On November 6, 2020, the Minister of Finance of Malaysia
presented the 2021 budget to parliament. As highlighted in the budget speech,
fiscal measures in the budget are mainly focused on incentives and include the
following:
·
Review (revision) of tax incentives for
companies relocating to Malaysia and making new investments, including:
·
Extension of the application deadline until
December 31, 2022 for manufacturing and selected service sectors.
·
A tax rate from 0% to 10% for 10 years for new
companies and a tax rate of 10% for 10 years for existing companies with a new
segment of services; as well as
·
Expanding reach to include companies adopting
industrial revolution 4.0 and digitalisation technologies with investments that
generate significant multiplier effects in the following services:
·
Providing technology solutions, including but
not limited to a technology company that develops technologies and provides
technology solutions based on significant scientific or engineering challenges.
·
Provision of infrastructure and technologies for
cloud computing.
·
Research and development work.
·
Trials and clinical trials of medical devices;
as well as
·
Any services or services related to production,
as determined by the minister of finance.
·
Extension of tax credits for pharmaceutical
companies, including vaccines, for applications filed before December 31, 2022,
including:
·
A tax rate from 0% to 10% for the first 10 years
and a tax rate of 10% for a subsequent period of 10 years; as well as
·
Strategic investments by such companies may be
considered for other facilities, including grants, import / sales tax
exemptions for machinery and equipment, and raw materials.
·
Review and expand tax incentives to commercialize
R&D outputs, including reintroducing tax incentives to commercialize
non-resource R&D outputs and expanding incentives for commercializing
R&D outputs by public research institutions to also include private higher
education institutions with the following incentives:
·
For investor companies - a tax deduction
equivalent to the amount of investment made in a subsidiary that commercializes
the R&D results of public research institutions, including public higher
education institutions and private higher education institutions; as well as
·
For subsidiaries commercializing R&D results
- exemption from income tax 2021 in the amount of
100% of statutory income for 10 years.
·
Implementation of the new Global Trading Center
incentive scheme, which includes a 10% personal tax rates 2021 for a period of 5 years, which can be
extended for another 5 years, while applications for the scheme are accepted
from January 1, 2021 to December 31, 2022.
·
An increase in the limit on value-added sales
and additional activities carried out in the free industrial zone and in the
warehouse of licensed production, so that the income from such sales is limited
to 40% of the total income (from 10%) for applications received from November
7th. 2020, which applies to the following activities:
·
Research and development
·
Product design
·
Marketing, only for companies with international
purchasing center status.
·
Extension of the 15% flat income tax rates 2021 for certain eligible individuals to
non-residents holding key positions for five consecutive years in companies
that have been granted tax incentives for relocation under the penjana
initiative, which applies to applications received since november 7. 2020 until
december 31, 2021, subject to the conditions that an individual:
·
Extension of the main hub scheme for another two
years (applications received from january 1, 2021 to december 31, 2022), as
well as the introduction of relaxed conditions for the extension for the second
five years.
·
Extension of tax credits for the returned
experts (rep) program for three years (applications received from january 1,
2021 to december 31, 2023), with the benefits changed as follows:
·
Income tax at a flat rate of 15% for an
assessment period of five consecutive years; as well as
·
Exemption from import duty and excise tax on the
purchase of a car, provided that the total tax exemption limit is myr 100,000.
·
Extension of tax incentives for the export of
private medical services for two years for the estimated years 2021 and 2022.
·
Extension of tax relief 2021 incentives for manufacturers of industrial
building systems components for five years (application received from january
1, 2021 to december 31, 2025); as well as
·
Extension of tax credits until 2022 for
maintenance, repair, overhaul (mro) activities for the aerospace industry, ship
construction and repair, bionexus status, and economic corridor development,
which is granted while the government is conducting a comprehensive study of
the existing tax. Structure of incentives.
In addition to incentive measures, the budget includes
expanding the scope of the tourist tax relief on accommodations reserved through online platform
providers starting from July 1, 2021. This is intended to ensure equal
treatment for tourists who book accommodation directly with registered
accommodation operators and through online platform providers.
Several individual income tax measures are also proposed.
This includes a decrease in the income tax rate for the group from 50,001 to
70,000 ringgit from 14% to 13%, as well as other increased benefits and
benefits for individuals.
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