On 13 October, Malaysian Prime Minister and Finance Minister Anwar Ibrahim tabled the government’s 2024 budget.
The budget includes tax proposals related to corporations such as:
Capital gains tax on disposal of unlisted shares:
In line with the Budget 2023 announcement to implement Capital Gains Tax (CGT) on the disposal of unlisted shares for companies, it is proposed CGT rate be imposed as follows:
| Shares Acquisition Date | CGT Rate |
| Before 1 March 2024 | The taxpayers may choose:
i. 10% on the net gain of the disposal of shares; or ii. 2% on the gross sales value. |
| From 1 March 2024 | 10% on the net gain of the disposal of shares |
To ensure the smooth implementation of CGT and reduce the cost of doing business, it is proposed CGT exemption be given on the disposal of shares related to the following activities:
- Initial Public Offering (IPO) approved by Bursa Malaysia; and
- Restructuring of shares within the same group.
Effective Date: From 1 March 2024.
Tax incentive for global services hub
To attract quality investment, the Government has introduced the Principal Hub tax incentive with the objective of transforming Malaysia into a global business hub for high-value activities which are managing, controlling and supporting core business functions such as risk management, decision-making, strategic business and finance. The incentive given is income tax at a rate of 0%, 5% and 10% subject to certain condition such as incur minimum annual business expenditure and provide full-time high value employment. However, the current tax incentives are not based on outcome-based approach.
To maintain Malaysia’s competitiveness as a key player in the global services sector in the region and to establish the country as a high-impact strategic services hub, it is proposed Global Services Hub tax incentive based on outcome-based approach be introduced as follows:
| Particulars | New Company | Existing Company | ||
| Tier 1 | Tier 2 | Tier 1 | Tier 2 | |
| Exemption Years | 5+5 | 5 | ||
| Tax Incentive | Tax Rate 5% | Tax Rate 10% | Tax Rate at 5% on the value-added income | Tax Rate at 10% on the value-added income |
| Types of Income Exempted | i. Services income; or ii. Services and trading income. |
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| Qualifying Services & Additional Services | Undertake the following activities: i. Regional P&L/Business Management Unit; ii. Strategic business planning; iii. Corporate development; iv. Any 2 qualifying activities under the services category as follows: a. Strategic services; b. Business services; c. Shared services; or d. Other services. |
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| Conditions (Outcome-based) |
i. Annual operating expenditure; ii. High value full-time employees; iii. C-Suite with a minimum monthly salary of RM35,000; iv. Local ancillary services; v. Collaboration with higher education institution/TVET; vi. Training for Malaysian students/citizen; vii. Environmental, Social and Governance (ESG) elements; or viii. Other conditions as determined by the Minister of Finance. |
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The determination of the eligibility for the income tax rate that a company will enjoy for each year of assessment is based on the outcome-based approach.
In addition, it is proposed income tax rate of 15% be given for a period of 3 consecutive years of assessment and limited to 3 non-citizen individuals holding key/C-Suite positions with a monthly salary of at least RM35,000 appointed by a new company approved with Global Services Hub tax incentive.
Effective Date: For applications received by the Malaysian Investment Development Authority from 14 October 2023 until 31 December 2027.
Implementation of Global Minimum Tax deferred to year 2025
Taking into account feedback from the industry and latest international developments, the Government is expected to implement the global minimum tax in 2025 and only applicable to companies with a global income of at least 750 million euros. The Government will also continue to monitor the development of the global minimum tax at the international level.
Implementation of e-Invoice from August 2024
- The Government has agreed to enforce e-invoice on a mandatory basis to taxpayers with annual income or sales exceeding 100 million ringgit beginning 1 August 2024.
- Meanwhile, e-invoice for taxpayers in other income categories will be enforced in phases with a comprehensive implementation beginning 1 July 2025.
- The use of Tax Identification Number (TIN) will be expanded to support the implementation of the e-invoice. This can further increase the number of taxpayers, which in turn will reduce revenue leakages. Such matter will continue to be looked at.
