Tax incentives for both middle and high-income earners

The burden on taxpayers, middle as well as high-income earners, will be reduced in line with the introduction of the Goods and Services Tax (GST) next year, said Datuk Seri Najib Tun Razak.

During the Budget 2015 announcement yesterday, the Prime Minister said with the lowered tax rates, taxpayers earning RM4,000 and less will no longer have to pay personal income tax for the year of assessment 2015.

This moves 300,000 individual tax payers out of the taxpaying bracket.

Also, he said, the income of individuals that is currently subject to the maximum tax rate will be pushed up from above RM100,000 to above RM400,000.

Najib also announced that the maximum tax rate, which is currently at 26% will be reduced to 24%, 24.5% and 25%; which means existing tax payers will be able to get savings of at least 5.3%.

For businesses, Najib said cooperative income tax rate would be reduced by one to two percentage points.

“In addition, secretarial fee and tax filing fee are allowed as deduction,” he said.

He added that for the year of assessment 2016, corporate income tax rate would be dropped by one percentage point from 25% to 24%, while for SMEs, it would be reduced by one percentage point from 20% to 19%.

Chartered Tax Institute of Malaysia president Aruljothi Kanagaretnam said the lowered rates would result in a significant amount of savings for taxpayers, both middle and high income earners.

“It is a people friendly budget.

“The increased BR1M and housing incentives, for example, shows that the Government is channelling the money it is collecting through the GST, back to the people.

“They also kept their promise to reduce tax rates when the GST is implemented,” he said.