Malaysia: Budget 2016 – Strengthening Growth, Enhancing Inclusiveness, Ensuring Fiscal Sustainability

Improving the Goods and Services Tax (GST) 

• Zero-rated GST for all types of Controlled Medicines totaling 8,630 under the Poisons List Group A, B, C and D for 30 types of illness such as cancer, diabetes, hypertension & heart disease 

• Additional GST zero-rated goods proposed: 

• Soybean and organic-based infant and children milk formula; 

• Chickpeas, mung beans and white beans Dhal (Parpu); 

• Lotus root and water chestnut; 

• Mustard seeds; 

• Brown sugar; and 

• Dry mee kolok. 

• Annual sales turnover threshold for registration of Flat Rate Scheme under GST for small-scale farmers is reduced to RM50,000 compared with RM100,000. 

• Small-scale farmers can impose an additional 2% on sales value. 

• GST relief for re-importation of goods that were exported temporarily for the purpose of promotion, research or exhibition. 

• GST relief on oil and gas industries qualified re-import of equipment that was temporarily exported for the purpose of rental and lease such as oil platform equipment and floating platforms. 

• GST relief for the procurement of teaching materials and equipment by skills and vocational training providers under the National Skills Development Act 2006. 

• Rebates equivalent to the amount of GST paid on prepaid mobile phones cards will be credited directly to consumers for activation effective from 1 January 2016 to 31 December 2016.

‍Strengthening the Economic Growth 

• Introduction of Special Reinvestment Allowance for existing companies in the manufacturing and agriculture sectors whose Reinvestment Allowance incentive has expired. 

• Small and Medium Enterprise (SME) will be able to claim income tax exemption for exported manufactured goods that attain at least 20% or 40% of value added as compared to 30% or 50% previously for years of assessment 2016 to 2018. 

• Full income tax exemption on statutory income for tour operators will be extended for a further 3 years i.e. years of assessment 2016 to 2018.

• Tax incentives for food production will be extended until 2020, with the scope of the incentives widened to include deer rearing, cultivation of mushroom, coconut, seaweed, honey bees and stingless honey bees and planting animal feed crops such as sweet potato and tapioca. 

• Double tax deduction can be claimed by SME that incurs expenditure on Research and Development projects up to an amount of RM50,000 for each year of assessment from 2016 to 2018.

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