional Indemnity Insurance *2 30.07.2009

Year 2010

1/2010 Withholding tax on Income under Paragraph 4(f) 19.04.2010

2/2010 Allowable Pre-Operational and Pre-Commencement

of Business Expenses *1 03.06.2010

Year 2011

1/2011 Taxation of Malaysian Employees Seconded Overseas 07.02.2011

2/2011 Interest Expense and Interest Restriction 07.02.2011

3/2011 Investment Holding Company 10.03.2011

4/2011 Income from Letting of Real Property 10.03.2011

5/2011 Residence Status of Companies and Bodies of Persons 16.05.2011

6/2011 Residence Status of Individuals 16.05.2011

7/2011 Notification of change in accounting period of a company/ 23.08.2011

trust body/co-operative society

8/2011 Foreign Nationals Working In Malaysia 16.11.2011

9/2011 Co-operative Society 16.11.2011

10/2011 Gratuity *1 05.12.2011

11/2011 Bilateral Credit and Unilateral Credit 20.12.2011

12/2011 Tax Exemption on Employment Income of Non-Citizen Individuals

Working for Certain Companies in Malaysia 20.12.2011



SECTION B



Year 2012

1/2012 Compensation for loss of employment 27.01.2012

2/2012 Foreign Nationals Working in Malaysia – Tax Treaty Relief 03.05.2012

3/2012 Appeal against an assessment *2 04.05.2012

4/2012 Deduction for loss of cash and treatment of recoveries *2 01.06.2012

5/2012 Clubs, Association or similar institutions 25.06.2012

6/2012 Reinvestment allowance *2 12.10.2012

7/2012 Taxation of Unit Holders of REITs / Property Trust Funds 29.10.2012

8/2012 REITs / Property Trust Funds - An Overview 02.11.2012

9/2012 Taxation of REITs / Property Trust Funds 26.11.2012

10/2012 Tax Treatment of Malaysian Ship 13.12.2012

11/2012 Employee Share Scheme Benefit *2 13.12.2012

12/2012 Share Schemes Benefit for Cross Border Employees 24.12.2012

Year 2013

1/2013 Deductions for Promotion of Exports 04.02.2013

2/2013 Perquisites from Employment *2 28.02.2013

3/2013 Benefits-in-Kind *2 15.03.2013

4/2013 Accelerated Capital Allowances 15.04.2013

5/2013 Taxation of Unit Holders of Unit Trust Funds 23.05.2013

6/2013 Unit Trust Funds Part II - Taxation of Unit Trusts 23.05.2013

7/2013 Unit Trust Funds Part I - An Overview 28.05.2013

8/2013 Gratuity *2 25.06.2013

9/2013 Special Deduction for Expenditure on Treasury Shares 27.06.2013

10/2013 Taxation of Business Trusts 03.07.2013

11/2013 Pre-Operational Business Expenditure *2 18.11.2013

12/2013 Rescuing Contractor and Developer 17.12.2013



SECTION B



Year 2014

1/2014 Withholding Tax on Special Classes of Income *2 23.01.2014

2/2014 Taxation of Investors on Income from Foreign

Fund Management Company 28.04.2014

3/2014 Taxation of Limited Liability Partnership 09.05.2014

4/2014 Deferred Annuity 24.06.2014

5/2014 Ownership and Use of Asset For The Purpose Of

Claiming Capital Allowances *2 27.06.2014

6/2014 Taxation of Foreign Fund Management Company 08.09.2014

Note:

*1 Superseded

*2 Original rulings superseded

1. Budget 2015 (SELCK) - SAL GROUP · Mudhrabah, Musyarakah, Ijarah, Istisna’, Murabahah, Bai’ Bithaman Ajil based on tawarruq and Wakalah approved by the Securities Commission

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