Malaysia Middle-Income Tax Lowered, Boosting Economic Growth and Providing Relief for Taxpayers
Every income earner in Malaysia needs to pay income tax. But with the rising inflation, Malaysians of a lower and middle-class income group have been affected the most. The recent revised Budget 2023 has decided for Malaysia’s middle income tax lowered by two per cent.
The move by Malaysia’s Finance Minister is to help middle-income earners improve purchasing power and alleviate some financial burden. Malaysia’s middle-income earners are those earning between RM35,000 to RM100,000 annually.
Beneficial For The People
With the Malaysia income tax lowered, the middle-income band group will benefit from the extra money in one way or another. While the lower income band receive support in many forms, the middle-income earners have been weathering financial burden for some time. About 2.4 million taxpayers will benefit from the lowered income tax rate.
Currently, Malaysia has a progressive income tax rate, i.e., the more your income, the higher the tax rate. The lowered tax rate in Malaysia will be applicable from the year of assessment 2023. This means taxpayers earning between RM35,001 and RM100,000 will pay 17% tax instead of 19% starting from YA 2023.
Though the Government will have reduced tax revenue from this income band, the benefits for the people outweigh the Government’s distress.
Tax For Development
Income tax is an important source of revenue for the Malaysian Government. To ensure proper public infrastructure development and maintenance, the Government of Malaysia collects various taxes, including income tax. It allocates and spends tax collections for national security, physical development and infrastructure. It includes roads, hospitals, and schools, as well as economic and social development such as health services, education and welfare of the people.
Income tax also helps to fund a variety of vital programs and services, and it also helps to reduce income inequality. Though income inequality is subject to many other factors, the tax collected from income tax and other taxes can play an essential role in reducing income inequality by redistributing wealth and providing a safety net for low-income families.
The lowered tax will greatly relieve several small business owners and entrepreneurs in the income group. While for the others, we’re here. By partnering with 3E Accounting, you can get holistic business advisory solutions, including personal and corporate taxation. Contact us for more.