If you’re a Malaysian business owner or entrepreneur, you’d want to discover 7 crucial insights into the latest Malaysian Tax Budget 2024. Explore topics ranging from business loans to valuable tax-saving tips in this blog post that can enhance your business.

Recently, several structural changes to the Malaysian tax system have been introduced to:

  • Ensure the government can meet its fiscal responsibilities
  • Reduce the deficit to 4.3%
  • Increase its revenue to RM307.6 billion

7 Highlights for SMEs & Microentrepreneurs

1. Mandatory adoption of e-invoicing for taxpayers

E-invoicing is coming to improve record-keeping and reduce tax costs. Here’s the phased rollout:

  • Those with over RM100 million in annual income must start by August 1, 2024.
  • Those with RM25-RM100 million need to begin by January 1, 2025.
  • Everyone else must join by July 1, 2025.

Tax deductions for expenses related to environmental, social, and governance (ESG) initiatives are now available to promote sustainability and governance. Businesses can claim up to RM 50,000 annually for ESG-related costs, including enhancing sustainability reporting, climate risk management, tax governance reports, transfer pricing documentation, E-invoicing setup, and other ESG reporting requirements. This incentive is applicable from the assessment year 2024 to 2027.

3. Capital Gains Tax (CGT) on disposal of unlisted shares

A capital gains tax (CGT) will be applied to unlisted shares.

– For shares acquired before March 1, 2024, you can choose either 10% of your net gain or 2% of the gross sales value.

– After March 1, 2024, a 10% CGT rate on the net gain will be fixed.

– There will be CGT exemptions for shares related to approved Initial Public Offerings on Bursa Malaysia and for shares restructured within the same group.

– These changes will take effect from March 1, 2024, to make the implementation smoother and reduce business costs.

4. Sales and service tax (SST) increased to 8%

The SST – which is currently set at 6% – will be increased to 8% in 2024, but will exclude essential services like F&B and telecommunication in a bid to avoid burdening the rakyat. The government will also expand the scope of taxable services to include logistics, brokerage, underwriting, and karaoke services.

5. Improved access to business loan facilities for MSMEs

The government is set to allocate up to RM44 billion for loans and financing guarantees, with an additional RM2.4 billion for microentrepreneurs and small traders through various agencies, including BNM, BSN, and TEKUN.

– RM1.4 billion under BSN micro loan: For business capital, equipment purchases, premises, and marketing initiatives for hawkers and small entrepreneurs

– RM330 million via TEKUN: For financing facilities to small traders, such as batik and craft operators, orang asli entrepreneurs, and bumiputera of Sabah and Sarawak. RM30 million will be earmarked specifically for businesses run by the Indian community.

– RM720 million allocated specifically for women and youth entrepreneurs

– BNM’s SME loan funds offer RM8 billion in loans, including RM600 million for micro enterprises, low-income entrepreneurs, small contractors, sustainable businesses, and food security sectors within SMEs.

6. Funds for automation and digitalisation

– RM100 million allocated for digitisation grants benefiting over 20,000 MSME entrepreneurs.

– Capped at RM5,000 for each entrepreneur, this grant can be used to upgrade sales, inventory, and digital accounting systems.

– RM900 million in loans provided for SMEs to enhance business productivity through automation and digitization.

– RM40 million earmarked for the Shop Malaysia Online program, encouraging small traders to sell products online.

7. Capital allowance on ICT equipment and computer software increased

The capital allowance on ICT equipment and computer software expenses will be raised from 20% to 40%, with the claiming period reduced from four to three years for companies.

These measures introduced in Budget 2024 offer significant benefits and opportunities for SMEs and microentrepreneurs in Malaysia. By embracing these changes, businesses can enhance their operational efficiency, access vital funding, and stay competitive in a rapidly evolving market. Make sure to leverage these incentives to drive your business growth and sustainability.

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