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Malaysia

3 September 2021

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Malaysia Publishes 2022 Pre-Budget Statement

The Malaysian Ministry of Finance has announced tax plans for Budget 2022, which are covered in a 2022 Pre-Budget Statement. This includes that the Government is considering the following measures to increase tax revenue through increased tax compliance:

  • Implementation of the Special Voluntary Disclosure Program (SVDP) for indirect taxes administered by the Royal Malaysian Customs Department (RMCD). Through this programme, taxpayers are encouraged to voluntarily come forward to declare any tax that either has not been paid, underestimated, or erroneously reported to RMCD;
  • Introduction of a Tax Compliance Certificate as a pre-condition for tenderers to participate in Government procurement; and
  • Implementation of the Tax Identification Number (Tax Identification Number or TIN) as well as reviewing tax treatment that is identified as having elements of revenue leakage or harmful practices.

The Government is also conducting a comprehensive review of the tax incentive framework to ensure that the tax incentives offered to foreign and local investors remain relevant to the current business landscape while continuing to maintain the country's competitiveness in attracting quality investments and provide positive returns to the country's economy and fiscal position. The objectives of this review are as follows:

  • Provide an incentive framework that is responsive to changes in the business environment and economic landscape;
  • Coordinate the role and focus as well as uniformity in evaluating investments by investment promotion agencies;
  • Ensure that the tax incentive framework complies with international commitments; and
  • Ensure that Malaysia remains a major investment destination.

Lastly, it is noted that Malaysia continues to support the OECD BEPS initiative to address the issue of cross-border tax evasion, which includes examining the proposals on the digital economy through Pillar One and Pillar Two to ensure that Malaysia has the right to tax digital economy activities.

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