INDIRECT TAXES

Value-added activities

in Free Industrial

Zones (FIZs) and

Licensed Manufacturing

Warehouses (LMWs)

Current:

Effective from 1 April 2020, all application and approval processes for value-added and additional activities in the FIZs and LMWs are processed at the Zone or State Customs Office and the sales value must not exceed 10% of the Company’s annual sales value for the following activities:

  1. Research and Development;
  2. Product Design;
  3. Marketing, for company with International Procurement Centre status only
  4. Distribution, for company with Regional Distribution Centre status only;
  5. Quality Control;
  6. Testing and Commissioning including Calibration and Configuration;
  7. Labelling, Packaging and Re-Packaging;
  8. Remanufacturing, Repairing and Servicing; and
  9. Supply Chain Management, Strategic Procurement Operation and Total Support Solutions.

Proposed:

It is proposed that the 10% limit on the sales value be increased to not exceed 40% of the company’s annual sales value.

 

(Effective Date: new applications and applications to increase the sales value limit received by the Royal Malaysian Customs Department (RMCD) from 7 November 2020 onwards)

Sales tax exemption on the purchase of locally assembled bus

Current:

Currently, locally assembled bus is exempted from sales tax until 31 December 2020.

 

Proposed:

To ease the burden of bus operator It is proposed that sales tax exemption for the purchase of locally assembled bus be extended for a period of two years.

(Effective from 1 January 2021 to 31 December 2022)

Excise duty on electronic cigarette

Current:

Currently, specific cigarette and tobacco products that are classified under tariff heading of 2402 and 2403 are subject to excise duty.  Electronic cigarettes including vape are not subject to excise duty as opposed to cigarettes and other tobacco products regulated under the Control of Tobacco Product Regulations 2004.

 

Proposed:

The following is proposed to ensure equal tax treatment on all types of cigarettes and other tobacco products:

i.              Excise duty at the rate of 10% ad valorem for all types of electronic and non-electronic cigarette devices including vape; and

ii.            Excise duty at the rate of RM0.40 per ml for liquid or gel used for electronic cigarettes including vape.

(Effective: 1 January 2021)

 

STAMP DUTY AND OTHERS

Stamp duty exemption for first residential property

Current:

Currently, 100% stamp duty exemption is given on instrument of transfer and loan agreement for the purchase of the first residential property valued up to RM300,000 by a Malaysian citizen.

 

Stamp duty exemption

Type of instrument Value of 1st residential home

Sales and Purchase agreement executed in the period

A

100%

Instrument of transfer and loan agreement

Up to RM300,000

1 January 2019 to 31 December 2020

B

100% exemption on the first RM300,000 , The remaining balance of the home value is subject to the prevailing rate of stamp duty

RM300,001 to RM500,000

Proposed:

It is proposed that the 100% stamp duty exemption limit for the first home be increased from RM300,000 to RM500,000.

(For Sale and Purchase Agreement (SPA) executed from 1 January 2021 to 31 December 2025)

Stamp duty exemption to revive abandoned housing projects

Current:

Currently, rescuing contractor / developer and original house purchaser in the abandoned project are given stamp duty exemption on loan agreements and instruments of transfer of the house from 1 January 2013 to 31 December 2020.

 

Proposed:

The existing stamp duty exemptions will be extended for another 5 years to alleviate the financial burden borne by the original house purchasers and to encourage the involvement of rescuing contractors / developers to revive the abandoned housing projects.

(Effective: Loan agreement and instrument of transfer executed from 1 January 2021 until 31 December 2025 for abandoned housing projects certified by the Ministry of Housing and Local Government)

Stamp duty exemption for Perlindungan Tenang products

Current:

Currently, stamp duty exemption is given on the 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 exemption is granted for policies and certificates issued from 1 January 2019 to 31 December 2020.

 

Proposed:

Stamp duty exemption period on the purchase of Perlindungan Tenang products be extended for another 5 years. This is targeted for lower income group to enable them to have insurance and takaful protection which includes life insurance, fire and flood insurance at a low premium.

(Effective date: For insurance policies and takaful certificates issued from 1 January 2021 to 31 December 2025)

Extension of period for stamp duty exemption for exchange traded fund

Current:

Currently, stamp duty exemption is given on contract notes for trading of Exchange Traded Fund (ETF) from 1 January 2018 to 31 December 2020.

 

Proposed:

Stamp duty exemption on contract notes for trading of ETF will be extended for another 5 years.

(Effective date: For the trading of ETF executed from 1 January 2021 to 31 December 2025)

Import Duty and Excise Duty Exemption on CBU / CKD Vehicle under  Returning Expert Programme (REP)

Current:

Import duty and excise duty exemption for the purchase of a CBU vehicle or excise duty exemption for the purchase of a CKD vehicle subject to the total duty exemption limited up to RM100,000.

 

Proposed:

Application period for REP incentive be extended for another 3 years.

(Effective date: For applications received by Talent Corporation Malaysia Berhad from 1 January 2021 to 31 December 2023)

Expansion of Tourism Tax to accommodation premises booked through online platforms

Current:

Currently, Tourism Tax is levied on tourists staying in accommodation premises which is registered under Tourism Tax Act 2017 at flat rate of RM10 per night. Malaysian tourists and permanent residents are exempted from the imposition of tourism tax.

An accommodation premise generally includes all premises offering lodging or sleeping accommodation including hotels, boarding houses, etc., but excludes certain small operators such as homestays and premises having up to 4 rooms.

 

Proposed:

Tourism tax is to be expanded to accommodation premises booked through online platform providers to ensure equal treatment between tourists who make their reservations for accommodations directly with the registered accommodation premises operators and through online platform providers.

(Effective date: From 1 July 2021)

Reduction of employee’s contributions to the Employees’ Provident Fund (“EPF”)

It is proposed that the rate of employee’s contribution to the EPF be reduced from 11% to 9% for a period of 12 months beginning January 2021.

(Effective: 1 January 2021 to 31 December 2021)

Withdrawal from Employees Provident Fund “EPF” Account 1

It is proposed that the withdrawal facility for  EPF Account 1 with an amount of RM500 a month with a total of up to RM6,000 over a period of 12 months.

(Effective date : January 2021)

Extension of Wage Subsidy Programme (WSP) to employers in the tourism sector

The WSP will be extended for a further 3 months for the tourism and retail sectors. The subsidy amount is at a rate of RM600 per month for every employee who earns monthly salary of RM4,000 and below. The number of employees limited under the WSP will be increased from 200 employees per company to 500 employees per company.

(Effective date: From 1 April 2021 to 30 June 2021)

Exemption from levy contribution to Human Resource Development Fund (HRDF) Levies

Current:

Under the current Economic Stimulus Package, all industries are exempted from contributing HRDF levies for 6 months from April to September 2020.

 

Proposed:

An exemption from the HRDF levies will be given for 6 months effective from 1 January 2021. This exemption will cover the tourism sector and companies affected by the Covid-19 crisis.

(Effective date: From 1 January 2021 to 30 June 2021)

PenjanaKerjaya Incentive (Hiring Incentive)

The Government will continue the hiring incentive under PERKESO with enhancement and is now called “PenjanaKerjaya”:

Incentive

Current Proposed
Hiring of employees earning RM1,500 and above RM800 per month Increased to 40% of monthly income for a period of 6 months, up to RM4,000 per month
Hiring of disabled, retrenched workers and long term unemployed Disabled – RM1,000 per month

Long term unemployed – RM800 per month

Additional incentive equivalent to 20% of employees’ income for a period of 6 months.
Hiring of local workers for sectors with high reliance on foreign workers (i.e. Construction & Plantation) N/A

60% of monthly wages for a period of 6 months:

–   40% to be channeled to employers

–   20% to be channeled as wage top up to local workers replacing the foreign worker.