The Prime Minister, YAB Dato’ Sri Mohd. Najib Tun Abdul Razak, who is also the Minister of Finance, tabled the 2012 Budget on Friday, 7 October 2011.
The theme of the 2012 Budget “National Transformation Policy: Welfare for the Rakyat, Well-Being of the Nation”, reflects the Government’s focus on enhancing the welfare of the people and the journey to become a developed and high-income nation.
A total of RM 232.8 billion is allocated in 2012 Budget. 78% (RM181.6 billion) of it is for operating expenditure and 22% (RM51.2 billion) is for development. This is the largest budget in the history of Malaysia, with an increase of 9.4% compared to 2011. A total of RM 212 billion has been allocated for 2011Budget.
To further support economic growth, the Government will implement a Special Stimulus Package through Private Financing Initiatives. In 2012, total projects amounting to RM6 billion will be implemented through the Special Stimulus Package and several public projects will be implemented to stimulate the economy and enhance the well-being of the rakyat.
The five main focus areas of the Budget are:
1. Accelerating investment;
2. Generating human capital excellence, creativity and innovation;
3. Rural transformation programme;
4. Strengthening the civil service;
5. Easing inflation and enhancing the well-being of the people.
The following are 2012 Budget Highlights:
1. Double deduction is given on expenses incurred in implementing structured internship programmes, in participating in approved overseas career fairs and in awarding scholarships to Malaysian students.
2. Tax deduction is given on franchise fees paid for local franchise brands.
3. Late tax refunds by the Inland Revenue Board are subject to compensation of 2%.
4. Tax audit time bar is reduced from 6 years to 5 years from the date of assessment except for cases of false declaration, wilful late payment and negligence. Records shall continue to be kept for 7 years.
5. Tax deduction is given for expenses incurred on the issuance of Islamic securities based on the Wakalah principle approved by Securities Commission (SC) or Labuan Financial Services Authority (LFSA). The incentive is given from the years of assessment 2012 until 2015.
6. Existing tax exemptions for the issuance and trading of non-Ringgit Malaysia sukuks originating from Malaysia are extended to Year of Assessment (YA) 2014.
7. 70% tax exemption on statutory income for 5 years is given to an approved Treasury Management Centre (TMC) providing qualifying treasury services to its related companies within or outside the country.
8. 100% income tax exemption for 10 years for Kuala Lumpur International Financial District status companies.
9. Pioneer status or investment tax allowance is accorded to investors undertaking new investments in 4 and 5 star hotels in Peninsular Malaysia, providers of industrial design services and private schools and international schools registered with the Ministry of Education.
10. Extension of 100% import duty and excise duty exemption for new completely-built-up hybrid and electric cars to 31 December 2013.
11. Tax exemption under Section 54A of the Income Tax Act, 1967 (the Act) (Exemption of shipping profits) for shipping companies is reduced from 100% to 70% of statutory income.
12. Tax relief of up to RM3,000 for contributions by individuals to SC approved Private Retirement Schemes (PRS).
13. Real Property Gains Tax (RPGT) at the revised rate of 10% is imposed on disposals within 2 years of acquisition, after 2years & up to 5 years, RPGT is 5%.
14. 100% stamp duty exemption is given on loan agreements for the purchase of residential properties priced up to RM300,000 under the Skim Perumahan Rakyat 1Malaysia (PR1MA).
15. Increase in Employers' Contribution from 12% to 13% for contributors who earn RM5,000 and below.
For more information on 2012 Budget please log on to:
2012 Budget Appendices