Tax Budget 2023 - Corporate

Tax Budget 2023 - Corporate

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim have proposed some changes to the income tax rates under the new Budget 2023.

Key summary on tax budget 2023 for Corporate

Reduction of SME tax rates for first RM150,000 from 17% to 15%

Income tax rate to be reduced from 17% to 15% for the first RM150,000 of chargeable income from YA 2023 for resident companies with paid- up capital of RM2.5 million and below and annual sales turnover not exceeding RM50 million.

Chargeable income of RM150,001 to RM600,000 remains to be taxed at 17%; excess shall be taxed at the prevailing rate of 24%.

Tax deduction for non-commercial Electric Vehicles (EV)

Tax deduction for company that rents non- commercial EV increase to RM300,000 for YA 2023 to YA 2025.

Tax deduction on smart artificial intelligence (AI) driven reverse vending machine

Special tax deduction for donations or sponsorships of Smart AI-Driven Reverse Vending Machine.

For contribution/sponsorship and applications received by Ministry of Finance (MOF) from 1 April 2023 until 31 December 2024.

Extension of full stamp duty exemption on the restructuring of loan/finance agreement executed from 1/1/23-31/12/24

Tax incentive for chicken rearing in closed house system

100% Accelerated capital allowance & Income Tax Exemption on qualifying capital expenditure incurred from YA 2023 until YA 2025.

Tax incentive for automation in manufacturing, service and agriculture sector

100% Accelerated capital allowance

• Scope of automation to include the adaptation of Industry 4.0 elements.

• Scope of tax incentive is expanded to include agriculture sector.

• Capital expenditure threshold to be increased up to RM10 million.

• Application extended to 31 December 2027

Extension of tax incentive on electrical and electronic

Extension of existing relocation incentives for the manufacturing sector.

Extension of tax incentive on biotechnology and food production

Existing tax exemption for BioNexus status companies is increased from 70% to 100% of statutory income and is extended to 31 December 2024.

Existing tax incentive for food production projects is extended to 31 December 2025 and expanded to include agricultural projects based on Controlled Environment Agriculture.

Extension of tax incentive on aerospace and shipbuilding

Existing income tax exemption and investment tax allowance for the aerospace industry is extended to 31 December 2025.

Existing tax incentives for the shipbuilding and ship repairing industry are extended to 31 December 2027.

Tax incentive for manufacturing of electric vehicle (EV) charging equipment

100% Income tax exemption on statutory income commencing YA 2023 to YA 2032 or 100% Investment tax allowance for a period of 5 years to set off against 100% of statutory income.

For applications received by Malaysian Investment Development Authority (MIDA) from 25 February 2023 until 31 December 2025.

Tax incentive for Carbon Capture and Storage (CCS)

Companies undertaking CCS in-house activity

• Investment tax allowance of 100% for 10 years to set-off against 100% of statutory income.

• Full import duty and sales tax exemption on equipment for CCS technology from 1 January 2023 until 31 December 2027.

• Tax deduction for allowable pre-commencement expenses within 5 years prior to the date of commencement of operation.

Companies undertaking CCS services

100% Investment tax allowance for 10 years to set-off against 100% statutory income or 70% Income tax exemption on statutory income for 10 years

• Full import duty and sales tax exemption on equipment used for CCS technology from 1 January 2023 until 31 December 2027.

• Tax deduction on fees incurred for use of CCS services for YA 2023 to YA 2027.

For applications received by MOF from 25 February 2023 until 31 December 2027.

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