The Malaysian 2024 Budget, which is themed “Madani Economy: Empowering the People”, was announced on...
The Malaysian 2023 Budget was announced on 7 October 2022 by the Minister of Finance, Tengku Zafrul Aziz. The 2023 Budget has a total allocation of RM372.3 billion. The 2023 Budget has been broadly distributed as follows:
The top three recipients of allocations for 2023 are the Finance Ministry (RM67.2bil), Education Ministry (RM55.6bil) and Health Ministry (RM36.1bil), constituting 43.3% of total expenditure.
The economy is expected to grow moderately between 4.0% and 5.0% in 2023. It is worth noting that the International Monetary Fund has revised the global economic growth rate for 2023 to 2.9% in July 2022.
The 2023 Budget is themed “Strengthening Recovery, Facilitating Reforms Towards Sustainable Socio-Economic Resilience of Keluarga Malaysia”. The 2023 Budget was formulated based on three priorities:
- Reinforcing the momentum of economic recovery by ensuring it is not just a recovery in Gross Development Product terms but also a job and income recovery for Malaysians and businesses;
- Strengthening economic resilience against future shocks through reforms towards better social protection especially of vulnerable segments of society, a stronger public health system, more sustainable fiscal position to provide buffers against future shocks and by undertaking more targeted forms of subsidies and assistance; and
- Implementing comprehensive reforms in the economic and social aspects for businesses, priority sectors and the nation to emerge more competitive globally while advancing its sustainable development agenda.
As the election is around the corner, there are indeed several tax measures that can benefit the taxpayers at large, namely the reduction in personal tax rates and the extension of tax reliefs for individuals. The inclusion of ‘software’ under the definition of ‘plant’ for tax purposes is indeed a welcomed move to ensure that Malaysia remains competitive at the global level. In addition, the announcement of a global minimum tax in line with the Pillar 2 initiatives announced by the OECD were also expected by many.
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 2022 is issued.
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