Malaysia’s 2019 Budget

Malaysia’s 2019 Budget Highlights:

•Petronas dividend will double to MYR54b (US$13bil) in 2019.
•Malaysia expects growth to moderate to 4.8% this year.
•Current account is expected to stay in surplus, albeit slightly smaller.
•Malaysia sees average palm oil prices at MYR2,400/ton in 2019.
•Malaysia sees 2018 budget deficit at 3.7% and seen narrowing to 3.4% of GDP in 2019, 3% in 2020, 2.8% in 2021.
•Inflation at 1.5%-2.5% in 2018, 2.5%-3.5% in 2019.
•Malaysia sets 2019 revenue target at MYR261.8b (including MYR30b special dividend from Petronas).

Property:
- To streamline the real property gains tax on gains on the disposal of real estate and shares in real estate companies.
- For companies, non-citizen and non-resident individuals, real property gains tax rates are increased from 5% to 10%; for locals permanent residents, rates rise from 0% to 5%
- Stamp duty rates for transfer of properties worth >MYR1m will be raised by 1ppt from 3% tax rate to 4%.

🏠 Housing:
- REHDA has agreed to reduce 10% of housing prices which are not subject to price controls for new projects.

💰Taxes:
- The government will introduce a Credit System for sales tax deductions from Jan 1, 2019. The credit system will also avoid double taxation and lower business cost.
- Imported services will be subject to services tax. Relevant service tax will be imposed with effect from Jan 1, 2020, which will include transaction on software, music and online advertising.
- Sugar tax: Government intends to introduce excise duty from April 1,2019 at MYR0.40/ltr on two categories of sugary drinks manufactured in ready-to-drink packaging.
- For SMEs: Corporate tax rate cut to 17% from 18% for companies with taxable income of up to MYR500k and with paid up capital of <MYR2.5m.


For the Rakyat:

- Govt to continue providing scholarships, study loans via RM3.8b allocation, of which RM2b is reserved for MARA-sponsored Bumiputera students
- Cash handouts: Household with monthly income <MYR2,000 will get a grant of MYR1,000 | Monthly income from MYR2,001-MYR3,000 : will receive MYR750 | Monthly income from MYR3,001-MYR4,000: will receive MYR500.
- Targeted fuel subsidy for those owning one car with an engine capacity <1,500cc or bike <125cc.

Labour:

- Government to raise minimum monthly wage to MYR1,100 throughout Malaysia starting Jan 1,2019.
- Labour laws to be reviewed to strengthen the labour market and workers' welfare, and totally prohibit discriminatory practices by employers.
- Businesses that employ ex-offenders will be rewarded with extra tax cuts.