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The Budget 2022 sought to relief the economic impact of the Covid-19 pandemic through the grant of numerous tax deductions and relief to taxpayers and business. Given the tax measurements and relief, we could see that the budget has covered a wide spectrum in terms of tax deductions and incentives for business, employment, cost of living, and others that will help to endure and propel economic activities, rebuild economic resilience and reform agenda against the effect of prolonged Covid-19 pandemic

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·  First, course fees mainly purpose for upskilling or self enhancement that conducted by a recognized body will to be tax-deductible for YAs 2022 and 2023 which up to an increased limit amount of RM2,000 for each YA.

·    Second, under the Employees’ Social Security Act 1969, contributions made to the social security organization are deductible up to maximum of RM350 which increased from RM250. This relief had extended to include contributions under the Employment EIS Act 2017 starting effect from YA 2022.

· Accommodation fees at premises or building that registered with the commissioner of Tourism and tourist attractions’ entrance fees that conduct within period 1st March 2020 to 31st December 2022 are deductible up to a maximum of RM1,000. Furthermore, expenditure incurred on purchasing domestic tour packages from licensed travel agents are also eligible for tax deduction starting from 1st January 2021 to 31st December 2022.

· In addition, childcare fees incurred from a registered childcare center or kindergarten continue to be deductible up to a maximum amount of RM3,000 for YA 2020 to YA 2023 with the same requirements and that is individual’s child must be aged six years old and below.

· Payments for the installation, purchase, rental and hire purchase of equipment or subscription for the use of electric vehicle charging facilities for the individuals own vehicle and is not for purpose of running business are deductible to a maximum amount of RM2,500 for each basis year starting from YA 2022 to YA 2023

· Not only that, purchasing of a personal computer, smartphone or tablet that is not intended for business purposes and solely for the individual’s own use or that of his spouse or child, is deductible up to a maximum amount of RM2,500.

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Under Malaysia Budget 2022, tax relief for individuals was enhanced by owing to the adverse economic impact of the Covid-19 pandemic, and includes relief and deductions for the various expense such as self enhancement fees, accommodation at premises for tourism, installation payments and much more.

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Ø  Deferred income tax instalment payment

Ø  Approval for amendments on tax estimates

Ø  Tax deduction on rental reduction

Ø  Carry forward accumulated losses

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·        Extension of tax deduction on renovation cost up to RM300,000 for SOP compliance measures such as improving air ventilation

·        Additional tax deduction up to RM50,000 on expenses spent on workers’ hostel rental

·        Enforcement of COVID-19 SOP compliance through the Ministry of Home Affairs as well as compliance to Act 446 through the Ministry of Human Resources

·        Increasing opportunities for participation in Government procurement, registration requirements will be simplified

·        Creating a second Business Travellers Centre in Johor (RM10 m)

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·       RM14.5 b for children’s schooling supplies

·       RM1 b for school maintenance and upgrading works

·       RM50 million to fund the purchase of teaching aids and to improve the facilities in special needs schools

·       PerantiSiswa Keluarga Malaysia provide RM450 m to supply a tablet to every B40 student in institutions of higher learning.

·       RM6.6 b for Technical and Vocational Education and Training (TVET)

·       increase the Orang Asli Secondary School students’ subsistence rate to RM4 per day.

·       RM10 m to encourage and educate children in Sabah and Sarawak

·       RM6.6 billion is allocated for educational purposes to Bumiputera institutions

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·       RM2 billion to fund the vaccination programme.

·       RM2 billion to enhance the capacity of public health service facilities

·       Sponsorship of medical specialist programmes with RM100 m

·       RM70 m on mental health support services, counselling, and psychosocial support

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·       BKM channel RM2,000 to households earning less than RM2,500 per month with 3 or more children.

·       Assistance of RM500 to single parent households that monthly income less than RM5,000.

·       assistance of RM300 to senior citizen households.

·       provide RM25 million to Yayasan Keluarga Malaysia

·        RM30 m to upgrade Government buildings infrastructure

·       RM10 m for Independent Living Centres and the Government Industrial Training and Rehabilitation Centre

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The following kinds of foreign-sourced income are tax-exempt:

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The following kinds of foreign-sourced income are tax-exempt:

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Dividends obtained by corporations and limited liability partnerships; and Income received by individual taxpayers in all forms.

From January 1, 2022 to December 31, 2026, the income tax exemption is in force.

According to the Chartered Tax Institute of Malaysia, the dividend tax exemption will encourage additional investments to be repatriated to Malaysia and strengthen the country's position as a location for regional headquarters.

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Stamp duty has been increased. As announced in the 2022 budget, the government has increased the stamp tax on share contract notes, bringing the stamp duty ceiling to 1,000 ringgit (US$238) per note. Any money in excess of this amount will be remitted.

From January 1, 2022 to December 31, 2026, the remittance applies to all contract notes issued by all stocks listed on Malaysia's stock market.

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Issues Tax Exemption for Foreign Sourced Income

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Issues Tax Exemption for Foreign Sourced Income

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Malaysia's government has decided not to tax individual taxpayers on foreign-sourced income, reversing a budget plan from 2022 to do so.

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Impact of the budget announcements on any tax implications for business and individuals.

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Impact of the budget announcements on any tax implications for business and individuals.

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·       Resource allocation costs: lost government tax revenue resulting from the tax incentive

·       Compliance costs: lead to too much investment in a certain area of the economy and too little investment in other areas of the economy.

·       Revenue costs: associated with enforcing the tax incentive and monitoring who is receiving the incentive and ensuring they are properly deserving of the incentive.

·       Corruption costs: similar to revenue costs that it relates to people abusing the tax incentive.

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Encourage individuals and businesses to spend money or to save money by reducing the amount of tax that they have to pay.

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Encourage individuals and businesses to spend money or to save money by reducing the amount of tax that they have to pay.

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·       Positive and negative impacts on an economy

·       Attract investment to a country

·       Increased employment

·       Higher number of capital transfers

·       Research and technology development

·       Difficult to estimate the effects of tax incentives, it can raise the overall economic welfare