The Malaysian Budget for 2013 was presented by the Prime Minister (also the Finance Minister) on 28 September 2012 and is generally effective from year of assessment 2013 unless otherwise stated. Key points of the budget are summarized below:
Corporate taxation:
Tax-free incentives and grants are introduced for new and existing pre-schools and childcare centers registered with the State Education Department, including an income tax exemption for 5 years and an industrial building allowance at 10% per year. A 100% income tax exemption is given to Liquefied Natural Gas trading companies under the Global Investment for Trading (GIFT) programme and a 100% investment tax allowance for 10 years is given on qualifying expenditure incurred on investments in activities related to the refining of petroleum products.
Business trusts are subject to income tax in the same manner as a company. At the initial stage of establishment, business trusts are given a stamp duty exemption on instruments of transfer of assets while persons disposing of real properties or shares in a real property company to a business trust are given real property gains tax exemptions.
The current tax incentives for the commercialization of resource-based R&D results are to be extended to commercialization of non-resource based results which are products promoted under the Promotion of Investment Act 1986. The tax incentives, which are effective for applications received from 19 September 2012 until 31 December 2017, are:
– a deduction to be granted to the investing company, equivalent to the total investment made in the subsidiary company that undertakes the commercialization of R&D results; and
– an income tax exemption of 100% on the statutory income of the subsidiary company that undertakes the commercialization of R&D results, for a period of 10 years.
Moreover, a 100% income tax exemption and an industrial building allowance at an annual rate of 10% are accorded to operators of pre-schools. The 100% accelerated capital allowances on security control and surveillance equipment installed in factory premises or buildings used for a business are extended to assessment year 2015. This also covers companies installing security control and surveillance equipment in residential areas.
Individual Taxation
The individual income tax rate is to be reduced by 1 percentage point for the first RM50,000 of chargeable income. Child tax relief is to be increased from RM4,000 to RM6,000 per child (6 times the basic child relief of RM1,000) for children aged 18 and above and receiving full-time tertiary education, effective from year of assessment 2013. Tax relief available for savings in the National Education Savings Scheme (SSPN) will be increased to RM6,000 for assessment years 2012 to 2017.
