Highlights of Budget 2021

Industrial Insight > Highlights of Budget 2021
Nov 16 2020
Article by Cheng & Co

Highlights of Budget 2021

1. REVENUE & EXPENDITURE

 

2. Budget Highlights

BUDGET PROPOSAL – Changes Affecting Individuals
BUDGET PROPOSAL – Changes Affecting Companies And Unincorporated Businesses
BUDGET PROPOSAL – Investment Incentives
BUDGET PROPOSAL – Stamp Duty

a. BUDGET PROPOSAL – Changes Affecting Individuals

1. Maximum Tax Relief For Individual

Tax Relief

Current

Budget 2021

Personal tax rate for chargeable income range in between RM50,001 to RM70,000

  • 14%

  • 13%

  • W.e.f YA2021

Medical treatment of serious illness (personal, spouse and child)

  • Maximum RM6,000

  • Maximum RM8,000

  • W.e.f YA2021

Full health screening

  • Maximum RM500

  • Maximum RM1,000

Expenses for medical treatment, special needs and parental cares

  • Maximum RM5,000

  • Maximum RM8,000

  • W.e.f YA2021

Vaccination relief (self, spouse and child)

  • Nil

  • Maximum RM1,000 (NEW)

Private Retirement Scheme (PRS)

  • Maximum RM3,000

  • YA2012 – YA2021 (10years scheme)

  • Maximum RM3,000

  • YA2022 – YA2025 (Extended)

SSPN net saving relief

  • Maximum RM8,000

  • YA2019 – RM2020

  • Maximum RM8,000

  • YA2021 – RM2022 (Extended)

 

Tax Relief

Current

Budget 2021

Disabled spouse relief

  • RM3,500

  • RM5,000

  • W.e.f YA2021

Lifestyle tax relief

  • Maximum RM2,500

  • Maximum RM3,000

  • Entrance fee for sport competition

  • Electronics newspaper subscription fee

  • W.e.f YA2021

Tax exemption for compensation upon retrenchment

  • RM10,000 for every year of service completed

  • W.e.f 1st July 2008

  • RM20,000 for every year of service completed

  • YA2020 and YA2021

Education fees (self)

  • Maximum RM7,000

  • Additional RM1,000

  • Any up-skilling and self-enhancement course in any field which certified by Jabatan Pembangunan Kemahiran, Kementerian Sumber Manusia

  • W.e.f YA2021 until YA2022

 

2. Employees Provident Fund (EPF)

  • EPF contribution (employee deduction):
  • Decreased from 11% to 9% starting January 2021, for 12 months.


EPF withdrawal – Account 1

  • RM500 per month up to 12 months

  • Up to maximum of RM6,000 per year

EPF withdrawal – Account 2

  • To purchase life and chronic diseases insurance products or Takaful insurance

3. Unemployment And Graduates

– Job Seeker Allowance from SOCSO :

  • Extended 3 months Allowance for job seeker is now extended to a period of three (3) months additionally apart from six (6) months provided previously with RM150 million to be allocated to 130,000 job seeker as below:

  • 1st month : 80% of salary;

  • 2nd to 6th month: 50% of salary;

  • 7th to 9th month: 30% of salary

– RM700 million for MySTEP to offer 50,000 job opportunities in government sector and government linked companies

– RM1 billion for reskilling and upskilling programme in which involving 200,000 people

– Voucher worth of RM3,000 allocated to 50,000 graduates for further study in relation to professional field

4. Personal Incentive

  • B40 RM50 cash voucher as financial assistance to purchase Perlindungan Tenang products including Takaful life and personal accident insurance

  • A telecommunication credit worth of RM180 that can be used for internet subscription, or defray part of the cost to buy mobile phones

    • Rate for monthly welfare for children from low income range family)

    • RM200 per child aged 6 years old and below,

    • RM150 per child aged 7 – 18 years old

    • Maximum RM1,000 per family

  • Specific repayment assistance:-

    • Deferment of instalment payment for 3 months, or

    • 50% reduction on the instalment payment for 6 months

5. 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 – RM5,000

    • 1 child : RM500

    • ≥ 2 children : RM750

  • Single individual income < RM2,500

    • 21 years old and above  : RM350

 

6. Others Welfare

  • eBelia Programme

    • RM75 million to encourage cashless economic culture

    • One-off RM50 will be credited to e-wallet accounts of those aged between 18 and 20 years old.

  • Senior citizens, disabled and home volunteers

    • Increment of assistance value from RM150 to RM400

    • Increment of assistance value from RM30 to RM80 for Home Help Services Programme (Program Khidmat Bantu client)

    • Applicable to first 2,000 home volunteers and 8,000 senior citizens and disabled

  • Unlimited Travel Pass initiative

    • The My30 Unlimited Travel Pass initiative will be continued and further implemented in Penang and Kuantan.

    • An unlimited monthly travel pass at RM5 will be introduced to students from Year One to Form Six, as well as disabled students.

  • SAVE 2.0 programme

    • SAVE 2.0 programme will be introduced, where an e-Rebate of RM200 for a household purchasing a locally made air-conditioning unit or refrigerator.

 

b. BUDGET PROPOSAL – Changes Affecting Companies And Unincorporated Businesses

1. PENJANA KERJAYA & WAGES SUBSIDY PROGRAMME

  • Incentive for workers earning RM 1500 and above, will be increased from a rate of RM 800 per month to 40% from worker’s monthly salary, limited to RM 4,000 per month

  • Incentive of RM 600 for workers earning RM 4000 and below, maximum number of employees has increased from 200 to 500 employees. Cover industry of retails and tourism

  • Additional incentive 40% + 20% for hiring local workers as replacement of foreign workers.

  • Government to provide incentives for private companies hiring fresh graduates, at RM1,000 a month for three months, for each fresh graduate hired. Companies may also claim a RM4,000 grant to train the newly hired fresh graduates. This is expected to benefit up to 50,000 graduates, with a total allocation of RM250 million.

  • Wages subsidy programme extended another 3 months (focus on tourism sector)

 

2. TAX DEDUCTION FOR EMPLOY OF SENIOR CITIZENS AND EX-CONVICTS

  • Additional tax deductions will be given to employers who hire senior citizens. This tax deduction will be extended until year assessment 2025.

 

3. LEVY EXEMPTION

  • 6 months levy exemption by HRDF (effective from 1st Jan 2021), this exemption will be covering tourism sector and companies affected by Covid-19 pandemic.

 

4. SPECIAL PRIHATIN GRANT

  • Govt announces a special PRIHATIN grant of RM1,000 for traders and hawkers in Sabah, as well as for taxi, e-hailing and rental car drivers, and tourist drivers.

 

5. INCENTIVES FOR HIRING OF FRESH GRADS

  • Govt to provide incentives for private companies hiring fresh graduates, at RM1,000 a month for three (3) months, for each fresh graduate hired. Companies may also claim a RM4,000 grant to train the newly hired fresh graduates. This is expected to benefit up to 50,000 graduates, with a total allocation of RM250 million.

 

6. RELOCATION OF BUSINESS IN MALAYSIA

  • Special tax rate for individual at 15% given to non-citizens who hold the significant position (c-suite) for 5 consecutive years of assessment.

  • Maximum to 5 non-citizen per company which obtained approval for tax incentive.

  • Effective date : 7th November 2020 until 31st December 2021.

 

7. RETURN EXPERT PROGRAMME

  • Special tax rate of 15% for consecutive 5 years of assessment for expert return from overseas;

  • For application to Talent Corp in between 1st January 2021 until 31st December 2023.

 

c. BUDGET PROPOSAL – Investment Incentives

 

1. INCOME TAX EXEMPTION ON THE SUSTAINABLE AND RESPONSIBLE INVESTMENTS SUKUK GRANT

Further encourage the issuance of SRI sukuk and bond that meet green, social and sustainability standards in Malaysia, it is proposed that:

  • The existing income tax exemption on grant for Green SRI sukuk be expanded to all SRI sukuk and bond which meets the ASEAN Green Social and Sustainability Bond Standards approved by the Securities Commission Malaysia; and

  • The income tax exemption on the above grant be given for a period of 5 years.

  • For applications received by the Securities Commission Malaysia from 1 January 2021 to 31 December 2025.

 

2. TAX INCENTIVES FOR COMPANIES MANUFACTURING PHARMACEUTICAL PRODUCTS INCLUDING VACCINES

  • Govt offers vaccine companies income tax rates of between 0% and 10% for the first 10 years to encourage these players to set up their operations in Malaysia.

 

3. TAX INCENTIVE FOR INVESTMENT IN EQUITY CROWDFUNDING

  • Govt will provide 50% tax exemption on the investing amount or capped at RM50,000 for equity crowdfunding (ECF) investors. RM30 million in matching grants will also be allocated for ECF platforms approved by the Securities Commission(SC)
  • Govt to provide RM50 million in matching investment for P2P platforms, especially those based on invoice financing.

 

4. REVIEW OF TAX INCENTIVE FOR PRINCIPAL HUB

  • Tax exemption for principal hub activity which involved as service provider has been extended to another 2 years assessment

  • Application start from 1st January 2021 until 31st December 2022

 

5. REVIEW OF TAX INCENTIVES FOR COMPANIES RELOCATING THEIR OPERATION TO MALAYSIA AND UNDERTAKING NEW INVESTMENTS

New and existing companies that relocate their business for the following:-

  • ​Selected services sector, application received by the MIDA from 7 November 2020 until 31 December 2022.

  • Manufacturing sector activities, application received by the MIDA until 31 December 2022. From abroad to Malaysia are eligible for the income tax rate of 0% to 10 for a period up to 10 years.

 

6. REVIEW AND EXPENSION OF SCOPE OF TAX INCENTIVE FOR COMMERCIALISATION OF R&D FINDINGS

  • To create a competitive R&D ecosystem and to encourage new R&D activities by public research institutions including public higher education institutions as well as to enhance the role of private higher education institutions in producing high quality researchers and quality R&D.

  • Income tax exemption of 100% of statutory income for 10 years. Application received by the MIDA from 7 November 2020 until 31 December 2025.

 

7. INCREASE OF SALES LIMIT FOR VALUE-ADDED AND ADDITIONAL ACTIVITIES CARRIED OUT IN THE FREE INDUSTRIAL ZONE AND LICENSED MANUFACTURING WAREHOUSE

  • Proposed that the 10% limit on the sales value form value-added and additional activities be increased to not exceed 40% of the company’s annual sales value. For new application and applications to increase the sales value limit received by the RMCD from 7 November 2020.

 

d. BUDGET PROPOSAL – Stamp Duty

 

1. STAMP DUTY EXEMPTION FOR FIRST HOME OWNERS

  • 100% full stamp duty exemption given to transfer of ownership document and loan agreement for purchase of a first residential home up to RM500,000 will be waived

  • This exemption is effective for Sales and Purchase Agreement (S&P) must be dated from 1st January 2021 until 31st December 2025

 

2. STAMP DUTY EXEMPTION TO REVIVE ABANDONED HOUSING PROJECT

To further encourage rescuing contractors to complete abandoned housing projects and reduce the financial burden of affected house purchasers.

Existing stamp duty exemption to the contractors and original purchase of houses at abandoned project will be extended to another 2 years.

Exemption for :

a. Rescuing Contractor / Development

  • Instruments of loan agreements to finance the completion of abandoned housing projects and instruments of transfer of title for land as well as houses affected.

b. Original House Purchaser in the Abandoned Project

  • Instruments of loan agreements for additional financing and instruments of house transfer.

  • Both exemption are given on Loan agreement and instruments of transfer executed from 1st January 2021 until 31st December 2025 for abandoned housing projects certified by the Ministry of Housing and Local Government.

 

3. STAMP DUTY EXEMPTION FOR PERLINDUNGAN TENANG PRODUCT

  • 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 will encourage more low-income category to have insurance and takaful coverage.

  • This exemption is effective for Insurance Policies and Takaful Certificate issued from 1st January 2021 until 31st December 2025.

 

4. STAMP DUTY EXEMPTION FOR EXCHANGE TRADED FUND

  • Stamp duty exemption is give on contract notes for trading of Exchange Trade Fund (ETF)

  • This exemption is effective for the Trading of Exchange Trade Fund (EFT) executed from 1st January 2021 until 31st December 2025

 

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