Tax Exemptions and Initiatives You Should Know About Budget 2022

Finance Minister, Tengku Zafrul Abdul Aziz recently announced Malaysia’s largest budget ever at RM332.1 billion.

Themed as “Keluarga Malaysia, makmur sejahtera” (Malaysian family, prosperous and peaceful), the budget is based on three concepts: 1) people’s wellbeing, 2) resilient businesses and, 3) a prosperous economy.

Budget Expenditure and Revenue since 2010 | Source: Kini News Lab

Seemed as an inclusive budget, here’s everything you should know about tax breaks or initiatives that will be imposed for the upcoming year.

Individual

  • EPF: Personal tax relief of RM4,000 for an individual’s contributions to EPF is proposed to be extended to cover voluntary contributors such as gig economy workers, home-makers and pensioned civil servants.  
  • Child care: Tax relief of up to RM3,000 for fees paid to registered child care centre or kindergarten
  • Vehicle purchase: Sales tax exemption of 100% will be extended for passenger vehicles which are Completely Knocked Down (CKD) and 50% on Completely Built Up (CBUs). This includes MPVs and SUVs for six months until 30 June 2022.
  • Electric vehicles: 100% exemption on import and excise duties and sales tax
  • Covid-19 vaccine booster: Provision of individual tax relief and company tax deduction on costs of these booster shots.
  • Sin tax: Increase excise duties imposed on sweetened drinks and on liquid or gel products containing nicotine.
  • Digital devices: Special RM2,500 tax relief for purchase of computers, tablets and smartphones.
  • Tackling unemployment: 4.8 billion allocation to create at least 600,000 job opportunities through the JaminKerja initiatives
  • Upskilling: Tax deductions of RM2,000 to RM7,000 for upskilling courses
  • Easing burden on student loan: A 10-15% discount is applicable depending on repayment option.
  • E-sports: Income tax exemptions for winners of (eligible) e-sports championships
  • Mental health: Tax relief for medical expenses/consultation involving registered psychiatrists, clinical psychologists and counsellors
  • Property: Real property gains tax (RPGT) removed for house sales from sixth year onwards
  • Online shopping: Sales tax to be imposed on low-value items sourced overseas that are sold by online sellers and sent to Malaysia via air courier. Effective 1 January 2023.
  • Online shopping: Services tax to be imposed on delivery services provided by service providers including e-commerce platforms, except for food and beverage deliveries and logistics services. Effective 1 July 2022.
  • Tourism: Exemption of tourism tax imposed on foreign tourists staying in accommodation premises; exemption of entertainment duty on admission fees to entertainment premises such as theme parks, performance stages, sport & competition events and movie theatres in the Federal Territories; Personal tax relief on domestic tourism expenses incurred extended.
Source: Ministry of Finance

Company

  • Covid-19 vaccine booster: Goverment plans to provide individual tax relief, company tax deduction on costs of Covid-19 vaccine booster shots.
  • Premise renovation: Special additional tax deduction of up to RM50,000 for companies registered under Safe@Work on the rental expenses of employee accommodation premises extended until 31 December 2021.
  • Employment of vulnerable/marginalised: Special incentive of 30% of the monthly salary for the first six months and 40% for the next six months for hiring women who left the workforce, disabled workers, Orang Asli, ex-convicts
  • Women empowerment: It is compulsory fo all public-listed companies to have at least one female on their boards.
  • Tourism industry: Targeted wage subsidies for the employers in tourism industry which has been badly affected during the pandemic.
  • Postponement of income tax installment payment for Micro and SMEs for six months until June 30, 2022
  • Premise rental: Special tax exemption for building/commercial unit owners who provided at least 30% rental discount
  • Arts & Sports: Income tax exemptions for organisers of artistic and cultural activities, as well as sports competitions and international-level recreational activities – extended until 2025
  • Cukai Makmur: a special tax on a one-off basis to companies that generated more than RM100 million in taxable earnings. They will be taxed at 24% while the remainder will be taxed at 33% for the tax assessment year of 2022.

Note: The above list will be updated where necessary

Explore Our Sources:

  1. Ministry of Finance Malaysia. (2021). Budget 2022 Speech. Link
  2. PwC Malaysia. (2021). Centre Stage: Budget 2022 Overview. Link
  3. The Edge Markets. (2021). Budget 2022 Highlights. The Edge Markets. Link
  4. SAYS.(2021). 12 Highlights From #Bajet2022 And How They Affect You. Says.com. Link

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