2 November 2018
Key highlights of 2019 Budget
KUALA LUMPUR: The following are the highlights of the 2019 Budget, which was tabled by Finance Minister Lim Guan Eng in Parliament on Friday.
The budget carries the theme of "Credible Malaysia, Dynamic Economy, Prosperous Rakyat" and will focus on three main thrusts with 12 key strategies to recapture Malaysia's 'Economic Tiger' status.
The three main thrusts are:
*Promotion of entrepreneurial culture
The 12 strategies are:
*Strengthening fiscal management
*Restructuring and rationalising government debt
*Increase government revenue
*Ensuring welfare and quality life
*Increasing job opportunities and marketability
*Improving quality of healthcare services and social welfare protection
*Increasing disposable income
*Education for a better future
*Initiating new economic power
*Grabbing opportunity to face global challenge
*Redefining government’s role in business
*Ensuring economic fairness and sustainable economic growth
1. Government plans to implement scheduled sale of land and in stages to the highest bidders to maximise returns to it.
2. Government will create the first Real Estate Investment Trust in the world for airports Government will exempt the service tax for specific services from Jan 1, 2019
3. Government will introduce a credit system for tax deductions from Jan 1, 2019
4. Government proposes that services that are imported be imposed a service tax from Jan 1, 2019 to ensure fair competition for local service providers
5. Government to restructure budget via zero-based budgeting
6. Fiscal Responsibility Act will be tabled by 2021 to avoid uncontrolled spending
7. Procurement Act to be tabled next year to regulate procurement process, ensure transparency
8. Government to use accrual basis of accounting to replace the cash basis of accounting
9. Debt Management Office will be set up, responsible for reviewing and managing government debts and liabilities.
10. Foreign online service providers have to register with the Customs Department, impose the service tax and remit it from Jan 1, Jan 2020
11. Government will launch a special Voluntary Disclosure Programme for taxpayers to declare whatever income not reported
12. Malaysia will implement the Automatic Information Exchange with other taxation authorities to enable auditing and investigation
13. Government will study more than 130 types of schemes for fiscal investment support undertaken by 32 agencies encouraging investments to ensure the relevant taxation incentives and no overlapping
14. The Property Gains Tax will be raised to 10 per cent from five per cent for companies, non-citizens and non-permanent residents in the sixth year and above
15. Government to restructure budget via zero-based budgeting.
16. Fiscal Responsibility Act will be tabled by 2021 to avoid uncontrolled spending.
17. Government Procurement Act to be tabled next year to regulate procurement process, ensure transparency.
18. Government to use accrual basis of accounting to replace the cash basis of accounting.
19. Debt Management Office will be set up, responsible for reviewing and managing government debts and liabilities.
20. The Real Property Gains Tax (RPGT) for citizens and permanent residents is raised to five per cent RPGT is exempted for properties, low, medium cost homes and affordable homes below RM200,000
21. The stamp duty for property transfers costing more than RM1 million is raised to four per cent
22. The maximum tax rate option of RM20,000 allocated under the Labuan Business Activity Tax Act 1990 is abolished.
23. LRT3 project will continue with reduced budget from RM31.6 billion to RM16.6 billion.
24. MRT2 project will continue with a savings of 22.4%, from estimated cost of RM39.3 billion to RM30.5 billion).
25. The RM5.2 billion Klang Valley Double Tracking Project will be re-tendered through open tender to provide substantial cost saving.
26. Under SST, nearly 10 times more items exempted from sales tax.
27. Casino duty is raised to 35 per cent of gross income
28. The “dealer” machine licence will be raised to RM50,000 annually from RM10,000
29. The duty on gambling machines is raised to 30 per cent on gross collections
30. The Federal government is expected to collect RM261.8 billion in 2019, encompassing the special Petronas dividend of RM30 billion
31. The government will allow property crowdfunding driven by the private sector as an alternative for the purchase of a first home and supervised by the Securities Commission
32. Government to introduce a credit system for sales tax deduction from January 2019 to avoid double taxation and to reduce business costs.
33. Government to introduce special voluntary disclosure programme for taxpayers to declare unreported income.
34. The Inland Revenue Board (LHDN) to investigate extraordinary wealth, including possession of jewellery, watches, handbags, luxury cars or real estates.
35. Government hopes to recoup at least RM1 billion from anti-smuggling and anti-fraud efforts.
36. Departure levy proposed for all international outbound air passengers from June 1, 2019.
37. Venture funds managed by government agencies will be streamlined to ensure the funds are channelled only to high potential companies
38. Government-related Investment Funds will allocate RM2 billion in matching grants for investment in private equity funds and venture capital funds
39. The government plans to establish a Co-Investment Fund totalling RM50 million for the private sector through an alternative financing platform
40. Capital Market and Services Order to introduce a new framework to approve and monitor digital forex activities and token market will be gazetted in 2019
41. Government will implement a Fibre Optic Plan and National Connectivity with an allocation of RM1 billion
42. Casino licence will be increased from RM120 million to RM150 million annually, casino duty will also be increased to 35% on gross income.
43. Machine dealer's licence will be raised from RM10,000 to RM50,000 annually, while tax on gaming machines also up from 20% to 30% of gross collection.
44. Government expects to collect revenues of RM261.8 billion, including special Petronas dividend of RM30 billion.
45. Government to continue and improve cost of living aid (BSH) for B40 group, to be given in a more targeted manner, with 4.1 million households expected to continue receiving financial aid from government via RM5 billion allocation.
* Households with monthly income of RM2,000 or lower to get RM1,000
* Households with monthly income between RM2,001 and RM3,000 to get RM750
* Households with monthly income of between RM3,001 and RM4,000 to get RM500
46. Government will subsidise RON 95 petrol for cars with the engine capacity of 1,500cc, and below, and those with motorcycles with engine capacity of 125cc and below.
47. Price of RON 95 will be floated based on Automatic Price Mechanism (APM)
48. The government has allocated RM210 million from 2019 to 2021 to encourage the move to Industry 4.0
49. The Malaysia Productivity Corporation will undertake the Readiness Assessment programme to assist 500 small medium enterprises (SMEs) to switch to Industry 4.0 technology
50. RM2 billion will be made available under the Business Financing Guaranteed Scheme to enable SMEs to invest in automation and modernisation
51. The government will make available a Digital Transformation of Industries fund of RM3 billion and a subsidy incentive of two per cent
52. The government has proposed the imposition of income tax at the concession rate of 10 per cent on the overall statutory income related to the Principle Hub activities for a period of five years
53. Government will implement a SME financing fund by commercial financing institutions of RM4.5 billion with a 60 per cent guarantee by Syarikat Jaminan Pembiayaan Perniagaan Bhd
54. The tax rate for companies with a taxable income of up to RM500,000 and SMEs with a paid up capital of less than RM2.5 million will be reduced to 17 per cent from 18 per cent
55. Exim Bank will offer credit facilities and Takaful protection of RM12 billion for SME importers
56. An allocation of RM100 million to improve the capabiltiies of the SME industry in the halal sector
57. A Shariah compliant Financing Scheme of RM1 billion will be provided to finance halal product exporters by financial institutions at the profit subsidy rate of two percent
58. Government to allocate RM10 million to work with NGO and social enterprises, helping underprivileged communities
59. A one-off assistance of RM500 will be paid to pensioners who are receiving pensions of less than RM1,000.
60. Minimum wage to increase to RM1,100 nationwide starting Jan 1, 2019
61. Nearly RM29 billion proposed for healthcare, up 7.8% over previous budget
62. RM50 million set aside to treat patients with rare diseases, Hepatitis C and haemodialysis treatment
63. RM100mil for Health Protection Scheme with health screening pilot project for 800,000 people from B40 group ages 50 and above.
64. Government to introduce excise duty at 40 sen per litre on two categories of sugary drinks, starting April 1, 2019
65. Government to allocate almost RM1.5 billion to build and complete affordable homes
66. Bank Negara Malaysia to provide RM1 billion fund for first time house buyers with income less than RM2,300 per month
67. RM400 million allocated to maintain, improve government quarters
68. Permodalan Usahawan Nasional Bhd will make available an allocation of RM200 million for the retail and wholesale industry as well as to rent business premises
69. RM20 million has been allocated for the “Buy Malaysian Goods” campaign
70. Government will allocate RM2.46 billion to upgrade and rehabilitate railway tracks
71. An allocation of RM25 million is being made available for the Kota Perdana Special Border Economic Zone at Bukit Kayu Hitam, Kedah
72. Land of 380 acres at Pulau Indah will be transformed into a Free Trade Zone and linked to the Port Klang Free Zone
73. The government will implement the Biodiesel B10 programme for the transport sector and B7 for the industrial sector in 2019
74. An allocation of RM30 million will be provided to assist oil palm smallholders obtain the Sustainable Palm Oil (MSPO) certification
75. RM100 million is allocated for the use of Cuplump Modified Bitumen technology for the construction of roads in investment and industrial areas in stages
76. A Rubber Production Incentive with an allocation of RM50 million to assist in reducing the impact of the fall in rubber prices on smallholders
77. RM47 million is allocated for Research & Development (R&D) to enhance seed productivity, cereals and fruits, RM18 million for automation of the agrofood industry and RM52 million for entrepreneur programmes and agro industry training
78. The government is offering a Pioneer Status incentive of 70 per cent or Investment Tax
79. Allowance of 60 per cent for five years for companies that manufacture environment friendly plastics that are bio-resin and bio-polimer based
80. A fund of RM2 billion is available for the Green technology Financing Scheme with the government bearing the interest rate subsidy of two per cent for the first five years
81. The 2019 Budget sees an allocation of RM314.5 billion for expenditure compared to RM290.4 billion in 2018
82. A total of RM259.8 billion is for administration expenses and RM54.7 billion as development expenditure.
83. Contingencies are set at RM2.0 billion.
84. The economic sector has received the highest allocation of RM29.2 billion, the social sector (RM15.2 billion, security sector (RM7.1 billion) and general administration (RM3.2 billion).
85. Government to freeze toll charges on all highways in 2019 with financial implication of RM700 million.
86. Education Ministry to get biggest allocation of RM60.2 billion, including RM2.9 billion education aid proposed for disadvantaged students in the form of food supply, text books, cash aid and RM3.8 billion for scholarships, education loans.
87. Tax exemption to be given to companies that assist its staff to settle their PTPTN loan by the year ending 2019.
88. Individual tax exemption for SSPN Saving Scheme is increased from RM6,000 to RM8,000.
89. RM100 million earmarked to prepare Malaysian athletes for 2020 Tokyo Olympics.
90. Khazanah Nasional Berhad to provide RM100 million for FIMI specifically applicable to film production at the Pinewood studio in Iskandar Johor.
91. National Fiberisation and Connectivity Plan (NFCP) to be implemented with RM1 billion allocation.
92. RM926 million allocated to build and upgrade roads including in rural areas and bridges.
93. Access to power and water supplies in rural areas to be improved with allocations of RM694 million and RM738 million respectively.
94. Pan Borneo Highway project in Sabah and Sarawak to continue, subject to cost rationalisation study.
96. RM10 million to set up another 50 childcare facilities in government buildings.
97. RM2 billion proposed to encourage investment in green technology industries.
98. Budget provides a total allocation of RM314.5 billion compared to RM290.4 billion in 2018 –with RM259.8 billion allocated for operating expenditure and RM54.7 billion for development expenditure.
99. RM286.8 million proposed for MACC operating expenditure.
100. The casino licence is raised to RM150 million annually from RM120 million
101. RM500 special payment for civil servants up to Grade 54 and RM250 for government pensioners