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Malaysia Budget 2014 Highlights

Malaysia Budget 2014 Highlights

Among the highlights of the recently tabled Budget 2014 by Prime Minister Datuk Seri Najib Nazak on the 25th of October 2013, lower-to-medium income households may be further burdened by the government’s subsidy rationalization for sugar, resulting in immediate increase of 34 sen per kilogram.

The government said the raise in sugar price is expected to reduce the number of diabetic patients as people would reduce sugar intake, although much remains to be seen on the effectiveness of this rationalization. This is seen as further burdening the taxpaying Malaysians after the recent fuel price hike in September.

GOODS AND SERVICE TAX

GST (goods and services tax) is also set to be implemented at 6% starting on the 1st of April 2015 (approximately 17 months from now), replacing the current Sales Tax (6%) and Service Tax (10%). However essential items such as cooking oil, spices, salted fish, rice, flour shall be void of GST. GST will also be exempted on electricity (partial exemption on usage of up to 200 units only), piped water supply and public transportation. Meanwhile, house buying, selling and renting are not affected by GST.

PERSONAL INCOME TAX AND CORPORATE INCOME TAX

For high-income salaried workers, the highest personal income tax bracket is also increased from RM100,000 to RM400,000. Tax for the highest income bracket will be reduced from the current high of 26% to 24% in 2014 while corporate income tax will also be reduced from 25% currently to 24% in 2014. Tax filing is no longer required for individuals who pay tax (PCB) on a monthly basis.

PUBLIC TRANSPORTATION

The public transportation sector like rural train commutes will be given subsidies by the government. The government also allocates RM15.3 billion to centralize taxi industry administration and to improve the services industry-wide.

HEALTHCARE

The government seems to allocate huge number for Malaysian healthcare as RM22.1 billion will be used to improve the public healthcare system. For public healthcare institution, RM3.3 billion has been allocated to provide the best medical supplies. A number of 6000 new nurses will be trained, and they are 50 new 1Malaysia Clinics to be launched in 2014. The disables will be facilitated with amenities and help that cost RM441 million.

HOUSING AND PROPERTY TAX

The housing and property tax is to be revised by the government focusing on Real Property Gain Tax (RPGT). For properties that been held 3 years or less, the owner have to pay 30% tax while 20% of tax is the requirement for properties that been held 4 years. Less tax will be required for properties that have been held for 5 years of above which is 5%.

However, the government set different tax rates for non-citizens. RPGT for non-citizens are 30% for properties held for 1-4 years and 5% for 5 years and above. It is estimated that approximately 16,473 residential units of affordable houses to be developed with RM578 million allocated to the National Housing Department. The government claims that PR1MA to construct 80,000 new residential units at 20% lower than market prices. To promote constructions at low and medium cost, there will be subsidy for private developers.

AID & WELFARE

In 2014, the government said that BR1M will be increased to RM650 from RM500 for families earning RM3,000 and below. For families that have monthly income of RM3,000 – RM4,000, they will get RM450 wort BR1M. For those who aged 21 and above and have monthly income not more than RM2,000, they are comply to receive RM300 BR1M. As for higher education students, they will receive RM250 worth 1Malaysia Book Voucher. A minimum of RM500 or half month bonus are to be given to civil servants on January 2014.

The Budget 2014 seems to be another year of increasingly higher priced goods and services on all front, therefore personal financial planning such as cutting on unnecessary expenditures, increasing household income or getting more revenue streams, need to take centre stage.

 

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