1. The maximum tax relief for individual, spouse and children’s medical expenses for serious medical ailments be increased from RM6,000 to RM8,000.
2. The maximum tax relief for medical treatment, special needs and carer expenses for parents be increased from RM5,000 to RM8,000.
3. Tax relief for a full health screening be increased from RM500 to RM1,000. Scope of health screening expanded to include expenses on vaccine such as for pneumococcal, influenza and Covid-19. – This tax relief, given on vaccination expenses is for the taxpayer, spouse and child limited up to RM1,000.
4. Reduction of personal income tax rate by 1% for chargeable income bands from RM50,001 to RM70,000.
5. The income tax exemption limit for compensation on loss of employment will be increased from RM10,000 to RM20,000 for every completed year of service. Exemption is available for a period of two years of assessment.
6. Full stamp duty exemption will be given to transfer of ownership document and loan agreement for the purchase of a first home worth not more than RM500,000. This exemption will be for the purchase agreement from January 2021 to Dec 31, 2025.
7. The limit of the ‘lifestyle tax relief’ has been raised from RM2,500 to RM3,000, which is an increase of RM500 specifically for sports-related expenditure, including entrance participation fees for sports competitions. The scope of the relief has also been expanded to include subscription to electronic newspapers.
8. To encourage parents to save for the costs of their children’s higher education fees, a tax relief of up to RM8,000 for National Education Savings Scheme (SSPN) net savings will be implemented until year of assessment 2022.
9. The Private Retirement Scheme (PRS) tax relief of RM3,000 a year has been extended till year of assessment 2025.
10. The maximum tax relief for disabled husband and wife be increased to RM5,000 from RM3,500.
11. The scope of tax relief on self-education fee of RM7,000 be expanded to include courses of up-skilling or self-enhancement. The maximum relief for education fee under this scope to be limited to RM1,000.
12. Returning expert may choose to be taxed at a flat rate of 15% for a period of 5 consecutive years. This is extended till year 2023.
13. Imposition of excise duty at ad valorem rate of 10% on electronic cigarette and RM0.40/ml on liquid or gel used in electronic cigarette (including Vape)
14. Tourism tax is expanded to include accommodation booked thru online platform
15. Stamp duty exemption on insurance policy and takaful certificate relating to Perlindungan Tenang Products with yearly premium/contributions not exceeding RM100 be extended till 31 December 2025.
16. RM6.5billion allocated in Bantuan Prihatin Rakyat (BPR)
Household Income <RM2,500
1 child RM1,200
≥ 2 children RM1,800
Household Income RM2,501 to RM4,000
1 child RM800
≥ 2 children RM1,200
Household Income RM4,001 to RM5,000
1 child RM500
≥ 2 children RM750
Single individuals earning < RM2,500
21 years old & above RM350
17. Banks will enhance the TRA to B40 borrowers who are BSH recipients or BPR, and to micro enterprises with loans of up to RM150,000. Borrowers in this category will be given the following options:
Option 1: A moratorium on their instalments for a period of 3 months; or
Option 2: Reduce their monthly repayment by 50 percent for a period of 6 months
Eligible borrowers will only need to contact their banks to choose the options and complete the documentation.
For the M40 borrowers, the application process for the repayment assistance will be simplified. Borrowers would only need to make a self-declaration of the reduction in income in order to secure the repayment assistance. The facility for the B40 and M40 will commence in December 2020.
18. mySalam’s coverage broaden to include medical devices such as heart stent or prosthesis.
19. B40 aid recipients will be given a RM50 voucher under Perlindungan Tenang Voucher Programme as financial aid to purchase Perlindungan Tenang products such as life takaful and personal accident. At the same time, the Government will also extend the stamp duty exemption period on all Perlindungan Tenang products with an annual premium or contribution value not exceeding RM100 for another 5 years until year of assessment 2025.
20. minimum employee EPF contribution rate is reduced from 11 to 9% beginning January 2021 for a period of 12 months
21. Facility to withdraw EPF savings from Account 1 for EPF members who have lost their jobs. The amount allowed will be RM500 a month with a total of up to RM6,000 over 12 months. Eligible contributors can apply beginning January 2021.
22. EPF will allow members to withdraw from EPF Account 2 to purchase insurance and takaful products which are approved by EPF relating to life and critical illnesses coverage for themselves and their family.
23. For the year 2021, the Job Search Allowance will be extended by 3 months and the rate will be: 80% in the first month, 50% for the second till the sixth month 30% for the last three months. For this purpose, an allocation of RM150 million will be provided and is expected to benefit up to 130 thousand job seekers.
24. The Government will also continue the PenjanaKerjaya – hiring incentive programme under PERKESO, with several enhancements as below:
i. Incentive for employees earning RM1,500 and above will be enhanced from a flat rate of RM800 per month to 40 percent of monthly income, subject to a maximum incentive of RM4,000;
ii. to encourage employment for the disabled, long –term unemployed, and retrenched workers, employers will be given an additional incentive equivalent to 20 percent of the employee’s monthly income making the total incentive to employers’ amount to 60 percent; and
iii. For sectors with a high reliance on foreign workers such as construction and plantations, a special incentive of 60 percent of monthly wages will be provided whereby 40 percent will be channelled to the employer while 20 percent will be channelled as a wage top up to the local worker replacing the foreign worker.
The above three incentives will be given for a period of six months; and
iv. For those employed under the PenjanaKerjaya, the maximum training rate which can be claimed by employers will be increased from RM4,000 to RM7,000 to enable workers to take up high skilled training and professional certifications.
To ensure the success of these four PenjanaKerjaya initiatives, a total of RM2 billion will be allocated, which is expected to increase the employment opportunities for 200 thousand job-seekers.
25. one-off RM50 into e-wallet accounts for those aged 18 to 20 years via the eBelia Programme.
26. To enhance the welfare of vulnerable groups, the Government has agreed to increase the monthly rate of financial assistance as follows: i. The rate for Financial Assistance for Person With Disabilities (OKU) who are Incapable of Work is increased from RM250 to RM300;
ii. The rate for Financial Assistance for Older Persons, Carers of Bed-ridden Disabled Person (OKU) and Chronically Ill Patient is increased from RM350 to RM500;
iii. The rate for Incentive Allowance for Disabled Workers is increased from RM400 to RM450; and
iv. The rate for Financial Assistance for Children is increased from RM100 per child with a maximum of RM450 per family, to RM150 per child aged seven years to 18 years, or RM200 per child aged six years and below with a maximum of RM1,000 per family. It is hoped this increase will help with childcare and nutritious food.
Investment in Key Sectors RM1 billion special incentive package for high value-added technology, with a focus on supporting R&D investment in aerospace and electronics.
RM500 million High Technology Fund will be provided by Bank Negara Malaysia (BNM) to support high technology and innovative companies.
Incentives for businesses relocating into Malaysia
Application for the incentive of special tax rates for manufacturing companies relocating businesses to Malaysia be extended for another 1 year until 31 December 2022;
the scope of tax incentives will also be extended to companies in selected services sector which have significant multiplier effect by providing an income tax rate of 0 to 10% for a period of 10 years.
4. Initiatives in Making Malaysia A Destination For High-Value Service Activities
i. Relaxation of tax incentive conditions for Principal Hub, the incentive will be extended until 31 December 2022;
ii. New tax incentive for the establishment of Global Trading Centre at a concessionary rate of 10% for a period of 5 years and renewable for a period of another 5 years;
iii. Limit on sales value for value-added and additional activities carried out in the Free Industrial Zone and Licensed Manufacturing Warehouse be increased from 10% to 40% of the total annual sales value; and
iv． Special income tax treatment at a flat rate of 15% for a period of 5 years to non-resident individuals holding key positions for strategic new investment by companies relocating their operations to Malaysia under the Pelan Jana Semula Ekonomi Negara (PENJANA) incentive package.
5. Existing Tax Incentives extended until 2022 include tax incentives for MRO activities for aerospace, building and repair of ships, Bionexus status and economic corridor developments.
6. A National Development Scheme (NDS) valued at 1.4 billion ringgit by Bank Pembangunan Malaysia will be introduced to support the implementation and development of domestic supply chain and increase the production of local products such as medical devices.
7. Extension of Funds and Schemes Maritime Development and Logistics Scheme; Sustainable Development Financing Scheme; Tourism Infrastructure Scheme; and Public Transport Fund will be extended until 31 December 2023 with a fund size of RM 3.7 billion. ( RM500 million ringgit from these schemes will be designated for Bumiputera entrepreneurs.)
8. Targeted Assistance and Rehabilitation facility worth RM2 billion under Bank Negara Malaysia will be introduced through loans from banking institutions for affected SMEs.
9. Initiatives for Locally Manufactured Products i. RM25 million for the Micro Franchise Development, Affordable Franchise programmes and Buy Made in Malaysia programme;
ii. RM150 million for training programmes, sales assistance and digital equipment for 100,000 local entrepreneurs to encourage adoption of e-commerce under the e-Commerce SME and Micro SME Campaign;
iii. RM150 million to implement Shop Malaysia Online initiative together with the e-commerce platform to encourage online spending which will benefit 500,000 local sellers including the halal products and handicrafts entrepreneurs; and
iv. RM35 million to promote Malaysian-made products and services under the Trade and Investment Mission.
10. Tax Inventive for manufacturers of pharmaceutical products including vaccines to invest in Malaysia, preferential tax rate of 0 to 10% for 10 years.
11. Empowering the Agriculture Sector
i. RM30 million allocated in Community Farming Programme and expanded to the semi-urban and rural communities. This programme provides equipment such as fertigation kits and crop media up to RM500 per individual or RM50,000 per community, is expected to benefit 60,000 participants;
ii. RM50 million allocated to implement Organic Agriculture Project to benefit 1,000 communities;
iii. RM10 million in matching grants allocated in e-Satellite Farm Programme, with up to RM30,000 to the Pertubuhan Peladang Kawasan (PPK) for the purpose of purchasing agriculture equipment based on the Internet of Things including drones. The programme is expected to benefit more than 300 PPKs with a membership of nearly 1 million farmers and planters;
iv. For fisherman: Financing under the Vessel Modernization and Capture Mechanization Programme of up to RM 5 million (at a rate of 3.5%) for a period of 10 years to fishermen in zones A and B to upgrade equipment, nets and boats (RM150 million provided by Agrobank);
v. For agricultural entrepreneurs: Funding under the Agrofood Value Chain Modernization Programme of up to RM1 million (at a rate of 3.5%) for a period of 10 years for agricultural entrepreneurs to procure equipment and technology based on IR4.0. (RM60 million provided by Agrobank);
vi. For micro-entrepreneurs: RM10 million through matching grants is allocated in Aquaculture Development Programme, up to RM20,000 for micro entrepreneurs to purchase equipment to develop high-value aquaculture livestock such as lobster and grouper; and
vii. The implementation of impactful and high-value farming projects with an RM100 million through collaboration with State governments such as pineapple farming in Johor and freshwater prawns in Negeri Sembilan.
12. Commodity Sector
RM20 million allocated to extend Malaysian Sustainable Palm Oil Certification or MSPO to boost growth and enhance the competitiveness of palm oil industry.
RM30 million matching grants for commodity sector industry’s investment in mechanisation and automation;
RM16 million allocated in incentives for latex production, focused in Pahang, Terengganu and Kelantan;
A furniture industrial park to be opened in Pagoh, to further boost the timber industry and provide employment opportunities.
13. Tourism Industry
6 months HRDF levies exemption will be given (effective from 1 January 2021) This exemption will cover the tourism sector and companies affected by the COVID-19 crisis.
Training and placements for 8,000 employees of airline companies in Malaysia with an allocation of RM 50 million to be provided by Government.
RM35 million allocated to the Malaysia Healthcare Travel Council to enhance the competitiveness of the local health tourism industry.
Income tax exemption for the export of private healthcare services extended until the year of assessment 2022.
RM1,000 Grant Khas Prihatin be given to traders, hawkers, taxi drivers, e-hailing, rental cars and tour drivers in Sabah.
14. RM1 billion in Industrial Digitalization Transformation Scheme to be provided by BPMB, to boost digitalization activities. These funds will be extended until 31 December 2023.
15. For automation and modernization, RM150 million additional funds will be provided under the SME Digitalization Grant Scheme and the Automation Grant. The Grants’ eligibility conditions are relaxed for micro SMEs and start-ups that have been operating for at least six months.
16. Financing for Business
i. Micro Credit Financing
Through PUNB, RM230 million allocated as financing to SMEs for working capital, upgrading of automation systems and equipment and expenditure related to the implementation of COVID-19 SOP compliance.
For Bumiputera micro and small businesses, RM300 million in Lestari Bumi financing facility scheme provided by SME Bank.
National Supply Chain Finance Platform (“Jana Niaga”) introduced to assist the financial position of SMEs that supply to the Government or GLCs. – This platform will be led by EXIM Bank with the involvement of several financial institutions. RM300 million will be provided by EXIM Bank to drive Jana Niaga. – Implementing GLCs are Petronas and Telekom Malaysia and will be extended to other GLCs, Ministries and Government agencies in the future.
RM50 million matching grant allocated in Peer-to-peer financing (P2P) under Securities Commission Malaysia (SC) for SMEs financing.
Almost RM1.2 billion micro credit financing will be provided through TEKUN, PUNB, Agrobank, BSN and other financial institutions. – This includes RM110 million to Micro Enterprises Facility under BNM to encourage entrepreneurship among gig workers and self-employed and to support iTEKAD program.
ii. Loan Guarantees Financing
RM10 billion increase in loan guarantees given under Syarikat Jaminan Pembiayaan Perniagaan, with RM2 billion reserved for Bumiputera entrepreneurs.
For corporate companies involved in highly high skilled industries such as oil & gas and aerospace, RM3 billion in guarantee allocated under the Dana Jamin Prihatin Guarantee Scheme and will be extended until 2021 with improved terms and conditions.
Others Consumer Credit Act will be formulated – To encourage standardised credit lending activities and increase consumer protection. – This formulation will be led by Bank Negara Malaysia and Securities Commission.
iii. Alternative Financing
For Equity Crowd Funding (ECF) – 50% income tax exemption on the investment amount or limited to RM50,000 will be given. – An allocation of RM30 million in matching grant will also be invested on ECF platforms under the supervision of the SC.
17. For construction contractors
RM2.5 billion allocated for contractors in Class G1 to G4 – including additional RM200 million for maintenance projects for Federal Roads and RM50 million for PPR houses. – Government will also extend flexibilities accorded on procurement procedures until December 2021 to expedite the implementation of developmental projects.
RM50 million allocated in financing access for construction contractors through MARA, under the Skim Pembiayaan Kontrak Ekspres, SPiKE will be offered to Bumiputera contractors who deal with the Government to facilitate cash flow in implementing projects.
18. RM20 million allocated to the Malaysian Global Innovation and Creativity Center or MaGIC and selected agencies in social enterprise development program.
– Social enterprises with Government Impact e-Procurement Program Certificate from MaGIC and other selected agencies can join in the pilot project for the e-Procurement registration to become suppliers to the Government. – With this initiative, social enterprises can supply goods and services in total up to RM20 million per year.
19. RM2 billion allocated to extend the Green Technology Financing Scheme 3.0 (GTFS3.0) for two years up to 2022.
Three main objectives of Budget 20211. The wellbeing of the people 2. Business continuity 3. Resilience of the economy
PROPOSALS AFFECTING INDIVIDUAL
TAX RATE
The income tax rate of those earning between RM50,001 and RM70,000 will be lowered by one percentage point (from 14% to 13%).
TAX RELIEFS & EXEMPTIONS
The tax relief on expenses for medical treatment, special needs and parental care will be increased from RM5,000 to RM8,000.
Tax exemption will be given for the vaccination costs for taxpayer, spouse and children limited to RM1,000.
The tax relief limit on taxpayer, spouse and child medical treatment for serious illnesses will be increased from RM6,000 to RM8,000. This includes the tax relief for medical examination expenses which will be increased from RM500 to RM1,000.
The tax relief for disabled spouse will be increased from RM3,500 to RM5,000.
The Private Retirement Scheme (PRS) tax relief of RM3,000/year will be extended until year of assessment 2025.
The limit of the ‘lifestyle tax relief’ will be increased from RM2,500 to RM3,000, which is an increase of RM500 specifically for sports-related expenditure.
A tax relief of up to RM8,000 for National Education Savings Scheme (SSPN) net savings will be implemented until year of assessment 2022.
The scope for the tax relief for education expenses has been expanded to cover fees for attending up-skilling and self enhancement courses in any field of skills recognized by the Department of Skills Development, Ministry of Human Resources. This relief is only limited to RM 1,000/year until year of assessment 2022.
The income tax exemption limit for compensation paid upon job loss will be increased from RM10,000 to RM20,000 for every year of service completed for years of assessment 2021 and 2022.
To encourage more individual investors to participate in equity crowdfunding (ECF) platforms, an income tax exemption of 50% from the invested amount or limited to RM50,000 will be given.
EMPLOYEES PROVIDENT FUND (EPF)
EPF contributors will be allowed to withdraw RM500/month from EPF Account 1, up to a total of RM6,000/year, application starts from January 2021.
EPF contributors can also make withdrawal from EPF Account 2 to purchase insurance products for themselves and their family members.
The minimum employee EPF contribution rate will be reduced from 11% to 9% for a period of 12 months starting from January 2021.
STAMP DUTY
Stamp duty exemption for first residential home Full stamp duty exemption will be given to transfer of ownership document and loan agreement for the purchase of a first home worth not more than RM500,000. This exemption will be extended until year 2025 for the sale and purchase agreement executed from 1 January 2021 to 31 December 2025.
Stamp duty exemption for Perlindungan Tenang products Stamp duty exemption is given on the purchase of insurance policies and takaful certificates for Perlindungan Tenang products covering life, fire and flood insurance with an annual premium or contribution value not exceeding RM100. This exemption will be extended until year 2025 for insurance policies and takaful certificates issued from 1 January 2021 to 31 December 2025.
Stamp duty exemption on contract notes for trading of Exchange Traded Fund (ETF) This exemption will be extended until assessment year 2025 for the trading of ETF executed from 1 January 2021 to 31 December 2025.
OTHERS
Excise duty will be imposed on all types of electronic and non-electronic cigarette devices starting from 1 January 2021.
The scope of imposition of tourism tax will be expanded to accommodation premises reserved through online platform providers.
PROPOSALS AFFECTING COMPANIES
Additional tax deductions will be given to employers who employ senior citizens, ex-convicts, parolees, supervised persons and ex-drug dependants. This tax deduction will be extended until year of assessment 2025.
A Human Resource Development Fund (HRDF) levy exemption will be given for six months effective 1 January 2021 which covers the tourism sector and companies affected by Covid-19.
The tax exemption for private healthcare service exports will be extended until year of assessment 2022.
The stamp duty exemption for revival of abandoned residential property projectcertified by the Ministry of Housing and Local Government will be extended until year of assessment 2025.
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