Corporate Tax
No reduction in the Corporate Tax from the existing 28%
New goods and services tax
The government has introduced a goods and services tax (GST) to be implemented on Jan 1, 2007. The rates of this new tax has yet to be determined. The government will consult public and private organisations regarding the implementation of GST.
With the introduction of the new tax, the government will reduce corporate and individual income tax rates.
Encouraging small and medium-size industries
The Small and Medium Industry Fund 2 will be increased by RM1.5 billion to RM4.5 billion and the New Entrepreneurs' Fund 2 by RM550 million to RM2 billion.
Two additional funds will be created - a Fund for Enhancing Marketing Skills of SMEs with an allocation of RM50 million and a Fund for Enhancing Product Design, Packaging and Labelling Capabilities of SMEs with an allocation of RM100 million.
Personal Income Tax
To further promote the Information and Communications Technology (ICT) sector and for ICT to benefit every household, Abdullah said the tax rebate for individual taxpayers for the purchase of personal computers would be increased to RM500 from RM400.
Individual taxpayers would also benefit from the additional tax relief given for the purchase of books which would now be raised to RM700 from RM500 previously.
There will be additional tax relief for disabled taxpayers, from RM5,000 to RM6,000. For disabled spouses, the government proposes the additional tax relief currently at RM2,500 be increased to RM3,500.
Civil servants earning up to RM1,000 a month will be paid a bonus of one and a half months salary and those earning more than RM1,000 a month will be paid a bonus of one month salary subject to a minimum of RM1,500. The bonus will be paid in two instalments, the first in October and the second in December.
Long-term government contracts for bumiputera entrepreneurs
The government currently awards long-term contracts for a period of five years to bumiputera entrepreneurs only in the defence industry.
This will be extended to other industries involving technology transfer, including mechanical and engineering equipment industries as well as health services. The contract can be extended for another five years, if the company shows excellent performance and has the potential to penetrate export markets.
RM500 million allocated to outsource Class F contractors to maintaing government buildings including schools, hospitals and government quarters in the districts.
Increase education, health tourism
Additional measures will be taken to further promote education tourism, where currently we have 51,000 foreign students from 130 countries.
The government will expedite approvals and accreditation of courses by private institutions of higher learning (IPTS), and to rank the performance of IPTA (public institutions) and IPTS based on international standards.
To promote health tourism - where 103,000 foreigners visited Malaysia under the health tourism packages in 2003, bringing the country a total revenue of RM58.3 million - the government will organise health tourism packages through coordinating efforts between hospitals and hotels as well as establishing an international referral network.
Liberalisation of capital markets
To increase global competitiveness, the government will allow up to five major foreign stockbrokers and five leading global fund managers to operate in Malaysia. It will also allow 100 percent foreign ownership in futures broking companies and venture capital companies.
The Employees Provident Fund (EPF) can increase the size of its funds placed with local fund management companies, including non-bank owned companies from RM6 billion to RM12 billion within three years.
Agriculture, third engine of growth
The government will focus on revamping the agriculture sector as the third engine of growth, after the manufacturing and services sectors. This policy is to reduce dependence on food imports, which amount to RM13.9 billion in 2003.
To encourage the commercialisation of the agriculture sector, the government will establish a fund of RM300 million for seed capital. In addition, a sum of RM1.5 billion is allocated for agricultural projects, especially for projects involving smallholders.
Tax incentives include a 100 percent deduction on capital expenditure, pioneer status or investment tax allowance for five years and reinvestment allowance for 15 years.
Companies which produce halal food will be given tax exemption for five years. A Special Fund for Development and Promotion of Halal Products will be established with an allocation of RM10 million.
Click here to download Text of the 2006 Budget Speech
Comments
Ohh, RM700 relief on books, woohoo. At 20% tax, I'll be saving RM140 a year. Can buy another book! That's like... buy 5 get 1 free!
:-P
Posted by: totoro | October 2, 2005 12:33 PM