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Commentary by KPMG in Malaysia: Budget 2020: Driving Growth and Equitable Outcomes Towards Shared Prosperity

Commentary by KPMG in Malaysia: Budget 2020: Driving G


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The 2020 Budget was announced by YB Tuan Lim Guan Eng on 11 October 2019.

Whilst there was significant anticipation on a possible return of Goods and Services Tax, there must have been a sense of relief from the public when it was announced that the Government does not intend to bring it back.

That aside, what were some of the more interesting proposals that were suggested?

The proposal to provide customized packaged investment incentives to attract Fortune 500 companies and global unicorns certainly would have raised a few eyebrows. Customised tax incentives are nothing new and the Government has awarded them in the past to investors that make significant contributions to the economy. In view of this, it will be interesting to see what plans the Government will have to make this initiative a success.  It will certainly be necessary to target and court these global giants like never before in order to secure positive results. 

The Electrical and Electronics (E&E) Sector is also getting favourable focus in this year’s Budget.  Typically, companies that have enjoyed tax incentives like Pioneer Status or Investment Tax Allowance (ITA) can thereafter claim Reinvestment Allowance for 15 consecutive years for reinvestment projects.  Generally, no further tax incentives are available after their expiry.  It is now being proposed that a new ITA incentive of 50% of qualifying capital expenditure be given to Companies in the sector even after the 15 year period has expired. This will certainly be very welcome by the E&E players where continuous capital investment and innovation is key to their being able to compete in international markets.

One other initiative that should be lauded is Malaysians@Work. This is certainly a bold move by the Government to increase the domestic workforce and reduce our dependence on foreign labour.  This move will certainly cost the Government many millions but we must congratulate and support them for initiating this.  It should be noted however that this increase in cost may also be off-set somewhat by the reduction in administrative costs that are presently being incurred on foreign labour, which we appreciate is not insignificant.

It also needs to be noted that this financial support is being proposed for two years. One imagines that this programme will need to work hand-in-hand with other Government initiatives to upskill our workforce to make them indispensable to local employers.

Written by Tai Lai Kok, Head of Tax at KPMG in Malaysia 


For media queries, please contact:

Syazlina Nasir
Executive, Marketing & Communications
KPMG in Malaysia
Direct: +603 7721 3728
Kimberly Sammy
Manager, Marketing & Communications
KPMG in Malaysia 
Direct: +603 7721 3924

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