Soh Lian Seng
KUCHING: The government has announced the implementation of the Qualified Domestic Minimum Top-Up Tax (QDMTT) of 15 per cent which will likely combat revenue leakages and profit-shifting activities, KPMG Malaysia highlighted in its post-Budget 2023 commentary.
“As eagerly awaited, the Government also announced that the implementation of the QDMTT of 15 per cent will commence in 2024, in line with international tax developments surrounding the Base Erosion Profit Shifting (BEPS) Pillar 2 initiatives.
“This will combat revenue leakages and profit-shifting activities and allow Malaysia the first right to charge top-up taxes on revenue from entities located in Malaysia that are paying low taxes,” KPMG Malaysia head of tax Soh Lian Seng said.
The proposal in Budget 2023 also addressed critical areas and sectors and has taken into account the rising cost of living of Malaysians, particularly the M40 and the worst affected economic sectors such as tourism and travel.
“Most significantly, a two per cent reduction in personal income tax rate for individuals with taxable income ranging from RM50,000 to RM100,000; the reinvestment allowance and income tax exemption for the hotel and tourism industries – these reliefs are well received.
“It is good that emphasis continues to be placed on strengthening the recovery momentum for SMEs with the provision of a two per cent tax cut for the first RM100,000 income, various tax allowances, financing assistance and grants for automation and digitalisation spending,” he added.
Aside from that, sustainability is a key focus in the Budget 2023 proposals, with the government’s intention to introduce Carbon Tax to drive the Environment, Social and Governance (ESG) agenda
“Although no specific implementation date has been announced, the government is evaluating the carbon pricing mechanism. Already introduced in various developed countries, the carbon tax will serve as a new source of government revenue and is certainly a step in the right direction to assist our nation in achieving carbon neutrality by 2050.
“The extension of the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) by another two years to December 31, 2025 will also continue to incentivise and encourage businesses to accelerate the use of ESG-focused technology and embark on green projects,” Soh said.