BUDGET 2021 HIGHLIGHTS - 6 NOVEMBER 2020 ANC GROUP
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BUDGET 2021
HIGHLIGHTS
Tax Letter Issue 26
6 NOVEMBER 2020
ANC GROUP
-1-
FOREWORD
The government has introduced a phased economic recovery plan, centered on the 6R
approach which is Resolve, Resilience, Restart, Recovery, Revitalise and Reform.
We are currently at Phase 5 : Revitalise. However, with increase in number of COVID-19
cases, additional efforts will be required to be carried out by the government to reduce the
spread of the pandemic and revitalise the economy.
The nation’s economy suffered a tremendous blow this year. This can be seen as the
government’s revenue and industry overall have been heavily impacted following the
spread of COVID-19. As a result, the targeted revenue for 2020 has been revised from the
initial projection of RM244.5 billion to RM227.3 billion.
Projected revenue collection for the year 2021 on the other hand, remain positive and it is
expected to increase to RM236.9 billion. However, empty malls, lower exports and imports,
poor consumer sentiments, low profits and rising unemployment rate towards the end of
year 2020, it would be an uphill battle for the nation in the year 2021.
With a projected total expenditure of RM322.5 billion for 2021, we foresee the tax office to
be more aggressive than ever.
-2-
-3-
INCOME TAX AFFECTING INDIVIDUALS
Reduction in Personal Income Tax Chargeable Income Current Tax New Tax
Rate (RM) Rate (%) Rate (%)
0 - 5,000 0 0
Income tax rate for resident individuals 5,001 - 20,000 1 1
will be reduced by 1% (tax saving of 20,001 - 35,000 3 3
RM200) for chargeable income band of 35,001 - 50,000 8 8
RM50,001 to RM70,000. 50,001 - 70,000 14 13
70,001 - 100,000 21 21
Effective YA 2021. 100,001 - 250,000 24 24
250,001 - 400,000 24.5 24.5
________________________________ 400,001 - 600,000 25 25
600,001 - 1,000,000 26 26
Medical Expenses for Parents 1,000,001 - 2,000,000 28 28
Exceeding 2,000,000 28 28
Medical expenses which include medical
treatment, special needs and parental
care for parents is proposed to increase Expansion of Scope for Medical Expenses
from RM5,000 to RM8,000.
It is proposed that the scope for income tax relief
on medical expenses will be increased from
Effective YA 2021.
RM6,000 to RM8,000. The amount inclusive of:-
________________________________ (i) Vaccination expenses up to RM1,000; and
(ii) full medical check-up relief of RM1,000 (which
Further Deduction for Disabled
was previously RM500).
Spouse
Effective YA 2021.
It is proposed that the further tax relief for
disabled spouse will be increased from
RM3,500 to RM5,000.
Effective YA 2021.
________________________________
Private Retirement Scheme (PRS)
PRS relief of RM3,000 which was
supposed to end in YA 2021 will be
extended to YA 2025.
-4-INCOME TAX AFFECTING INDIVIDUALS
Lifestyle Relief Compensation for Loss of Employment
Lifestyle relief of RM2,500 will be It is proposed that the compensation for
increased to RM3,000 and to include loss of employment of RM10,000 will be
subscription for electronic newspapers. increased RM20,000 for each full year of
service.
However, the increment of RM500 is
only limited to acquiring sports Effective from YA 2020 to YA 2021.
equipment, entrance fee / rental of sports
facility and participation fee in sports _________________________________
competition.
Tax Incentive for Returning Expert
Effective YA 2021. Programme (REP)
It is proposed that the REP tax incentive
________________________________ which enjoys :-
Amount deposited to Skim Simpanan
i. income tax flat rate of 15%
Pendidikan Nasional (SSPN) for
ii. exemption on import duty and excise
Taxpayer’s Child
duty up too RM100,000 for acquiring a
It is proposed that the SSPN relief of CBU/CKD vehicle
RM8,000 will be extended to YA 2022.
will be extended for another 3 years, for
application received by the Talent
________________________________
Corporation Malaysia Berhad from 1
Fees for acquiring qualification at January 2021 until 31 December 2023.
Tertiary or Post Graduate Studies
It is proposed that the abovementioned
relief of RM7,000 will be extended to
include up-skilling or self enhancement
courses recognized by the Department
of Skills Development, MOHR. The tax
relief is limited to RM1,000 for each YA.
Effective from YA 2021 to YA 2022.
-5-Employer
Wage Subsidy Programme Hiring Incentive
It is proposed that Wage Subsidy At present, the existing hiring incentive
Programme will be extended for another for employing a new employee receiving
3 months. The ceiling for total number of wages of above RM1,500 is RM800.
200 employees will be increased from
200 to 500 employees. It is proposed that the hiring incentive will
be increased to 40% of the employee’s
The subsidy remains at RM600 per monthly income, up to a maximum of
employee and we believe the 30% RM4,000.
decrease in sales still needs to be
complied with. If the employee is a disabled, long-term
unemployed and retrenched worker, the
________________________________ hiring incentive will be increased to 60%.
Employee’s EPF
Training rate that can be claimed by
It is proposed that the employee’s EPF employer will also be increased from
contribution rate will be decreased from RM4,000 to RM7,000.
11% to 9%.
________________________________
Employee will need to inform the
Youth Apprenticeship Programme
employer if they wish to retain the EPF
contribution at 11%. Accordingly, the Employer can claim an incentive of
employer will need to inform the EPF RM1,000 per month up to 3 months for
Board. new graduate who participates in the
apprenticeship programmes.
Effective January 2021 to December
2021. Employer can further claim a grant of up
to RM4,000 for training programmes for
________________________________ the apprentices.
HRDF Levy Exemption
HRDF levies will be given an exemption
for 6 months, effective from 1 January
2021. The exemption will cover tourism
sectors and companies affected by the
COVID-19 crisis.
-6-Employer
Further Tax Deduction for
Employment of Senior Citizens, Ex-
Convicts, Parolees, Supervised
Persons and Ex-Drug Dependents
It is proposed that the above tax
deduction will be extended for a period
of 5 years to further encourage
employers to provide job opportunities
for this group of individuals.
Effective from YA 2021 until 2025.
________________________________
-7-OTHER TAXES & GOODIES (maybe)
Imposition on Excise Duty on i-Lestari EPF Withdrawal
Electronic Cigarette
Individuals may withdraw EPF savings
It is proposed that all types of cigarettes from Account 1 on a targeted basis. The
and other tobacco products will be amount allowed will be RM500 per
imposed with: month for a total of RM6,000 for 12
months.
i. Excise duty at the rate of 10% ad
valorem for all types of electronic and However, we wish to highlight to readers
non-electronic cigarette devices to assess its pros and cons prior to such
including vape; and withdrawal.
ii. Excise duty at the rate of RM 0.40 per ________________________________
milliliter for gel used or liquid used for
electronic cigarette including vape.
With effect from 1 January 2021.
________________________________
Bantuan Sara Hidup will be replaced by Bantuan Prihatin Rakyat
Household Income With 1 child or less With 2 children or more
< RM2,500 RM1,200 RM1,800
RM 2,501 – RM4,000 RM800 RM1,200
RM4,001 – RM5,000 RM500 RM750
Household Income Single
< RM2,500 RM350
-8-STAMP DUTY
Stamp Duty Exemption for the Stamp Duty Exemption for Perlindungan
purchase of First Residential Home Tenang Products
Full exemption be given on instrument of It is proposed that the exemption period for
transfer and loan agreement for the the purchase of Perlindungan Tenang
purchase of first residential home priced products will be extended for another 5
up to RM500,000 for Malaysian citizens. years, to further encourage more low-
(previously was limited to RM300,000) income groups to have insurance and
takaful coverage.
Sales and purchase agreement must be
executed from 1 January 2021 to 31 For insurance policies and takaful
December 2025. certificates issued from 1 January 2021 to
31 December 2025.
________________________________
Stamp Duty Exemption for Exchange
Traded Fund (ETF) Stamp Duty Exemption to Revive
It is proposed that the stamp duty Abandoned Housing Projects
exemption on contract notes for trading
The Existing stamp duty exemptions given
of ETF will be extended for another 5 to rescuing contractor/developer and
years. original house purchaser for:-
i. loan agreements to finance the revival of
the abandoned project / additional
financing
ii. instruments of transfer of title for land
and houses in abandoned housing
projects
will be extended for another 5 years.
-9-OPPORTUNITIES & TAX INCENTIVES
Sustainable and Responsible Investments (SRI) Sukuk Grant
It is proposed that the existing income tax exemption on grant for Green SRI Sukuk be
expanded to all SRI sukuk and bond which meets the ASEAN Green, Social and
Sustainability Bond Standards approved by the Securities Commission Malaysia. The tax
exemption on the above grant will be given for a period of 5 years.
______________________________________________________________________
Principal Hub Export of Private Healthcare Services
It is proposed that the application period It is proposed that a tax exemption
for Principal Hub incentive for companies equivalent to 100% of the total value of the
undertaking qualifying services activities increased in exports of services will be
be extended to 31 December 2022. given to companies that provide export of
healthcare services.
________________________________
The incentive which is supposed to end in
Investment in Equity Crowdfunding
YA 2020, will be extended for another 2
Individual investors who invested in years.
equity crowdfunding is proposed to be
given :- ________________________________
Increase of Sales Limit for Value-Added
i. tax exemption up to RM50,000 for and Additional Activities carried out in
each YA Free Industrial Zone (FIZ) and Licensed
ii. deductible amount is limited to 10% of Manufacturing Warehouse (LMW)
the aggregate income
iii. investee company and amount of The 10% limit on the sales value from
investment must be verified by value-added and additional activities
Securities Commission Malaysia carried out in FIZ and LMW to be increased
to a limit of 40% of the company’s annual
sales value.
Effective for new applications from 7
November 2020.
- 10 -OPPORTUNITIES & TAX INCENTIVES
Manufacturers of Industrialised Tax Incentive for Relocating Operations
Building System (IBS) Components to Malaysia
The IBS tax incentive for manufacturers For companies which relocate its
to be extended to 31 December 2025. operations to Malaysia and make new
investments, these tax incentives are
Qualifying conditions will be relaxed and given:-
Investment Tax Allowance of 60% on
qualifying capital expenditure incurred i. New Company –
within 5 years, can be set off against 70% Income tax rate of 0% to 10% for a
of statutory income for each YA. period up to 10 years.
________________________________ ii. Existing Company –
Income tax rate of 10% for a period of
Tourism Tax
up to 10 years.
Imposition of tourism tax be expanded to
accommodation premises reserved _________________________________
through online platform providers from 1
Special Income Tax Rate Treatment for
July 2021 onwards. Relocating Non-Resident Individuals
________________________________ In addition to tax incentive offered to
companies to relocate their operations to
Tax Incentive for Global Trading Malaysia, it is proposed that non-residents
Centre
holding key positions / C-Suite positions
New incentive scheme will be introduced from the above, will also be able to enjoy a
as Global Trading Centre and to be given flat income tax rate of 15% for a period of
a 10% income tax rate for a period of 5 5 consecutive years
years and renewable for another 5 years.
Effective for applications received from 7
From 1 January 2021 to 31 December November 2020 to 31 December 2021.
2022.
- 11 -Song Liew Wang Choo Jad
Managing Partner Associate Partner
songliew@ancgroup.biz wangcj@ancgroup.biz
This taxletter offers non-binding information and is intended for general information purposes only. It is not intended as legal, tax or business
administration advice and cannot be relied upon as individual advice. When compiling this taxletter and the information included herein, ANC Hub Tax
Advisory Sdn Bhd (“ANC Group”) used every endeavour to observe due diligence as best as possible, nevertheless, ANC Group cannot be held liable
for the correctness, up-to-date content or completeness of the presented information.
The information included herein does not relate to any specific case of an individual or a legal entity, therefore, it is advised that professional advice on
individual cases is always sought. ANC Group assumes no responsibility for decisions made by the reader based on this leaflet. Should you have
further questions please contact ANC Group contact persons.
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