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Key Tax Measures in 2013 Budget
The Malaysian Budget proposals for 2013 were tabled on 28 September 2012 by the Prime Minister. In line with the Budget theme of 'Prospering the Nation and Enhancing the Well-Being of the 'Rakyat'' (Malaysian citizens), the proposals are broad-based and wide-ranging in their socio-economic objectives. Taxand Malaysia invesitgates the key tax measures within the 2013 Budget proposals.
The government has undertaken several strategic measures to position Malaysia as a global integrated trading hub for oil & gas as well as for refining and storage. Several large projects under the ETP have already been given 100% income tax exemption or investment tax allowances for a period of 10 years, exemption of withholding taxes and stamp duties. The 2013 Budget aims to further encourage investment in the sector with such tax incentives. The Budget also announced the offer of 100% income tax exemption for the first 3 years of operations for LNG trading companies under the GIFT (Government incentives for trading) programme.
Resident individual income tax rates will see a reduction of 1% across the chargeable income bands. However, the top rate remains at 26%.
Petroleum Income Tax
Besides administrative proposals to bring the petroleum income tax legislation in line with that under the income tax legislation, measures have been proposed to introduce transfer pricing provisions for transactions between related parties operating in the upstream sector. The proposals extend to provision of financial assistance and thin capitalisation.
Real Property Gains Tax (RPGT)
Limited liability partnerships will fall within the RPGT net as persons chargeable to tax under the RPGT legislation, in line with the introduction of the measures for limited liability partnerships under the Income Tax Act.
Malaysia is a major export driven country, however the tax measures proposed in the 2013 Budget are aimed at driving inward investment in order to promote their economy. This is a great opportunity for multinationals, especially those in the oil & gas industry, who wish to expand into the South East Asia region.