Review of MSMEs’ Income Tax Treatment and MSME Exclusion Requirements
On the first RM150,000 of chargeable income, the corporate income tax rate for MSMEs would drop from 17% to 15%. Moreover, MSME no longer includes businesses or limited liability partnerships with a more than 20% foreign shareholding.
Modified tax returns can be submitted electronically.
After 2024, businesses, Limited Liability Partnerships, trust organizations, and cooperative societies must file their revised tax filings online.
Modifications to the Capital Allowance Definition of Plant
Intangible assets like software will be added to the definition of “plant,” and the Minister will be given more authority to specify any other assets as assets that are not included in the definition of “plant.”
Extension of Relief Other Than Error or Mistakes Applications
Tax is subtracted from money paid to agents and other parties.
Companies making payments to specific agents, dealers, and distributors as of 1 January 2023 are required to submit withholding tax under Section 107D of the ITA to the MIRB by the end of the following month.
Partnership Income Tax Returns Electronic Submission
With effect from YA 2024, partnerships must electronically file their tax returns.
Application for a Deemed Assessment Balance of Tax Payable Installment Payment Plan
The balance of tax due under a deemed assessment and an additional assessment is now included in the application of payment by installments, as permitted by the Director General.
Employer’s returns for LLPs, trust organizations, and cooperative societies (Form E)
Employers who are LLPs, trust organizations, or cooperative societies must report their electronic filing of employer’s returns beginning in YA 2024.
Trust Bodies and Cooperative Organizations Income Tax Returns Electronically Filed
As of YA 2024, trust organizations and cooperative societies must electronically file their tax filings.
Revision of the Income Tax Rates for Residents
- These changes will take effect from YA 2023 onwards.
- It will affect resident individuals in the chargeable income bands between RM35,001 and RM100,000 by reducing their tax rates by 2%
- Resident individuals in the chargeable income band between RM100,000 and RM1,000,000 by increasing their tax rates by 0.5% to 2%.
Extension of Tax Relief for Childcare Centers and Kindergarten Costs
- Tax exemption will continue to be available for childcare centers and kindergarten fees up to RM3,000 until Year 2024.
Increase of Medical Treatment Expenditure Tax Relief
- The tax deduction for medical expenses for oneself, one’s spouse, and one’s child would rise from RM8,000 to RM10,000.
- The range of income tax exemptions for medical expenses will be broadened to cover the cost of interventions for children under the age of 18 who have autism, attention deficit hyperactivity disorder (ADHD), global developmental delay (GDD), intellectual disability, down syndrome, and specific learning disabilities, with a cap of RM4,000. These modifications will take effect as of YA 2023.
Deposits into the Skim Simpanan Pendidikan Nasional (SSPN) account
- A person may no longer deposit money for his child into the Skim Simpanan Pendidikan Nasional.
- Starting in the year 2023.
The Estimate of tax payable in the Notice of Installment Payments has undergone a second revision (Form CP500)
- Every year, anyone who is not a company, an LLP, a trusted body, or a cooperative society may update their estimated tax liability on Form CP500.
- The YA’s second rewrite may be completed by October 31.
- In effect starting in YA 2023
Important e-Filling for People
- Individuals must submit documents electronically if they are not businesses, limited liability partnerships, trust organizations, or cooperative societies. All persons shall be required to furnish a return of income to the Director General in the approved form on electronic media or by electronic transmission.
- Starting from AY 2024 forward
Increase of Tax Relief on Donations to Takaful or Life Insurance
- Contributions under any written law up to RM4,000; voluntary contributions to EPF (excluding private retirement plans); or mandatory contributions to recognized schemes.
- Voluntary payments to the EPF up to RM3,000 will be included in the tax benefit on life insurance or takaful contributions.
- All contributors to the pension plan under YA 2023, including those who are self-employed, employed, and government employees, are subject to the new approach.
Key Highlights of the Finance Bill 2023 w.r.t Real Property Gains Tax
Transfer of Assets to Controlled Businesses Established Outside of Malaysia
Subject to when assets are transferred to controlled firms formed outside of Malaysia, the disposal price is no longer considered to be comparable to the acquisition price.
Real Estate Transferred to Former Spouse in Divorce Cases as a Result of Court Orders
Due to court directives, the disposal price is now considered to be equal to the acquisition price for real property transfers between divorced couples.
Key Highlights of the Finance Bill 2023 w.r.t Stamp Duty
Agreements for Student Loans and Scholarships are Exempt from Stamp Duty
For agreements made starting on June 1, 2023, the fixed duty of RM 10 on educational loan and scholarship agreements will be extended to cover all levels of education, including certificates (education/skills/professional) issued by any educational and training institutions.
For the Absolute Bill of Sale of Account Receivables or Book Debts, Stamp Duty Treatment is Applicable
Any statutory body, an agency of the Government or of the State Government, or any company in which the Government or the State Government has an interest, which provides financing to a small and medium enterprise, will be subject to the fixed duty of RM10 on the absolute bill of sale of any accounts receivables or book debts.
Arrangements for Discounting Invoices or Hire Purchase Receivables: Stamp Duty Treatment
Any statutory body, an agency of the Government or of the State Government, or any company in which the Government or the State Government has an interest, which provides financing to a small and medium enterprise, will be subject to the fixed duty of RM10 on charge, mortgage, or assignment as security of accounts receivables.