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The honorable Minister of Finance, YAB Dato¡¯ Seri Anwar bin Ibrahim, tabled the 2024 Budget on 13 October 2023.

The 2024 Budget Touchpoints and additional appendix on tax measures were also released subsequently. We are pleased to provide the key additional updates below for your attention.

Expansion of the scope of taxable foreign-sourced income
Effective from 1 January 2022, foreign source income received in Malaysia by any Malaysian resident person is subjected to income tax. Certain exemptions have been given through the gazette orders. 

It is now proposed that the scope of taxable foreign source income be expanded to include gains from the disposal of capital assets received in Malaysia from outside Malaysia, effective from 1 March 2024. However, exemptions will be given subject to meeting economic substance requirements.

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Assessment under the Labuan Business Activity Tax Act 1990 (LBATA 1990)
It is proposed that the tax assessment under the LBATA 1990 to be based on the current year basis (currently on a preceding year basis), effective from the year of assessment 2025.

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Pengerang Integrated Petroleum Complex (PIPC)

PIPC will be transformed into a development hub for chemical and petrochemical sectors and the following tax incentives are proposed:

i. Chemical and petrochemical manufacturing company with minimum investment of RM500 million
? Income tax rate of 5% or 10% on income from qualifying activities for a period of up to 10 years, or
? Investment Tax Allowance of 100% for a period of up to 10 years to be set-off against 70% of statutory income.

ii. Developers of industrial areas in the PIPC
? Income tax rate of 10% on the income from sale or renting of land or building for a qualifying project for a period of 10 years.

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Increase in Service Tax Rate
It is proposed that the Service Tax rate will be increased to 8% from the current 6% on all taxable services except for food and beverage, telecommunication services, vehicle parking space services and logistic services. This is proposed to be effective 1 March 2024.

Expansion of Taxable Services
It is proposed that the scope of Service Tax will be widened to include karaoke centre services, delivery services, brokerage and underwriting services as well as logistic services. This is proposed to be effective 1 March 2024.

Evelyn Lee
Partner - Penang Tax
[email protected]
+603 7721 2399

Crystal Chuah Yoke Chin
Associate Director - Ipoh Tax
[email protected]
+603 7721 2714

Regina Lau
Partner - Kuching & Miri Tax
[email protected]
+603 7721 2188

Titus Tseu
Executive Director - Kota Kinabalu Tax
[email protected]
+603 7721 2822

Ng Fie Lih
Partner - Johor Tax
[email protected]
+603 7721 2514