Malaysia: Tax proposals in budget for 2022

No major new taxes were introduced.

No major new taxes were introduced.

The Minister of Finance on 29 October 2021 tabled the 2022 budget.

Tax-related proposals

While no major new taxes were introduced, the following tax-related proposals were included in the 2022 budget:

  • Repeal of the tax exemption on foreign source income from 1 January 2022
  • A one-off special “prosperity tax” rate for certain “super profits” generated in 2022
  • Extended ability to carry forward unabsorbed tax losses to 10 years (from seven years)
  • Revision of tax estimates and deferment of tax instalments
  • Exemption on peer-to-peer loan / financing agreements between small and medium-sized enterprises (SMEs) and investors executed from 1 January 2022 through 31 December 2026

Incentives

The 2022 budget also includes certain tax-related incentives such as:

  • Extensions of existing tax incentives
  • Extension of a special “reinvestment allowance” until 2024
  • Expansion of green technology incentive
  • A tax incentive for social enterprise
  • Tax incentives on digital ecosystem acceleration scheme
  • Relocation incentives for selected services sector

Indirect taxes

Regarding indirect taxes, the budget for 2022 proposes:

  • Special voluntary disclosure program for indirect taxes to be introduced in two phases
  • Exemption of real property gains tax from 1 January 2022
  • Stamp tax on contract notes on trading of Bursa-listed shares
  • Stamp tax exemption on mergers and acquisitions
  • Excise tax on gel or liquid used for electronic cigarettes and vaping
  • Import duty exemptions on the purchase of electric vehicles
  • Expansion of excise duty on sugar-sweetened beverages from 1 April 2022
  • Extension of sales tax exemption on the purchase of passenger cars until 30 June 2022
  • Extension of tourism tax and entertainment duty exemption until 31 December 2022
  • Service tax on goods, imposed on delivery services provided by service providers including e-commerce platform (except for food and beverages delivery services and logistic services) effective from 1 July 2022
  • Imposition of sales tax on goods not exceeding RM500 from abroad sold online by traders (local and overseas) and delivered to consumers in Malaysia via air courier service effective from 1 January 2023

Individual taxation

Regarding individual (personal) income tax, the budget proposals include:

  • Extension of individual tax relief
  • Tax relief for Social Security Organisation (SOCSO) contributions
  • Tax relief for full medical check-up expenses
  • Tax relief for education fees
  • Income tax relief for costs relating to electric vehicle charging facilities for years of assessment 2022 and 2023

Read an October 2021 report [PDF 5.28 MB] prepared by the KPMG member firm in Malaysia

 

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