KUALA LUMPUR — Oct. 11, 2019: A Digital Services Tax will be imposed from January together with some tax incentives and exemptions to further boost the economy.
The tax will include services such as, but not limited to, downloaded software, music, video or digital advertising.
With this, foreign service providers can commence registration with the Royal Malaysian Customs, said Finance Minister Lim Guan Eng when tabling the 2020 Budget today.
And to ensure a more progressive personal income tax structure, a new band for taxable income in excess of RM2 million will be introduced at 30 per cent, up from the present 28. This increase will affect about 2,000 people.
Also, a new incentive framework, a comprehensive review and revamp of the existing framework will be ready by January 1, 2021.
Another proposal is to provide up to RM1 billion customised packaged investment incentives annually over five years as part of the strategic push to attract targeted Fortune 500 companies and and global unicorns in high technology, manufacturing, creative and new economic sectors.
The government will also make available RM1 billion in customised packaged investment incentives annually over five years to transform the country’s businesses into most competitive enterprises in global export markets.
The tax incentives given to venture capital and angel investors will be extended until 2023 to further encourage alternative sources of funding for start-up companies and to attract more foreign investment to Malaysia.
To further promote high-value added activities in the electrical and electronics industry to transition into 5G digital economy and Industry 4.0, the government will provide tax exemption up to 10 years for E&E companies investing in selected knowledge-based services.
A special Investment Tax Allowance to encourage companies in the E&E sector that have exhausted the Reinvestment Allowance to further reinvest in Malaysia will also be given.
To support the growth of small and medium enterprises, the government has decided to increase the chargeable income tax to RM600,000 next year from the current RM500,000, with the rate maintained at 17 per cent.
This is subjected to an SME having a paid-up capital of not more than RM2.5 million and annual sales of not more than RM50 million. — Bernama