National Budget 2016
YAB Dato' Sri Mohd Najib Tun Haji Abdul Razak, Prime Minister and Minister of Finance tabled the National Budget 2016 on Friday, the 23 October 2015 in Parliament.
The 2016 Budget’s theme of “Prospering the people (Rakyat)” and its 5 priorities reflect the Government’s aspiration to achieve its goals of safeguarding the rights and interests of the Rakyat, achieving inclusive and sustainable growth and transforming Malaysia into a high-income and advanced economy. 2016 Budget Priorities:
1. Strengthening Economic Resilience
2. Increasing Productivity, Innovation and Green Technology
3. Empowering Human Capital
4. Advancing Bumiputera Agenda
5. Easing the Cost of Living of the Rakyat
The Malaysian economy impressively grew by 5.3% in the first half of 2015, despite the slowdown in global economic growth and declining commodity prices. Other promising performance indicators for 2015 include a reduction in the fiscal deficit to 3.2% of Gross Domestic Product (GDP) and an unemployment rate of 2.9%. Against this background, the Government’s predictions for 2016 include a 4% – 5% increase in GDP and a manageable inflation rate of 2% – 3% with private investment and consumption being touted as the key drivers of growth.
With national revenue and expenditure forecasted at RM225.7 billion and RM267.2 billion respectively, Malaysia’s fiscal deficit for 2016 is expected to decline to 3.1% of GDP. National revenue is still expected to register some growth in 2016 despite the weak oil prices due to strong Goods and Services Tax (GST) collection, which will be a key contributor to Government revenue.
The following are 2016 Budget Highlights:
(1) Increase in personal income tax rate from 25% to 26% for individuals with chargeable income ranging from RM600,001 to RM1,000,000 and 28% for chargeable income exceeding RM1,000,000.
(2) Review of personal tax reliefs for spouse, parents, children, tertiary education and employee SOCSO contributions. Relief of up to RM250 for voluntary employee SOCSO contribution.
(3) Special reinvestment allowance incentive from YA 2016 to YA 2018 for companies which have exhausted their eligibility for Reinvestment Allowance incentive.
(4) Value-added conditions for SMEs to qualify for allowance for increased exports have been lowered by 10% from YA 2016 to YA 2018.
(5) Automatic double deduction for R&D project expenditure of up to RM50,000 incurred by SMEs.
(6) Extension of existing tax incentives for food production, tour operators, Islamic fund management services and Real Estate Investment Trusts (REITs).
(7) Extension of zero rated goods and exempt services & special GST rebates. Domestic air transportation services for rural air services between Sabah, Sarawak and Labuan to be regarded as exempt supply. Rebates on GST paid for prepaid mobile phone users.
(8) Effective from 1 July 2016, minimum wage will be increased from RM900 to RM1,000 per month for peninsula Malaysia and from RM800 to RM920 for Sarawak, Sabah and Labuan.
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Posted Date: 12 Jan 2016