The Malaysian Budget 2021 was announced on 6 Nov 2020, which is mainly focused on three major goals naming business continuity, Rakyat’s well-being, and economic resilience. To achieve these goals, the Malaysian government is planning to offer some lucrative tax incentives for a wide range of businesses.
Some of the most prominent highlights of the Malaysian Budget 2021 are listed below.
1. The companies willing to relocate their business operations to Malaysia with new investments would also enjoy extended tax incentives.
2. Tax incentives have also been extended for those pharmaceutical companies (up to 31 December 2022).
3. The Global Trading Centre incentive scheme is also part of the budget 2021, which offers a 10% income tax rate for 5 years (can be renewed for another 5 years).
4. The 15% flat income tax rate is available for specific qualifying individuals (non-residents), who have been holding important positions in their companies for 5 consecutive years. Such companies must have been awarded tax incentives linked with relocation under PENJANA initiative
5. The Principal Hub scheme is also going to be extended for additional two years. Furthermore, the businesses can enjoy relaxed conditions even after the renewals of this scheme for the next five years.
6. The Returning Expert Program (REP) also sees some extension of tax incentives for three years. These include:
- A flat-rate income tax of 15% for five years
- Excise and import duty exemption for purchasing a vehicle (exemption limit-MYR 100,000)
7. The tax incentives for exporting private healthcare companies are also extended for another two years.
8. The manufactures of building components (industrialized) can also seek an extension of tax incentive for the next five years.
9. Imposition of tourism tax for premises reserved through online platforms.
10. The Tax incentives for the business associated with maintenance, repair, and overhaul (MRO) activities are extended for another 2 years. Such activities must be related to a specific sector including:
- Building or repairing ships
- Bionexus status
- Economic corridor developments
11. Furthermore, a variety of other income tax measures under consideration. One of these includes lowering the income tax rate from 14% to 13% for the MYR 50,001 to 70,000 bracket.
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