Budget 2016: Wealthy to pay more income tax

KUALA LUMPUR: Those earning annual net chargeable income of RM600,000 and more is the only group affected under the latest personal income tax structure announced by Prime Minister Datuk Seri Najib Razak on Friday.

The threshold for the top income tax rate has been raised to RM600,000 and above, from RM400,000 and above previously, and the maximum tax rate - reduced last year from 26% to 25% - has been increased to 28%.

For those earning chargeable income of RM600,000 to RM1mil, their tax rate has been lifted from 25% to 26%; while those making more than RM1mil will be taxed 28%.

Last year the rich had got a reprieve when the tax rate for those earning more than RM400,000 was cut from 26% to 25%.

Income tax rates for Malaysians in other income bands are maintained. Last year, the Government had reduced by one to three percentage points the tax rates of all Malaysians paying income tax.

Meanwhile, corporate income tax, which had been maintained at 25% for the last seven years, has been trimmed to 24% for both resident and non-resident companies. This comes as no surprise as Najib had announced the one percentage point reduction during the tabling of the previous budget.

The fixed income rate for non-resident individuals be increased by three percentage points from 25% to 28%.