Malaysia: Tax measures in Finance Bill 2021

The Finance Bill 2021 incorporates a number of tax-related measures

The Finance Bill 2021 incorporates a number of tax-related measures

The Finance Bill 2021 (released 9 November 2021) incorporates a number of tax-related measures as previously announced in the budget, but also includes other tax-related provisions. 

Regarding the taxation of businesses, the Finance Bill 2021 proposes the following:

Income tax

  • Repeal of income tax exemption on foreign-source income
  • Impose a special one-time “prosperity tax” (Cukai Makmur) at a rate of 33% on companies with chargeable income exceeding RM100 million
  • Extend the time period for carrying forward unabsorbed business losses, to 10 years (from seven years)
  • Extend the time period to carry forward and use special reinvestment allowances for an additional two years (from the standard 15-year period)
  • Extend the tax rebate available for certain small and medium-sized enterprises (SMEs) and limited liability partnerships (LLPs) for an additional year, through 31 December 2022
  • Provide an exemption for interest income from a unit trust that is an RMMF (republic money market fund) and distributed to certain unit holders
  • Address the tax exemption on interest when asset-backed securities are involved
  • Impose withholding tax at a rate of 2% on payments made to an agent, dealer or distributor
  • Requirements for research and development (R&D) companies and contract R&D companies to obtain certain administrative approval

The proposals in the Finance Bill 2022 also include measures concerning “Labuan tax” and certain tax administrative measures.

With regard to indirect taxes, the proposals would revise measures of the real property gains tax and the stamp tax (duty) imposed on certain documents or instruments.

Lastly, the Finance Bill 2022 would expand certain tax relief for individual taxpayers.

Read a November 2021 report [PDF 2.1 MB] prepared by the KPMG member firm in Malaysia


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