The Prime Minister, YAB Dato’ Sri Mohd. Najib Tun Abdul Razak, who is also the Minister of Finance, tabled the 2013 Budget on Friday, 28 September 2012.
The theme of the 2013 Budget “Prospering the Nation, Enhancing Well-Being of the people: A Promise Fulfilled” reflects the Government’s focus on improving the quality of life of the people, ensuring sustainable economic growth, spending prudently and reducing the fiscal deficit with the overall objective of prioritising the people.
For the 2013 Budget, an amount of RM201.9 billion has been allocated for operating expenditure whilst for development expenditure, the amount allocated is RM49.7 billion. On the revenue side, the Federal Government is expected to generate an amount of RM208.6 billion. Taking into account the estimated revenue and expenditure, the Federal Government deficit in 2013 is expected to improve to 4.0% of GDP compared with 4.5% in 2012.
The five main focus areas of the Budget are:
- Boosting investment activity;
- Strengthening education and training;
- Inculcating innovation, increasing productivity;
- Fiscal consolidation and enhancing the public service delivery; and
- Enhancing the well-being of the people.
The following are 2013 Budget Highlights:
1. Business trusts are subject to income tax in the same manner as a company. At the initial stage of establishment, business trusts are given a stamp duty exemption on instruments of transfer of assets while persons disposing real properties or shares in a real property company to a business trust are given real property gains tax exemptions.
2. 100% income tax exemption for 3 years is given to Liquefied Natural Gas trading companies under the Global Investment For Trading (GIFT) programme and 100% investment tax allowance for 10 years is given on qualifying expenditure incurred on investments in activities related to the refining of petroleum products.
3. Limited liability partnerships are subject to income tax in a manner similar to a company.
4. Interest income is to be treated as non-business sourced income unless that interest is received in the course of carrying on a money lending business.
5. The adjusted loss from the business of a family fund of a Takaful operator for a Year of Assessment (YA) is not allowed to be set off against income from other sources and vice versa.
6. Income received by certain approved annuity funds is now tax exempt.
7. An Angel Investor is allowed a tax deduction of the total value of its investment in a Venture Company against all income of the Angel Investor.
8. Expenditure incurred on the provision of treasury shares to employees is allowed a tax deduction.
9. Subject to limited exceptions, withdrawal of contributions made to a private retirement scheme by an individual before the age of 55 is subject to a 8% final withholding tax.
10. 100% income tax exemption and industrial building allowance at an annual rate of 10% are accorded to operators of pre-schools.
11. 100% accelerated capital allowance on security control and surveillance equipment installed in factory premises or buildings used for a business is extended to YA 2015. This also covers companies installing security control and surveillance equipment in residential areas.
12. Double deduction is given on expenses incurred for the issuance of Agro-Sukuk approved by the Securities Commission (SC) or Labuan Financial Services Authority (LFSA) and on expenses incurred for the issuance of retail sukuk and retail bonds.
13. Resident individual tax rates for chargeable income in the bands of RM2,501 to RM50,000 are reduced by 1% in each band.
14. Real property gains tax is revised to 15% for disposals within 2 years and 10% for disposals after 2 years and up to 5 years.
15. 50% stamp duty exemption is accorded on instruments of transfer and loan agreements executed by Malaysians for the purchase of their first residential property valued up to RM400,000.
16. Except for cases related to investigation, false declaration, willful late payment and negligence, the time bar for raising tax assessments or additional assessments is reduced from 6 years to 5 years.
17. RM1 billion for Domestic Investment Strategic Fund under Malaysian Investment Development Authority to leverage on outsourcing opportunities and intensify technology acquisition by Malaysia-owned companies.
18. SME Bank and Islamic Development Bank (IDB) to provide RM200 million to Halal Industry Fund to finance working capital of participating SMEs
19. RM1 billion SME Development Fund under SME Bank
20. Income tax exemption be extended for three years for tour operators who bring in at least 750 foreign tourists or handle 1,500 local tourists a year.
21. To reduce the prices of goods in East Malaysia, the Government has introduced various initiatives, including the price uniformity programme, and subsidy of transportation costs of essential items in Sabah, Sarawak and the Federal Territory of Labuan.
For more information on 2013 Budget please log on to:
www.treasury.gov.my then click “BUDGET”