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Highlights of Malaysia Budget 2023

On 24 February 2023, Dato’ Seri Anwar bin Ibrahim, Prime Minister cum Finance Minister has re-tabled Budget 2023 themed “Membangun Malaysia MADANI”.

Highlights of Malaysia Budget 2023


Personal Tax

  • Reduction of 2% for the chargeable income band of RM35,001 to RM50,000 (from 8% to 6%), RM50,001 to RM70,000 (from 13% to 11%) and RM70,001 to RM100,000 (21% to 19%).
  • Increase of 1% for the chargeable income band of RM100,001 to RM250,000 (from 24 to 25%).
  • Increase of 0.5% for the chargeable income band of RM250,001 to RM400,000 (from 24.5 to 25%).
  • Increase of 1% for the chargeable income band of RM400,001 to RM600,000 (from 25 to 26%).
  • Increase of 2% for the chargeable income band of RM600,001 to RM1,000,000 (from 26 to 28%).
  • Scope of tax relief for medical treatment expenses be expanded to include the intervention expenditure for Autism, Attention Deficit Hyperactivity Disorder (ADHD), Global Developmental Delay (GDD), Intellectual Disability, Down Syndrome and Specific Learning Disabilities limited to RM4,000 as below:
    1. diagnostic assessment certified by a medical practitioner registered with the Malaysian Medical Council (MMC);
    2. early intervention and rehabilitation programmes conducted by health profession practitioners registered under the Allied Health Profession Act 2016.With the expansion of this scope, it is proposed that the amount of tax relief for medical treatment expenditure be increased from RM8,000 to RM10,000.
  • Scope of tax relief for life insurance or takaful contribution to be expanded to include additional voluntary contribution to Employees Provident Fund that is applicable to civil servants under the pension scheme.
  • Tax relief for child care centre or kindergarten fees to be extended to YA 2024.


Corporate Tax

  • Reduction of income tax rate of 2% (from 17% to 15%) for the first RM150,000 chargeable income for SME companies.


Tax Incentives

  • Tax deduction on cost of listing in Bursa Malaysia of up to RM1.5 million to be extended to YA 2025 and the scope is expanded to cover the listing costs incurred by technology-based companies for listing in Bursa Main Market.
  • Tax deduction on issuance cost for Sustainable and Responsible Investment (SRI) linked Sukuk from YAs 2023 to 2027.
  • Special tax deduction of RM150,000 on the purchase of qualified Malaysian-made handicraft purchased from local handicraft entrepreneur registered with Perbadanan Kemajuan Kraftangan Malaysia. (For qualifying handicraft products expenditure incurred from 1 January 2023 until 31 December 2025)
  • Double tax deduction on remuneration paid to Inmate and Ex-Inmate of Henry Gurney School under Malaysian Prison Department protection and rehabilitation institution and non-government care centres registered under Social Welfare Department from YA 2023 to 2025.
  • Tax deduction under Section 34(6)(h) of the Income Tax Act 1967 be given to companies and other than companies (individuals, partnerships, trusts and cooperatives that have business income) that make donations or sponsorships of Artificial Intelligence (AI) – Driven Reverse Vending Machine. (For contribution/sponsorship and application received by Ministry of Finance from 1 April 2023 until 31 December 2024)
  • Company that rent non-commercial electric vehicle (EV) is given tax deduction on the rental amount up to RM300,000 from YA 2023 to 2025.
  • 100% income tax exemption on statutory income from YA 2023 to 2032 or 100% Investment Tax Allowance (ITA) for a period of 5 years to be set-off against 100% of statutory income for manufacturer of Electric Vehicle (EV) charging equipment. (For applications received by the Malaysian Investment Development Authority (MIDA) from 25 February 2023 until 31 December 2025)
  • Tax incentives provided for companies undertaking Carbon Capture and Storage (CCS) in-house activity, companies undertaking CCS services and tax deduction on fees incurred for the use of CCS services.
  • 100% Accelerated capital allowance (ACA) and income tax exemption of 100% on qualifying capital expenditure to be given to chicken rearers who adopt closed house system.
  • Food production project tax incentive to be extended to 31 December 2025 and expanded to include agricultural based projects on Controlled Environment Agriculture (CEA).
  • Tax exemption rate on statutory income of BioNexus status company be increased from 70% to 100% and application period for tax incentive to be extended to 31 December 2024.
  • Tax incentive for automation in manufacturing and services sector to be enhanced. Scope of automation to include the adaption of Industry 4.0 elements and expanded to agriculture sector. Threshold to be increased to RM10 million.
  • Tax incentive for ship building and ship repairing industry to be extended to 31 December 2027.
  • Tax incentive for aerospace industry to be extended to 31 December 2025.


Indirect Tax

  • Import duty and sales tax exemptions on studio and filming production equipment from 1 April 2023 until 31 March 2026.
  • Excise duty and sales tax exemptions on the sale, transfer, private use or disposal of individually owned taxis and hired cars are expanded and reviewed as follows from 1 March 2023.
    1. exemption granted based on these licenses and services:a. taxis (budget taxis, executive taxis and TEKS1M);b. airport taxis (budget and family); and

      c. hired cars

    2. vehicle age condition is relaxed to at least 5 years from the date of registration.
  • Import duty exemption on components for locally assembled electric vehicles (EV) and full excise duty and sales tax exemptions on locally assembled CKD electric vehicles (EV) to be extended until 31 December 2027.
  • Import duty and excise duty exemptions on importation of Completely Built-Up (CBU) electric vehicles (EV) to be extended until 31 December 2025.
  • Import duty and sales tax exemption be given to nicotine gum and nicotine patch for a period of 3 years from 1 April 2023 until 31 March 2026.


Stamp Duty

  • Stamp duty on the instruments of transfer of property by way of love affection between parents and children, grandparents and grandchildren be fully exempted, limited to the first RM1 million of the property’s value. The remaining balance of the property’s value is subject to ad valorem duty rate and is given 50% remission on the stamp duty imposed. This stamp duty treatment applies to the recipients who are Malaysian citizens. (For instrument of transfer of property executed from 1 April 2023)
  • To streamline the stamp duty treatment for all levels of education, it is proposed that stamp duty of RM10 be expanded to include educational loan/scholarship agreement to pursue education at all levels including certificate (education/skills/professionals) in any educational and training institutions. (For educational loan/scholarship agreement executed from 1 June 2023)
  • Stamp duty exemption for restructuring or scheduling of loan/financing agreement to be extended for another 2 years from 1 January 2023 until 31 December 2024.


Luxury Goods Tax

  • Introduction of Luxury Goods Tax in year 2023 which aims to widen the tax base by primarily targeting high-income earners.


Capital Gains Tax

  • The Government will review the introduction of capital gains tax for the disposal of unlisted shares from year 2024 onwards and will carry out consultation with the relevant parties to examine the proposal in detail.


Special Voluntary Disclosure Program (SVDP)

  • The IRB and RMCD will re-implement the SVDP with penalty waiver of 100% for submissions from 1 June 2023 to 31 May 2024.



Finance Bill 2023 Highlights

Personal Tax

  • Personal tax relief of up to RM8,000 for contribution to the SSPN is extended to YA 2024.


Corporate Tax

  • New condition of not more than 20% of the paid-up capital of ordinary share / total contribution of capital at the beginning of the basis period for a YA is directly or indirectly owned / contributed by a company or companies incorporated outside Malaysia or an individual or individuals who are not Malaysian citizen of in order to qualify for SME tax rate from YA 2024 onwards.
  • Exclusion of intangible assets from the definition of plant be removed. In addition, the MOF may prescribe any asset to be excluded as plant.
  • Payment of withholding tax under Section 107D are to be accumulated on a monthly basis and remitted to the IRB not later than the last day of the following calendar month.


Tax Adminstration

  • Allow payment by installments for balance of tax payable under deemed assessments.
  • Allow second revision for tax installment scheme (CP500) not later than 31 October for that YA.


Real Property Gains Tax

  • The scope of no gain no loss be expanded to include the transfer of real property between former spouses which is carried out pursuant to an order of any court in consequence of the dissolution or annulment of their marriage where the transferor is a Malaysian citizen.
  • The scope of no gain no loss for transfer of assets owned by an individual, his spouse, jointly owned with his spouse or connected person, or by his and/or her nominee / trustee, to a controlled company is limited to controlled company incorporated in Malaysia.

Highlights of Malaysia Budget 2023