Malaysia announced its 2020 budget (the Budget) on 11 October 2019. The Budget seeks to encourage private sector and foreign investment through targeted incentives. No new taxes were introduced.
Highlights:
- 7% withholding on real property transactions: Any person acquiring real property (real estate) or shares in a real property company from a nonresident company for consideration comprised wholly or partly of cash will be required to withhold the lower of the cash payment or 7% of the purchase consideration and remit it to the Malaysian tax authorities within 60 days of acquisition. The new rule will become effective when Finance Act 2019 is enacted.
- Sales tax exemption program for export activities: Effective 1 July 2020, the Approved Major Exporter Scheme will be introduced. Under this program, a sales tax exemption is provided to approved export-oriented traders and manufacturers of sales tax-exempt goods on their imports and purchases of goods, raw materials, components and packaging materials.
- Service tax intragroup exemption: Effective 1 January 2020, the criteria for the existing intragroup service tax exemption will be relaxed. Companies will be permitted to provide services to third parties and still qualify for the intragroup exemption, provided that the value of the third-party services does not exceed 5% of the total value of services provided by the company within a 12-month period.
Source EY
