On 10th October 2014, Dato’ Sri Najib Tun Razak, a Prime and Finance Minister, unveiled Budget 2015 addressing key issues on promoting fiscal sustainability and easing the transition to GST for business and consumers, while placing the nation on a firmer growth trajectory towards Vision 2020.
The three key issues concerning the individuals and sole-proprietor business have been introduced in 2015 budget.
The first issue is about individual tax. The first change is that the income tax rate is reduced by 1 to 3% for resident individuals depending on different levels of chargeable income since Year of Assessment (YA) 2015 (KPMG, 2014). This results in that tax payers ...view middle of the document...
It is proposed that the 50% stamp duty exemption is given to a Malaysian citizen who executes instruments of transfer and loan agreements for a purchase of only one unit of residential property not exceeding RM500,000 which is RM100,000 more than existing legislation. Additionally, the effective date for the exemption is extended to 31 December 2016. This adjustment aims to benefit more low- and middle-income Malaysians own a roof above their heads amid rising property prices, industry players and observers said (Bernama, 2014).
In 2015 Budget speech, YAB Dato’ Sri Modh Najib Tun Haji Abdul Razak mentioned that the government would introduce a new Sharia-Compliant investment product called the Investment Account Platform (IAP) to provide opportunities for investors in investing their money as well as to boost development of SME by attracting participation from individual and institutional investors (Al Naqiy, 2014). This proposal will take effect from 1st September 2015 to 31st August. As an incentive to utilize this platform, government reported that individual investors will get income tax exemption on profits earned if the following conditions are fulfilled:
i) Tax exemptions shall only be accorded for three consecutive years starting from the first year where the profit is earned;
ii) The investment is made for a period of 3 years starting from the operation date of IAP;
iii) Tax incentive shall only be accorded for investment activities in Malaysia, in venture companies owned by Malaysian or locally incorporated companies;
iv) Tax exemption shall only be accorded for investments made in SMEs and venture companies in any sectors; and
v) Definition of SMEs is as per the latest definition issued by SME Corporation Malaysia.
According to Budget 2015, individual income tax rate has been reduced by 1-3% in terms of the different ranges of the income. For the personal Income Tax reductions, many residents said that they are pleased that the government is reducing income tax rates by 1-3% for assessment year 2015 (The Star, 2014). Under this mechanism, tax payers are enjoying a tax saving of at least 5.3% and those with income under RM4,000 would no longer have to pay income tax. This brings tax payers are closer to regional practices, and not only would tax payers have more disposable income, but also this will make Malaysia a more attractive employment destination.
However, some people think that the deduction of the individual tax rate is because of the implementation of GST, so actually national people are paying another new tax, making the cash in hands no difference.
As discussed in Part (1), in order to guarantee more people can own their first home and reduce the cost of buying a house Malaysian government make a proposal. Some people commented that “ We appreciate that the Government has extended the 50% stamp duty on the instruments of transfer and loan agreements, at the same time increased the purchase limit...