The Prime Minister, YAB Dato' Sri Mohd. Najib Tun Haji Abdul Razak, tabled the 2014 Budget on Friday, 25 October 2013.
The 2014 Budget with the theme "Strengthening Economic Resilience, Accelerating Transformation and Fulfilling Promises" reflects the Government's commitment to ensure that the economy continues to expand at a strong pace and to reduce the fiscal deficit, with the overall objective of prospering the nation and promoting the well-being of the people.
For the 2014 Budget, an amount of RM217.7 billion has been allocated for operating expenditure whilst for development expenditure, the amount allocated is RM46.5 billion. On the revenue side, the Federal Government is expected to generate an amount of RM224.1 billion. Taking into account the estimated revenue and expenditure, the Federal Government deficit in 2014 is expected to improve to 3.5% of GDP compared with 4% in 2013.
• Ensuring well-being of the Rakyat.
1. Implementation of GST at the rate of 6% from 1 April 2015. GST will replace Sales Tax and Service Tax.
2. Reduction of individual tax rates of 1% to 3% across various income bands. The maximum individual tax rate is reduced from 26% to 25%, with the 25% rate applying to income in excess of RM400,000.
3. Relief of RM2,000 is given to tax residents earning up to RM8,000 per month with an aggregate income of up to RM96,000 a year.
5. Income tax rate for companies, limited liability partnerships, trust bodies, executors of an estate of an individual domiciled outside Malaysia at the time of his death and a receiver appointed by the Court is reduced from 25% to 24%. This proposal is effective from YA 2016.
6. Companies with paid up share capital of up to RM2.5 million are taxed at a reduced rate of 19% on the first RM500,000 of chargeable income. The excess is taxed at a reduced rate of 24%. This proposal is effective from YA 2016.
7. Income tax rates for cooperatives are reduced by 1% to 2% on chargeable income above RM150,000. This proposal is effective from YA 2016.
8. 100% accelerated capital allowance on information technology and communication (ICT) equipment is extended to YA 2016.
9. To promote Malaysia further as a preferred tourist destination as well as to increase the facilities for meeting, incentive, convention and exhibition activities, Pioneer Status or Investment Tax Allowance are given to hotel operators undertaking new investments in 4 and 5 star hotels. It is proposed that the incentives be extended for another 3 years.
10. Double deduction is given to small and medium enterprises, cooperatives, associations and organizations on the difference between the original salary and the minimum wages paid in calendar year 2014.
11. Companies with Flexible Working Arrangement (FWA) status will be given a double deduction on expenses incurred in the training of employees and payment of consultancy fees to design an appropriate FWA.
12. Anchor companies that have signed a memorandum of understanding with the Ministry of International Trade and Industry (MITI) in implementing Vendor Development Programme are to be given a double deduction on approved expenses.
13. Company secretarial fees of up to RM5,000 and tax filing fees of up to RM10,000 are now deductible.
14. Expenses incurred on the training of employees in the area of accounting and ICT for GST purposes are entitled to a double deduction. The proposal is effective for YA 2014 and YA 2015.
15. Imposition of Real Property Gains Tax of 30% for Malaysian citizens and permanent residents within a period of 3 years from acquisition. Disposals in the 4th and 5th year, will be subjected to RPGT at rates of 20% and 15% respectively.