“ 1Malaysia, Generating Transformation ” 

Summary & Highlights – Tax Changes & Proposals

Existing EPF relief of maximum RM6,000 is extended to include employees’ contributions to private staff retirement schemes. Employers are allowed for tax deductions for contributions made to the private staff retirement schemes. This benefits the lower income group as most of the medium income group may already claiming up to the maximum relief of RM6,000 as the relief of RM6,000 is also include the life insurance premium, apart from employees’ own EFP contributions. 

Current individual tax relief of up to RM5,000 for parents’ medical expenses be extended to cover expenses to care for parents. These expenses are for parents who suffer from diseases or with physical or mental disabilities and who need regular treatment certified by a qualified medical practitioner. This include treatment and care at home, day care centres or home care centres. Currently the tax relief of up to RM5,000 medical expenses for parents are for treatment in clinics and hospitals, treatment in nursing homes and dental treatment (exclude cosmetic dental treatment).

First-time Malaysian citizen house buyers will be given stamp duty exemption of 50% on (1) instruments of transfer (i.e sale and purchase agreement) and (2) loan agreement on a residential house price not exceeding RM350,000 during 1 Jan 2011 to 31 Dec 2012. Residential property include a terrace house, condominium, apartment or flat. Question here is – would serviced apartments erected on commercial land be scope out?

Service tax rate will be increased from 5% to 6% with effect from 1 Jan 2011. This will impact quite a number of service industry as well as individual consumptions. This may be a temporary measure to increase government revenue while pending the implementation of Goods and Services Tax (GST).

ASTRO monthly subscription fee will be added with a service tax of 6% with effect from 1 Jan 2011. Service tax of 6% will be imposed on paid satellite broadcasting services in which this service was not subject to service tax previously.

The Budget is more focusing on a macro economy and it appears not too many announcements or tax proposals that are affecting the individuals and companies directly.

No new taxes were introduced. No new policies announced on tackling the speculative buying of real properties, in particular the loan to value cap ratio at 70% or 80%.

No tax reductions for individuals and corporate. There was no announcement on withholding tax on dividend income from Real Estate Investment Trust (REIT).

Nothing was announced on bonus for civil servants.

This Budget is very plain and there was not many tax changes or proposals.

To download the Malaysia Budget 2011 Speech and Appendices,

Visit our  Malaysia Budget 2011: Summary and Highlights – Tax Changes and Proposals