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Malaysia: Tax measures in budget for 2021

Malaysia: Tax measures in budget for 2021

The Minister of Finance on 6 November 2020 tabled the 2021 budget.

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Tax measures proposed in the 2021 budget include:

  • A tax incentive for “global trading centres” of a 10% income tax rate for five years and renewable for an additional five years
  • Extension of the “principal hub” incentive for an additional two years
  • Relocation incentives for selected services sector including an income tax rate of 0% for new companies (for a 10-year period) and 10% for existing companies with a new services sector (for a 10-year period)
  • Extensions of existing relocation incentives for the manufacturing sector (including a 0% tax rate for new companies or a 100% investment tax allowance for five years)
  • Extensions of existing tax incentives for certain industrial sectors
  • A 1% reduction of the income tax rate for resident individuals, reduced from 14% to 13% for the income tax band of RM50,001 to RM70,000
  • An increase to the income tax exemption for compensation for loss of employment (increased from RM10,000 to RM20,000)
  • A “flat rate” of income tax for six consecutive years for non-Malaysian persons employed in “key positions” if the person is a Malaysian tax resident throughout the period
  • An exemption from import customs duty and excise tax for certain vehicles
  • Tax relief related to certain medical expenses

Read a November 2020 report [PDF 3.34 MB] prepared by the KPMG member firm in Malaysia 

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