Malaysia’s Budget 2025 aims to reinvigorate the economy through various tax reforms and tax measures impacting both businesses and individuals.

Unveiled by Prime Minister Datuk Seri Anwar Ibrahim on 18 October 2024, Malaysia Budget 2025 represents a crucial turning point for the nation’s economy with a record allocation of RM421 billion.

The theme, ‘Membugar Ekonomi, Menjana Perubahan, Mensejahtera Rakyat’ (Reinvigorating the Economy, Driving Reforms, and Prospering the People), reflects a dual focus in addressing immediate socio-economic challenges and building long-term resilience.

This budget balances economic growth, fiscal prudence and social welfare. It aims to revitalise the economy through key tax reforms and tax measures, addressing post-pandemic recovery, technological advancements, and climate change while improving the welfare of the Rakyat.

Our exclusive Malaysia Budget 2025 Commentary delves into the intricacies of these tax measures, providing valuable insights that will impact both the business and individual landscapes.

✓ Business Tax Reforms and Incentives for Corporate Taxpayers and Businesses

• Implementation of Global Minimum Tax (GMT)and Accelerated Capital Allowance (ACA) for e-invoicing
• Introduction of targeted incentives such as Investment Tax Allowance (ITA) for Smart Logistics Complexes (SLCs) and enhanced export incentives for Integrated Circuit (IC) Design Services

✓ Revenue and Fiscal Responsibility for Consumers and Businesses

• Broadening the Sales and Services Tax (SST) framework and rationalising subsidies

✓ Tax Measures and Reliefs for Individual Taxpayers

• Balancing the Introduction of new 2% Dividend Tax with extension of tax exemption on Foreign-Sourced Income (FSI)
• Introduction of targeted tax reliefs for certain individual taxpayers

✓ ESG-Driven Initiatives

• Introduction of a carbon tax and incentives for carbon capture, utilization and storage (CCUS) projects

As we navigate these changes line with the national aspiration, businesses and individuals must reassess their tax strategies to stay compliant and competitive.

Download our exclusive commentary now to navigate these changes with confidence. If you have any questions, please email our regional tax team at [email protected].

Malaysia’s 2024 Budget introduced several tax reforms which will impact local businesses and disposable income of general Malaysians.

On 13 October 2023, Malaysia’s Prime Minister and Finance Minister, YAB Dato’ Seri Anwar bin Ibrahim, presented the Budget 2024 focusing on three pivotal areas:

• optimising governance for enhanced service agility
• economic restructuring to foster growth, and
• elevating the standards of living for Malaysian citizens.

The expansionary budget is designed to address contemporary challenges and enhance the quality of life for Malaysians.

To fortify the government’s fiscal responsibilities, reduce the deficit to 4.3%, and augment revenue to RM307.6 billion, the budget incorporates significant structural changes to the tax system, including:

• E-invoicing for taxpayers with an annual turnover above RM100 million (starting 1 August 2024)
• Capital Gains Tax (CGT) arising from the disposal of unlisted shares in local companies (starting 1 March 2024)
• Global Minimum Tax (GMT) applicable to large multinational enterprises (MNEs) with global revenue of at least EUR 750 million (starting in the year 2025)
• Service Tax will be raised to 8% for all services except food, beverage, and telecommunication services
• Luxury Goods Tax ranging from 5% to 10%

Download our Budget 2024 Report today to find out more. If you have any questions, please reach out to your respective BoardRoom client managers or email us at [email protected].