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The Malaysian Budget 2014


The 2014 Budget was tabled on 25 October 2013 with the main objective of gearing Malaysia to becoming a high-income and developed nation by 2020. Taxand Malaysia discovers the key tax highlights of the 2014 Budget. 

Goods and services tax (GST)

  • With the introduction of GST, the sales tax and service tax will be abolished
  • The GST will be at a rate of 6% and will be implemented on 1 April 2015. The annual sales threshold will be RM500,000. Those below the threshold can register on a voluntary basis
  • GST will be imposed throughout the supply chain, on goods and services supplied within the country or imported into the country

Corporate tax

  • The corporate income tax rate will be reduced from 25% to 24% with effect from the year of assessment (YA) 2016 as part of the GST package
  • For companies with paid-up capital of not more than RM2.5 million at the beginning of the basis period for a YA, the income tax rates applicable on the first RM500,000 of chargeable income will be cut by 1% from 20% to 19%
  • Any balance of chargeable income will be subject to tax at 24%

Real property gains tax (RPGT)

  • In response to the outcry to rein in runaway property prices, the Government has again revised the RPGT rate upwards, which will be effective from 1 January 2014
  • For companies and individuals, gains on disposal of real property during the first to third year, fourth and fifth year of purchase will suffer a higher RPGT at the rate of 30%, 20% and 15% respectively
  • Companies which dispose of property after the fifth year of purchase will be taxed at 5% whilst individuals will not be charged to RPGT on the gain
  • Non-citizen individuals will suffer RPGT at 30% on gains from property disposed of within the holding period of up to 5 years whilst disposals in the sixth year onwards will attract RPGT at 5%

Discover more: The Malaysian Budget 2014

Your Taxand contacts for further queries are:
Veerinderjeet Singh
T. +603 2032 2799

Renuka Bhupalan
T. +603 2032 2799

Also published in Thomson Reuters' Taxnet Pro, 31 October 2013

Taxand's Take

Malaysia’s economy has demonstrated its underlying resilience by growing at an expected rate of between 4.5% to 5.0% in 2013 and 5.0% to 5.5% in 2014. Growth is expected to come through an increase in foreign direct investment, private investment and private and public consumption. However the level of Government deficit and the recent downgrade by Fitch Ratings, have prompted initiatives towards enhanced fiscal management in the near term and fiscal sustainability measures over the longer term. The deficit is projected to come down from 4.0% in 2013 to 3.5% in 2014 due to an expected increase in revenue collection by RM4 billion to RM224.1 billion.

Additional details will be revealed when the Finance Bill becomes available and upon the issuance of the relevant guidelines and subsidiary legislation. Overall the 2014 Budget proposals are broad-based and wide-ranging in its socio-economic objectives. The Budget appears to be a balanced one and yet is bold in terms of the changes proposed as part of the GST package. More was expected in terms of the subsidy rationalisation programme but small steps are being taken.

Taxand's Take Author

Veerinderjeet Singh
Taxand Board member