TraTax Budget 2023: Tax Breaks for MSMEs and Personal Tax Reductions
Budget 2023 will focus on cutting subsidies for the top 20% (T20) and curbing wastage and corruption in their administration to lower the debt levels.
TraTax is a firm of chartered accountants urges the government to give tax breaks to Small and Medium-sized Enterprises (MSMEs) and proposes reductions in personal taxes.
The Malaysian government has recently announced several tax-related updates during the Budget 2023 initial announcement. Among these updates is the implementation of a top-up tax by 2024 to the global minimum taxation of 15%.
However, this top-up taxation is not applicable for companies that are not part of a group and whose global turnover does not exceed Euros 750 million. Despite the expectation of the reintroduction of the Goods and Services Tax (GST), the Prime Minister and Finance Minister have made it clear that it will not be reintroduced anytime soon, as it would worsen inflation.
Tax Breaks for MSMEs
Instead, they will focus on cutting subsidies for the top 20% (T20) and curbing wastage and corruption in their administration to lower the debt levels. The government has also announced tax reduction and adjustment initiatives targeted specifically at micro Small and Medium-sized Enterprises (MSMEs).
These initiatives include a 15% tax on RM100,000 of chargeable income and a 17% tax on the next RM500,000. Above RM600,000, the present tax rate is 24%. This announcement results in a tax savings of RM2,000 per annum for MSMEs. Personal tax reductions and adjustments have also been announced.
The RM50,000 - RM70,000 range has been reduced from 13% to 11%, while the RM70,000 - RM100,000 range has been reduced from 21% to 19%. The RM250,001 - RM400,000 range has been increased from 24.5% to 25%.
The tax savings for the year of assessment 2023 are as follows: RM5,000 p.m - RM20 per year, RM7,500 p.m - RM620 per year, RM15,000 p.m - RM1,000 per year, and RM30,000 p.m - RM495 per year.
Minor changes have been announced during the Budget 2023 announcement, and more reliefs are expected to meet the lifestyle of young Malaysians in the upcoming budget announcement on February 24, 2024, by Prime Minister Anwar Ibrahim.
Stamp duty exemption for the transfer of immovable property between family members has been announced to be effective from January 1, 2023. Presently, the treatment for transactions between husband and wife is 100% remission, between parent and child is 50% remission, and between grandparent and grandchildren has no remission.
The proposed treatment is a fixed stamp duty of RM10, with similar announcements or initiatives expected to formalize the announced proposal during the initial Budget 2023. Finally, an administration announcement has been made that individuals who are 18 years old or above will be given a Tax Identification Number (TIN) automatically with effect from 2023.
The TIN will be a compulsory element for the process stamping of all documents and instruments.