Tax Update: BUDGET 2023 Tax Snapshots
Updated: Dec 28, 2022
With a focus on changes to strengthen resilience and weather uncertainties in the face of an increasing difficult global economic and geopolitical environment, Budget 2023 is comprehensive, rigorous, and forward-looking. The Budget also establishes the framework for upcoming expansion and competitiveness in key fields including sustainability and digitization.
The subject of Budget 2023, “Responsive, Responsibilities and Reformist,” depicts the current economic climate by highlighting significant growth following the epidemic and moving toward the future while constructing a more resilient present. There has been a substantial increase in development spending in the Budget, which is consistent with the government taking a more active role in stimulating growth. The fundamental problems of assisting the B40 and M40 populations are also appropriately addressed.
Sustainable Social-Economic Resilience of Keluarga Malaysia
Budget 2023 suggests personal income tax reduction for the M40, increased cash handouts and loans, and income tax exemptions for women returning to the workforce after a career break, with social protection and raising disposable income as its top priority. This demonstrates the Government’s dedication to constructing a strong safety net for Malaysia’s socioeconomically vulnerable communities.
The Budget 2023 also recognized the importance of SMEs, the informal sector workers, and youths as engines for growth and innovation, through the introduction of schemes to promote and bolster development in these sectors. These includes the reduction of corporate tax rates and the provision of a one-off grant for eligible SMEs, and the introduction of various hiring and training incentive. Collectively, these measures should create a supportive environment for SMEs and serve as a catalyst for economic growth through job creation with increased disposable income.
Assisting the B40 and hardcore poor
Budget 2023 continues to use direct cash handouts as the primary measure to assist the B40, introducing a new category for Bantuan Keluarga Malaysia 2023, with allocation of RM 8.7 million recipients. The tweaks and enhancements are measured and aimed at the specific segments where assistance is needed most.
Strengthening the tax system
Malaysia will be joining including the 40 countries which have adopted or will be adopting e-invoicing. Together with the use of the Tax Identification Number (TIN), this will reduce the shadow economy, increase compliance, and expand the tax net. This reinforces other initiatives of the IRB such as the Tax Corporate Governance Framework (TCGF), which promotes better governance and transparency, and cooperation between the IRB and taxpayers.
Environmental, Social and Governance (ESG) and Sustainability