BUDGET 2013- Is the public’s budget wish list met?

On 28 September 2012, the whole nation was all eyes on our Prime Minister(PM) and Minister of Finance YAB Dato’ Seri Najib Tun Abdul Razak. Given the short period of time before the 13th general election, which must be held by May next year, many expected Budget 2013 to be filled with lots of goodies in view of the forthcoming polls. However the government said that this is not an election budget but one that looks into the people’s welfare at all levels. 

The Budget 2013 is themed ”PROSPERING THE NATION, ENHANCING WELL-BEING OF THE PUBLIC, A PROMISE FULFILLED” and focuses on the following ve key areas: 

1. BOOSTING INVESTMENT ACTIVITY 
2. STRENGTHENING EDUCATION AND TRAINING 
3. INCULCATING INNOVATION, INCREASING PRODUCTIVITY 
4. FISCAL CONSOLIDATION AND ENHANCING THE PUBLIC SERVICE DELIVERY
5. ENHANCING THE WELL BEING OF THE PUBLIC 

The Budget is overall optimistic about the Malaysian economic outlook. The Malaysian economy is forecast to grow between 4.5% and 5.5% in 2013, the economy being poised to expand 4.5% to 5% for 2012, spurred by private investments. The government, which is keeping a tight rein on its expenditure, expects fiscal deficit to be reduced to 4% of GDP in 2013 from 4.5% in 2012. 

The 2013 Budget tax highlights are as follows: 

• Individual tax rates be reduced by 1% for each band of chargeable income from RM 2,501 until RM 50,000 category 
• Disposal of properties and real property company (RPC) shares within 2 years will pay 15% real property gains tax (RPGT) instead of 10%, in the 3rd to 5th year, pay 10% RPGT instead of 5% . Disposal after 5 years remains at 0% 
• Time bar for raising income tax assessment or additional assessment be reduced from 6 years to 5 years except in cases of investigation, false declaration, wilful late payment and negligence 
• Extending the tax incentives for commercialisation of research & development (R&D) findings of public research institutions to non resource based activities/products 
• Total value of investment by an angel investor in a venture company be allowed as deduction against all income 
• Tax incentives for private entrepreneurs in the oil & gas industry including 100% income tax waiver for 10 years, exemption of withholding tax & stamp duty 
• Tax exemption for inbound tour operators of not less than 750 inbound tourists per year for yeas of assessment 2013 to 2015
• Tax exemption for domestic tour operators of not less than 1,500 local tourists per year for yeas of assessment 2013 to 2015 
• 10 year s tax exemption for companies with Tun Razak Exchange (TRX) status ,i.e. world class green status 
• Tax exemption be given on income received by certain approved annuity funds by Bank Negara Malaysia 
• 5 years tax exemption and 10% industrial building allowance for new and existing private childcare centers and pre-schools 
• Double deduction on expenses incurred by employers for provision & maintenance of childcare centers and childcare allowances for employees 
• Business trusts(BT) be given similar income tax treatment to that of a company. Stamp duty exemption on instruments of transfer of businesses, assets or properties. RPGT exemption on disposal of real properties or RPC shares to BT 
• Double deduction for issuance of approved Agro-Sukuk and retail sukuk and bonds
• Tax incentives for banking institutions, rescuing contractors and original house buyers of abandoned housing projects 
• 100% accelerated capital allowances on security control and surveillance equipment installed in factories and all business premises be extended for another 3 years. This covers companies that install such equipment in residential areas 

In addition to the above, there are more freebies, where the head of the household earning less than RM3,000 is eligible for the assistance. Whereas single unmarried individuals aged 21 and above and earning not more than RM2,000 a month will get assistance amounts to RM250. The Government will also continue the Malaysia Book Voucher programme for all students in institutions of higher learning and at pre-university level, the value of the voucher will be increased from RM200 to RM250. 

As there is an election period ahead, as predicted by many, there are no unfavourable measures like higher sin taxes of liquor and tobacco or even the introduction of the Goods and Services Tax for 2013. Will these all round of goodies offered keeps the electorate happy and wins votes? Well, we will all have to wait and see the result soon.