This Bill will indemnify the government in relation to the issues surrounding the windfall profit tax (imposed since 1999), which did not comply with the requirements under Windfall Profit Levy Act 1998.
The following are the highlights of proposed legislative changes in the respective Bills.
Finance Bill 2023
- Tax relief for medical treatment expenses will be increased to RM10,000 from RM8,000 — effective YA 2023.
- Additional tax relief of up to RM4,000 will be provided for expenses incurred by individuals on for children aged 18 years and below on diagnosis, early intervention programs or rehabilitation treatment for specified learning disabilities — effective YA 2023.
- Tax relief for amounts deposited into Skim Simpanan Pendidikan National will no longer be allowed as a deduction — effective YA 2023.
- Tax relief for child care fees paid to a registered child care centre has been extended to YA 2024.
- The scope of tax relief for life insurance premiums will be expended to include voluntary contributions to the Employee Provident Fund — effective YA 2023.
- New chargeable income and income tax rates will apply to individuals effective YA 2023:
- A reduction of 2% for individuals with chargeable income between RM35,001 and RM100,000
- An increase of 0.5% to 2% for individuals with chargeable income between RM100,001 and RM1,000,000.
- The deadline for tax deduction on all payments made to agents, dealers and distributors which are subjected to withholding tax (which are accumulated on a monthly basis and remitted to IRBM) will be no later than the last day of the following calendar month. This will be deemed to have come into operation on 1 January 2023.
- New chargeable income and income tax rates will apply to qualifying micro, small and medium enterprises (MSMEs) by lowering the tax rate to 15% for the first RM150,000 of chargeable income — effective YA 2023.
- An additional shareholding condition will apply to MSMEs (from YA 2024) in order to qualify for the reduced rates:
- 20% of paid-up capital in respect of ordinary shares of the company at the beginning of a YA is directly or indirectly owned by one or more companies incorporated outside Malaysia, or by one or more individuals who are not citizens of Malaysia, or
- 20% of the capital contribution (whether in cash or in kind) of a limited liability partnership at the beginning of a YA is directly or indirectly contributed by one or more companies incorporated outside Malaysia, or one or more individuals who are not citizens of Malaysia.
- The words “intangible asset” in the definition of “plant” for capital allowance purposes has been removed — effective YA 2023. The Minister of Finance may prescribe any other assets as assets which are excluded from the definition of “plant”.
Real property gains tax
- The tax treatment of assets transferred between spouses where the disposal price is deemed equal to the acquisition price will be extended to include former spouses as a consequence of the dissolution or annulment of their marriage. This will come into effect once the Finance Bill is passed.
- The existing condition of transferring asset by an individual to a company controlled by the individual where the disposal price is deemed equal the acquisition price of the asset is only applicable if the company is incorporated in Malaysia. This will come into effect once the Finance Bill is passed.
The scope of the fixed duty rate of RM10 will be expanded to include similar instruments entered into by small and medium enterprises with government or state government agencies or statutory bodies that provide financing to small and medium enterprises. This will come into effect once the Finance Bill is passed.
Mandatory e-filing expanded
Individuals, trust bodies or co-operative societies, companies, limited liability partnerships, employers and partnerships will be required to submit returns and amended return forms using e-filing from YA 2024.
Windfall Profit Levy (Validation) Bill 2023
This Bill seeks to validate the windfall profit levy imposed and collected during the period from 1 January 1999 to 31 January 2023. This will cover the windfall profit levy imposed on crude palm oil, crude palm kernel oil, oil palm fruit and electricity. It is to indemnity the government and its officers as the windfall profit levy imposed during the period did not comply with the requirements under Windfall Profit Levy Act 1998.