PETALING JAYA: Those with nett chargeable income above RM20,000 will enjoy tax savings between RM300 and RM13,200 once income tax reduction kicks in next year.
The Inland Revenue Board Malaysia (IRB) corporate communications director Nor Azirah Mohd Said said currently, the first income band starts at RM1 to RM2,500.
With the 1% reduction, the first band will now be from RM1 to RM5,000, at 0% tax rate.
Prime Minister Datuk Seri Najib Tun Razak in his Budget 2015 speech last Friday also proposed that those with family income of RM4,000 be exempted from paying tax.
This would mean that almost 300,000 taxpayers in that bracket would be exempted from taxes in 2015.
Najib was reported saying that currently, there are only two million people who are paying taxes from a total of 13 million in the workforce.
Nor Azirah said in an interview that the tax rate reduction was aimed at benefiting the middle-income group who earn between RM4,000 and RM10,000 who were not eligible for any assistance such as the 1Malaysia People’s Aid (BR1M) payout.
“The next income band at tax rate of 1% will eventually not be taxable as the chargeable income is less than RM35,000 and is eligible for the tax rebate of RM400,” Azirah told The Star in an email yesterday.
For example, currently, a person with a monthly income of RM4,000 who is contributing to the Employees Provident Fund (EPF) and has a spouse who is not working, has to pay tax of about RM143.20 after receiving a RM400 rebate.
From 2015 onwards, however, the same person will not have to pay anything.
The Capital Gains Tax (CGT) proposed by the Opposition would only drive away investors as it affects the foreign and domestic investments in the country, said Deputy Finance Minister Datuk Ahmad Maslan.
He said the CGT would deter local and foreign direct investors, as they would not be able to gain profit, adding it would only increase the investment costs.
Ahmad said the country had already implemented one of the components of CGT in the form of the real property gain tax (RPGT).
“The Opposition does not know what it is talking about. The country’s economy will be affected if CGT is implemented as it will not motivate direct foreign and domestic investors to invest here,” said Ahmad in a press conference after a Budget 2015 briefing to Inland Revenue Board (IRB) employees here yesterday.
He also said the Government had no plans to impose the inheritance tax.