2007 Budget Highlights - Tax Commentary
The Prime Minister, YAB Dato` Seri Abdullah Bin Hj. Ahmad Badawi, who is also the Minister of Finance, presented the 2007 Budget on Friday, 1 September 2006.
The 2007 Budget`s theme is "Implementing the National Mission Towards Achieving the National Vision". The main objective is to ensure that the National Mission, which provides the development framework to achieve Vision 2020, is translated into programmes and projects to be implemented expeditiously and effectively to make Malaysia a developed nation.
2007 Budget Highlights - Tax Commentary:
1. Reduction in corporate tax rate by two percentage points over two years of assessment. For the Year of Assessment 2007, the corporate tax rate will be
reduced from 28% to 27% ¡£ For the Year of Assessment 2008, the corporate tax rate will be reduced to 26%.
2. To reduce the cost of doing business, it is proposed that the 10% penalty on withholding tax be imposed on the amount of unpaid tax and not on the total payment.
3. Special regulations pertaining to the tax computation of property development and construction contract businesses to be formulated.
4. To promote the growth of the national shipping industry, payments made by Malaysian resident companies to a non-resident for the rental of ships under a voyage charter, time charter or bare boat charter will be exempt from income tax.
5. Re-defining of the scope of investment holding company, such that income from the business of letting property, where a company provides any maintenance and support services in respect of that property, is excluded from the eighty percent threshold.
6. Improvement in tax benefits for Islamic banking, insurance and capital markets to spur sector
7. Tax exemption to Malaysian banks deriving income from overseas operations.
8. Differing tax rates for unit holders of Real Estate Investment Trusts (REITs). Distributions from REITs listed on Bursa Malaysia to unit holders other than resident corporate unit holders will be subject to tax.
Posted Date: 22 Apr 2007