Budget 2023 Insights

The Malaysian 2023 Budget, which is themed “Developing Malaysia Madani”, was announced on 24 February 2023 by the Minister of Finance, Anwar Ibrahim. The 2023 Budget has a total allocation of RM388.1 billion (an increase of RM15.8 billion, compared to the Malaysian 2022 Budget). The 2023 Budget has been broadly distributed to operating expenditure (75%) and development expenditure (25%).

The top two recipients in terms of budget allocations for 2023 are the Education Ministry (RM55.2bil) and Health Ministry (RM36.3bil), constituting 23.6% of total expenditure. A substantial amount of the Government’s operating expenditure has been allocated for debt service charges, emoluments, retirement charges, and subsidies and social assistance.

The economy is expected to grow moderately, with a forecasted growth rate of 4.5% in 2023. It is worth noting that as at January 2023, the International Monetary Fund projected that the global economic growth rate for 2023 would fall to 2.9%, before rising to 3.1% in 2024. The 2023 growth projection is consistent with the more modest global growth forecast by the World Bank, which was adjusted to 1.7%, from the earlier forecasted rate of 2.9%.

Several tax measures that will benefit individual taxpayers at large have been introduced, namely the reduction in personal tax rates and the extension of tax reliefs for individuals.

From a business perspective, various measures have been introduced to support micro, small and medium enterprises, including the provision of various financing facilities with a total value of up to RM40 billion.

In the ensuing pages of this report, we are pleased to present the economic outlook for 2023 and key tax measures introduced. These have been prepared based on the 2023 Budget Speech. We will issue another round of updates once the Finance Bill 2023 is issued.

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