Malaysia's Budget 2024: A Glimpse into Stamp Duty and Indirect Taxes Updates

Malaysia's Budget 2024: A Glimpse into Stamp Duty and Indirect Taxes Updates

The budget 2024 encompasses a range of proposals that touch upon stamp duty and indirect taxes, critical elements of the country's fiscal framework.

Let's dive into the key highlights of these proposals, exploring how they will impact property ownership, service tax, and more, while striving to strike a balance between economic growth and citizens’ welfare

Stamp Duty

1. Transfer of property ownership by renunciates of rights

The proposal involves a review of the stamp duty rate imposed when a beneficiary renounces their right to another eligible beneficiary in accordance with a will/ Faraid, or the Distribution Act 1958. This change aims to replace the current ad valorem duty rate under Item 66(c) of the First Schedule of the Stamp Act 1949.

Key Details:

• A fixed duty of RM10 will be imposed

• Effective from 1 January 2024 for instrument of property ownership transfer.

2. Property ownership by non-citizen

The Budget 2024 introduces a crucial review of the stamp duty legislation, specifically focusing on properties owned by foreign-owned companies and non-citizen individuals in Malaysia. The existing policy treats these property owners the same as Malaysian citizens when it comes to the ad valorem stamp duty rate imposed during the transfer of property ownership.

This review is integral to a more comprehensive strategy aimed at controlling property prices in the country. By reassessing the stamp duty structure for foreign-owned properties and non-citizen individuals, the government intends to create a fair and competitive property market.

Key Details:

• A flat rate stamp duty of 4% be imposed on the instrument of transfer executed by foreign-owned companies and non-citizen individuals (except Malaysian permanent residents)

• Effective from 1 January 2024 for instrument of property ownership transfer.

Indirect Taxes

1. Service Tax

The government acknowledges the importance of increasing revenue while gradually reducing subsidies. To achieve this goal, it has proposed measures to broaden the country's revenue sources without overburdening the citizens. Although these measures are challenging, the government is considering an increase in the service tax rate and an expansion of its scope to encompass various industries.

Key Details:

• Increased from 6% to 8% except for telecommunication and food & beverage

• Expanded the scope to include logistics, brokerage, underwriting and karaoke services

2. Import Duty and Sales Tax Exemption on Manufacturing Aids

This proposal is poised to bring about a notable transformation in our industries, significantly boosting the competitiveness of Malaysian-manufactured products. It signifies a shift from the existing policy where manufacturers are not entitled import duty and sales tax exemptions on the importation and locally purchased of manufacturing aids under the Customs Act 1967 and the Sales Tax Act 2018.

Key Details:

• eligible to manufacturers on the importation and locally purchased of manufacturing aids

• subject to types of industry and category of goods determined

• Effective from 1 January 2024

3. Entertainments Duty Exemption

To support the development of the national creative industry, strengthen cultural unity, and foster family bonding, the Minister of Finance is proposing a series of exemption rates under the Entertainment Duty Act of 1953.

Key Details:

• Entertainment held in the Federal Territories

• Propose types and rate

i. Full exemption for stage performances by local artists

ii. Reduction from 25% to 10% for

 stage performance by international artist/ light show/ Circus

 film screening (Cinema) / theatre

 exhibition/ Zoo/ Aquarium

 sport event/ e-sports/ bowling/ snooker/ pool/ billiard/ karaoke

iii. Reduction from 25% to 5 % for theme parks, family recreation centre, indoor gaming centre, and simulators

• Applications received by the Ministry of Finance from 1 January 2024 to 31 December 2028

4. Excise Duty

In the interest of public health and the well-being of our citizens, particularly with a focus on preventing diseases such as diabetes and obesity, there are 2 proposals to raise the excise duty rate:

i. Sugar sweetened beverages

• Increased to RM0.50 per litre

• Effective From 1 January 2024

ii. Chewing tobacco

• Imposed a rate of 5% + RM27/kg under the tariff code 2403.99.5000.

• From 1 January 2024

In summary, the proposed changes in stamp duty and indirect taxes are part of a broader strategy to steer the nation towards greater economic prosperity while ensuring fairness and inclusivity in various sectors. As these policies take effect, it will be fascinating to see how they shape the future of Malaysia's economy and the lives of its people.

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-companies-updates-/18oct23

Tax Exemption https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-tax-exemption-updates/19oct23

Tax Incentive : https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-tax-incentives-updates/20oct23

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