The Budget 2022 was presented in Parliament on 29 October 2021.
The following summary is extracted from a dialogue between the Ministry of Finance (MOF), the Malaysian Inland Revenue Board (IRBM/LHDNM) and professional organisations on 21 June 2023 on some key issues to be followed up in the Budget 2022 presentation.
This can be regarded as a post-Budget 2022 follow-up.
1. Non-Resident Individuals holding key positions in companies relocating operations to Malaysia
The application period for the special income tax rate of 15% for non-resident individuals holding key positions in companies relocating operations to Malaysia will be extended for another one year for applications received to MIDA by 31 December 2022.
MOF’S Feedback:
The subsidiary legislation draft is currently under review by AGC.
2. Digital Ecosystem Acceleration Scheme (DESAC)
Tax incentives for activities under Digital Ecosystem Acceleration Scheme (DESAC) be given as follows:
- Digital Technology Provider — tax rate at 0% to 10% for ten years for a new company, tax rate at 10% for existing companies
- Digital Infrastructure Provider — Investment Tax Allowance (ITA) of 100% on capital expenditure for qualifying activities for up to 10 years. This allowance can be offset against up to 100% of statutory income.
MOF’S Feedback:
Income tax exemption is granted for up to 3 assessment years on all income subject to Social Enterprise Accreditation by the Ministry of Entrepreneur Development and Cooperatives (MEDAC).
MOF has issued guidelines for applying for income tax exemption under Section 127(3A) of the Income Tax Act.
Applications can be made to the Tax Division, MOF, until 31 December 2023. The guidelines have been published on the MOF and MEDAC websites.
3. Rainwater Harvesting System projects
Rainwater Harvesting Systems (“RHS”) be included in qualifying green services and assets.
Where the Malaysian Green Technology Corporation approves RHS projects, the following incentives will now be available:
- GITA of 100% on capital expenditure for qualifying RHS activities — the allowance will be available to be set off against 70% of statutory income
- GITE, which will provide tax exemption on 70% of statutory income from qualifying RHS activities.
The incentives are available for applications to MIDA from 1 January 2022 to 31 December 2023.
MOF’s Feedback:
The draft exemption order is under final review by the Attorney General’s Chambers (AGC).
4. Structured Internship Programme (SIP)
Extension of incentive for a structured internship programme (SIP) for a further four years and that the scope of the incentive is expanded to include students with Master’s Degrees, Professional Certificates and those who have completed Skim Kemahiran Malaysia (SKM) Level 1 and 2.
MOF’S Feedback:
MOF has finalised the new policy based on TalentCorp’s request and will complete the exemption order as soon as possible.
5. Digital Ecosystem Acceleration Scheme (DEAS)
Tax incentives for the Digital Ecosystem Acceleration Scheme (DEAS)
- Digital Technology Provider (DTP)
- Where the DTP is a new company, an income tax rate of 0% to 10% will be given for up to 10 years.
- For an existing company that diversifies into new service segments/activities, an income tax rate of 10% will be given for up to 10 years.
MOF’S Feedback:
MOF and MIDA are finalising the implementation of the incentive.
- Digital Infrastructure Provider (DIP)
- A 100% investment tax allowance will be granted for up to 10 years, which can be set off against 100% of statutory income.
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