Dear Valued Customers,

Welcome to our E-Newsletter November 2019!

This month, we examine the issue that dominates headlines for businesses – the tabling of Malaysia Budget 2020.

Budget 2020 aims to restore Malaysia’s fiscal health while uplifting Malaysians’ living standards. Spanning citizens’ welfare, improving the business environment, and the country’s economy at large, Budget 2020 is the all-inclusive Budget that focuses on initiatives to engineer the revival of small businesses, and to cement the country’s position as the favoured destination for external investment.

SMEs and Start-ups: The Big Winners of Budget 2020

SMEs and start-ups are among the key beneficiaries of Budget 2020. Budget 2020 has proposed that the current 17% tax rate will now be applicable on the first RM600,000 of SMEs’ taxable income – tax-saving good news for SMEs in Malaysia. SMEs will enjoy a simpler and more flexible tax deduction limit on expenses incurred on secretarial fee and tax filing fee with the Budget proposal of a combined tax deduction limit of RM15,000 in each Year of Assessment. At the same time, RM1 billion will be allocated to aiding local companies to penetrate global markets and 100,000 high-quality jobs are expected to be generated.

Budget 2020 sees the government making a concerted effort to win the race to attract external investment and global unicorns in the digital sector into Malaysia. Budget 2020 offers up to RM1 billion worth of customised packaged investment incentives to attract Fortune 500 companies to do business in Malaysia and create 150,000 high impact jobs.

More Exemption Categories for Services Tax

Malaysia’s tax environment will see some changes with the introduction of a broader scope of Sales and Services Tax in Budget 2020. The proposal of “Approved Major Exporter Scheme” marks the positive development of the export industry. Under this scheme, the approved traders and manufacturers of exempted goods will be eligible for full sales tax exemption on the purchase or importation of goods, raw materials, components and packaging materials, while they are not required to determine the quantity of goods.

The existing group relief policy sees a relaxation with the introduction of 5% ‘de minimis’ threshold for services offered to third parties. In other words, the value of services offered to third parties cannot be more than 5% of the total value of services provided by that company within 12 months. Meanwhile, the services tax exemption on the provision of training and coaching services for disabled individuals has been one of the well-received tax proposals where the aforementioned training and coaching service will be eligible for tax exemption if it fulfils all requirements.

New Number Format Will Be Used for All Registered Companies in Malaysia

In a bid to implement a single registration format for business entities in Malaysia, Companies Commission of Malaysia has introduced the new business registration number format. The new 12-digit business registration number will replace the current business registration number. According to the Companies Commission of Malaysia, there is no urgency to replace the existing business registration number with the new one until further notice. That said, businesses are encouraged to obtain the new business registration number format for their record and reference.