Key Points for SMEs
1. Small and medium enterprises in YA2023 will save up to RM3,000 with a reduced tax rate of 15% on the first RM150,000 of their income. Here is the new tax table for SMEs in YA2023:
Chargeable Income | Tax Rate |
First RM150,000 | 15% |
RM 150,001 to RM 600,000 | 17% |
RM600,001 and above | 24% |
2. Gov will introduce Capital Gain Tax on the sale of shares in private companies (Sdn Bhd) in 2024. The tax scope and details will be announced later.
3. Taxpayers who declare any unreported taxes between June 2023 and May 2024 are eligible for a full waiver of additional taxes and fines (voluntary disclosure programme).
4. Extension of stamp duty exemption on restructuring or rescheduling of loan/financing agreement.
5. Double deductions to the employer on remuneration paid to the employee who is a senior citizen, ex-convict, parolee, supervised person, and ex-drug dependant. This tax incentive is given until year of assessment 2025, and is extended to the employment of inmates and ex-inmates from Henry Gurney School under the Malaysian Prison Department, and protection and rehabilitation institutions and nongovernment care centres registered under the Social Welfare Department.
Grants and incentives for SMEs
6. RM100 million of Digitization Grant Scheme for SMEs and small businesses to support business automation and digitization. This will come in the form of up to RM5,000 matching grant to SMEs subscribing to apps to digitalize their businesses, such as point-of-sales systems, accounts or inventory management.
7. Bank Negara will set aside RM1 billion for small businesses to make improvements to their operations by automating processes and digitalising their operations.
8. RM50 million in matching grants to encourage automation of the plantation sector using robotics and artificial intelligence.
9. Syarikat Jaminan Pembiayaan Perniagaan to provide guarantee up to RM20 billion in loans from SMEs, with a government guarantee of up to 90% for frontier tech, agriculture, and manufacturing companies.
10. Incentives for investment will be restructured in the form of tiered taxes based on performance, such as creating high-value jobs, including local businesses in the supply chain, and setting up new industry groups.
11. Khazanah Nasional and Employees Provident Fund will allocate RM1.5 billion to invest in innovative and rapidly growing Malaysian start-ups.
12. Tax deduction of up to RM1.5 million for companies that list on Bursa Malaysia's ACE and LEAP Markets until assessment year 2025; tax rebate also extended to tech companies that list on the Main Market.
13. RM2 billion is allocated to support green technology start-ups and to help SMEs to implement low-carbon practices. This allocation will be carried out through Bank Negara.
14. RM1.7 billion worth of loan facilities will be granted to help micro entrepreneurs, women and youth. This allocation will be carried out by BSN, Bank Negara and TEKUN (National Entrepreneurial Group Economic Fund).
15. For electric & electronic (E&E) and aerospace sectors in Malaysia, the government is proposing to:
Offer tax incentives and a 15% tax rate for C-suite executives until 2024 for companies (affected by Covid-19) transferring operations to the country;
Provide income tax incentives and investment tax allowances to the aerospace sector until 2025;
Develop Iskandar Malaysia in Johor with a special financial zone and attractive remuneration packages to attract international investors and workers;
Introduce an RM6 billion strategic financing program by Bank Pembangunan Malaysia to promote sustainable and automation initiatives.
Electric Vehicles and Green Initiatives
16. Bank Negara is providing up to RM2 billion to support green tech start-ups and SMEs in implementing low-carbon practices.
17. Bank Pembangunan Malaysia Bhd will offer RM1 billion Sustainable Development Scheme.
18. The Green Technology Financing Scheme will have an increased allocation of RM3 billion until 2025 and will include electric vehicles up to a guarantee limit of 60%.
19. Investment Tax Allowance and Green Income Tax Exemption schemes will have an incentive period will be extended to Dec 31, 2025 for eligible green activities.
20. EV components for local assembly have an import duty exemption until Dec 31, 2027.
21. Manufacturers of EV chargers will have a 100% statutory income tax exemption from 2023 to 2032 plus a 100% allowance on investment tax for five years.
22. Companies leasing EVs not exceeding RM300,000 will also receive tax breaks.
Agriculture and food industries
23. The government is encouraging private sector investment in large-scale agriculture by providing incentives, land, funds, and technology grants.
24. Elaun Modal Dipercepatkan and 100% income tax exemption on capital expenditure are available, and the tax incentive application period for food production projects has been extended until 2025 and includes modern agriculture projects.
25. Bernas is sharing 30% of its net profit from rice imports with rice farmers.
26. The government is providing rice farmers with various subsidies and incentives worth RM1.6 billion as well as RM200 cash per month for three months, or one season, for a total of RM228 million.
27. RM80 million is being allocated to improve the sustainability of the palm oil industry and combat anti-palm oil campaigns. Aerospace Industry
28. New and existing aerospace companies in Malaysia undertaking high-value activities such as manufacturing or assembling of systems, devices, parts, or components and maintenance, repair, and overhaul for aircraft (MRO), systems, devices, parts or components, and engineering & design/services related are given tax incentives as follows:
i. New Company
a. income tax exemption of 70% to 100% for a period between 5 to 10 years; or
b. Investment Tax Allowance of 60% to 100% for a period of 5 years and can be set-off
against 70% to 100% of statutory income for each year of assessment.
ii. Existing Company
Investment Tax Allowance of 60% for a period of 5 years and can be set-off against 70%
of statutory income for each year of assessment.
The tax incentive is for applications received by the Malaysian Investment Development
Authority (MIDA) until 31 December 2025. Relevant attachments: