The Malaysian Finance Minister delivered his budget proposals for 2019 on Friday 2 November 2018. Themed “A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society”, measures were introduced to address national debt levels, increase revenue and address the need for prudent spending.

 

Amidst several constraints and headwinds viz: the unprecedented high level of national debt, the substantial erosion of tax revenue due to the repeal of the unpopular GST, the rising prospect of the trade war between the United States of America and China, and the International Monetary Fund’s downward revision of the global economic growth forecast from 3.9% to 3.7%, the task of restoring the nation’s fiscal health is clearly challenging. It is therefore of some surprise that the budget has been somewhat expansionary, standing at RM 314 billion compared to RM 290.4 billion in 2018.

 

Corporate tax highlights

 

  • The existing tax exemption for interest earned on wholesale money market funds will cease with effect from 1 January 2019
  • Income tax deductions for contributions made to any social enterprise subject to a maximum of 10% of aggregate income of a company or 7% of aggregate income for a person other than a company
  • Reduction of corporate tax rate for small medium enterprises (SMEs) on chargeable income of up to RM 500,000 to 17% from 18% effective from YA 2019

Discover more: Insights – Malaysia Budget 2019

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Taxand's Take

This Budget should go a long way to support the Government’s goal of restoring fiscal health and restore the Malaysian economy as an Asian Tiger.

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Article tags

International Tax | Investments | Malaysia

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