Razak offers tax cuts for millions of Malaysians in ‘election budget’

Razak offers tax cuts for millions of Malaysians in ‘election budget’

31/10/17

Luke Foddy, Communications Manager

The Prime Minister of Malaysia, Najib Razak, has lowered taxes for millions of Malaysians in his final budget before upcoming elections.

Taking advantage of a surprisingly improved economy, Mr Razak has outlined a ‘populist’ budget, according to Free Malaysia Today, which reports that Razak is ‘under pressure to win over voters upset with rising… costs.’

According to Bloomberg, winners in the budget include 2.5 million middle-income tax payers, who will enjoy a two per cent tax break, and Malaysia’s 1.6 million civil servants who will receive a 1,500 ringgit bonus.

Mr Razak also announced 6.5 billion ringgit of benefits for agricultural workers, including irrigation and replanting support. Other beneficiaries include aviation and shipping, with imports of aircraft and ships to be given relief from Malaysia’s six per cent goods and service tax.

Corporates miss out

However, the absence of cuts in corporation tax will disappoint corporates who have dealt with rising operating costs in recent years, Bloomberg adds.

Reacting to the budget, PWC Malaysia’s tax leader Jagdev Singh is quoted in the New Straits Times saying: “There are no significant measures that impact corporates directly as tax rates remain the same, while the existing incentives are maintained.

“However, I had hoped that targeted measures based on productivity increases, and investment in R&D would be introduced, and this was visibly missing in Budget 2018.”

Malaysia’s The Star newspaper provide a comprehensive summary of the Budget here.