2024 Malaysia Budget highlights

Termed as the second MADANI budget, the Unity Government made the largest allocation in the country’s history with RM393.8 billion. At the time of writing, the Finance Bill which will enact the changes into law has not been released.

The 2024 budget highlights are set out below:

Key announcements

• Service tax to increase from 6% to 8%, except for services which are related to food & beverages and telecommunications. The scope of service tax will be expanded to include logistics, brokerage, underwriting and karaoke services.
• High Value Goods Tax at a rate of 5% to 10% on certain high value items such as jewellery and luxury watches, depending on the value threshold.
• Global Minimum Tax to be implemented in year 2025 on companies with global income of at least EUR750 million.
• Capital Gains Tax of 10% on net profit for disposal of unlisted shares by local companies at the rate of 10% net profit from 1 March 2024.
• E-Invoicing will be mandatory to taxpayers with an annual turnover or revenue of more than RM100 million from 1 August 2024. Previously, the initial commencement date announced was on 1 June 2024. E-Invoicing for taxpayers in other income brackets will be done in stages beginning 1 July 2025.

Individual tax

• Tax relief up to RM2,000 for upskilling courses is extended to year of assessment (YA) 2026.
• Effective YA 2024, the scope for lifestyle relief has been expanded to include fees for self-improvement courses such as language, photography, sewing and others.
• Tax relief up to RM2,500 for expenses related to electric vehicle (EV) charging facilities has been extended from YA 2024 to YA 2027.
• Effective YA 2024, tax exemption on childcare allowance received by employees or paid directly by employer to childcare centers is increased from RM2,400 to RM3,000.
• Effective YA 2024, a new tax relief up to RM1,000 is introduced specifically for expenses on sport equipment and activities, including training fees. This relief was previously part of the lifestyle relief.
• Effective YA 2024, medical treatment expenses for self, spouse and child will be expanded to include dental examination and treatment, limited to RM1,000.
• Effective YA 2024, medical treatment, special needs and expenses incurred for parents will be expanded to include full medical examination for parents, limited to RM1,000.
• Tax incentive for women to return to the workforce is extended from YA 2025 to YA 2028.
• Applications period for tax incentive for Returning Expert Programme will be extended to 31 December 2027.

Corporation tax

• Effective from YA 2024 to YA 2027, tax deduction up to RM50,000 for each YA will be given for Environmental, Social and Governance (ESG) related expenditure. This includes preparation of Transfer Pricing Documentation, e-Invoicing implementation and any reporting requirement related to ESG.
• Effective YA 2024, capital allowance for Information and Communication Technology (ICT) equipment and computer software will be revised to initial allowance (IA) at 40% and annual allowance (AA) 20%. The period to claim the capital allowance is reduced from 4 years to 3 years.
• Industrial Building Allowance (IBA) at the rate of 10% will be given to Senior Citizens Private Nursing Case Home approved by the Ministry of Health for building or renovation cost. This allowance is for eligible expenses incurred from 1 January 2024 to 31 December 2026.
• Tax exemption on management fees income from Sustainable and Responsible Investment (SRI) fund management services is extended from YA 2024 to YA 2027.
• Tax deduction on the cost of issuing SRI Sukuk is extended from YA 2024 to YA 2027.
• Tax deduction on rental of non-commercial EV is extended to YA 2027.
• Application period for tax exemption on social enterprises is extended until 31 December 2025.

Tax incentives

• Tax exemption equivalent to 50% of the amount invested by individual investors in equity crowdfunding in expanded to include investment through Limited Liability Partnership Nominee Company and is extended to 31 December 2026.
• Tax exemption equivalent to the amount of investment made by an angel investor is extended to 31 December 2026.
• The scope of Accelerated Capital Allowance (ACA) of 100% in qualifying capital expenditure incurred for automation has been expanded to include commodity sector under Ministry of Plantation and Commodities.
• Tax exemption on statutory income from Shariah-compliant fund management services has been extended to YA 2027, at a reduced rate from 100% to 60%.

Indirect tax

• Effective from 1 January 2024, import duty and sales tax exemption has been granted to eligible manufacturers on the importation and locally purchased manufacturing aids, subject to the type of industry and category of goods.
• Effective 1 January 2024, excise duty rate for sugar sweetened beverages is increased from RM0.40 to RM0.50 per litter.
• Effective 1 January 2024, excise duty will be imposed on chewable tobacco products at 5% + RM27/kg.
• Entertainment duty in Federal Territories (ie Kuala Lumpur, Putrajaya and Labuan) is reduced to between 0% to 10% from the current 25% for selected types of entertainments. Applications to be made to Ministry of Finance from 1 January 2024 to 31 December 2028.

Stamp duty

• Effective 1 January 2024, a flat rate stamp duty of 4% will be imposed on instrument of transfer of property by non-citizens and foreign-owned companies, excluding Malaysian permanent residents.
• Effective 1 January 2024, property transfer documents involving beneficiaries relinquishing their rights to eligible beneficiary as per will, inheritance, or the Distribution Act 1958 will be subjected to a stamp duty of RM10.

Source: Ministry of Finance Malaysia website, Budget 2024 speech, 13 October 2023