Volume 4 - Issue 3 - 24 October 2016

Budget 2017
Malaysia
Budget 2017
Three themes embody Malaysias Budget 2017:
Economic growth;
Prudent spending; and
Did you know?
Wellbeing of her rakyat (citizens)

Amid a challenging global macro-economic

1 Budget allocation 1

RM b
environment, Budget 2017 proposes five 300
strategies to strengthen the Malaysian economy 250
200 264.2 260.7 264.4 260.8
and address structural issues that are hampering 212.0
232.8
251.6
150
Malaysias long-term growth potential. 100
191.5

50
Despite declines in oil-related revenue, fiscal 0
2010 2011 2012 2013 2014 2015 2016e 2017f
consolidation is on-track as the Government 1Excludes contingency reserves
targets to narrow its budget deficit to 3.0% of GDP. 2 Government revenue
RM b
213.3 220.6 219.1 212.6 219.7
250 207.9
185.4
200 159.7

150
In the face of challenging global 100
externalities, our commitment to fiscal 50
discipline would be one of the key 0
ingredients to sustainable growth. 2010 2011 2012 2013 2014 2015 2016e 2017f

3 Budget deficit
%
Dato Abdul Rauf Rashid 6.0
Malaysia Managing Partner, 5.0
EY 4.0
5.4
4.8
4.5
3.0 3.9
3.5
2.0 3.2 3.1 3.0
1.0
0.0
2010 2011 2012 2013 2014 2015 2016e 2017f

5 strategic initiatives 4 Government debt/GDP ratio

60
58
%

56 58.3
1 Rakyat first 54
52 54.7 54.5
50 53.5 53.2
2 Accelerating economic growth 48 51.2 51.8
46
2010 2011 2012 2013 2014 2015 2016e
3 Empowering human capital
5 Operating and development expenditure
4 Strengthening inclusive Operating Development
development expenditure (RM b)
300
expenditure (RM b)
60

5 Improving public service CAGR 2010-2017: -1.6%

50
delivery
200 40

30
Notes: CAGR 2010-2017: 5.1%
*Numbers may not add up due to rounding.
e = Estimate 100 20
f = Forecast 2010 2011 2012 2013 2014 2015 2016e 2017f
Sources:
World Bank data Malaysia
Bank Negara Malaysia (BNM) annual reports
Budget speeches from 2010 to 2017
Ministry of Finance (MoF) economic reports

Take 5: Budget 2017 Malaysia Page 1

 Economic directions
Despite global external challenges, Malaysias economy is anticipated to grow at 4.5% in 2016.
The private sector continues to steer Malaysias domestic demand with the bulk of private investment
driven by ongoing infrastructure projects. Looking ahead into 2017, Malaysias growth is expected to be
modest, subject to better growth in world trade, particularly the US, developing economies and emerging
markets.
Malaysias real GDP is expected to register
% Real GDP vs. CPI
8 growth of 4% to 5% in 2017, driven by growth in
private consumption at 6.3% and investment at
6 GDP: 4-5% 5.8%.
4
2 Malaysias CPI, although contained at 2.0% to
CPI: 2-3% 2.5%, may face inflationary pressures with the
0
impact of the lower ringgit on the costs of
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016e

2017f
-2 imported business inputs and consumer goods.

RM b
Trade (goods and services)
900
800
Export: RM806b Total trade stands at RM1.52 trillion. While
700 exports and imports have been increasing
600 Import: RM712b steadily, the trade balance remains in surplus,
500 albeit a lower surplus, with tepid global demand.
400
300
China and ASEAN countries continue to be
200 Malaysias key trading partners.
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016e

2017f

Net international reserves

RM b
500
450
As of 14 October 2016, Malaysias total net
400
RM405b* international reserves amounted to 8.5 months
350
of retained imports and was 1.2 times the short-
300
term external debt.
250
200
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016*

*As of 14 October 2016

Growth by sectors The services and manufacturing

sectors continue to be the major
Agriculture Mining and Manufacturing Construction Services
% quarrying contributors to Malaysias economic
10 8.2 8.7 8.3 growth.
8
5.7
4.9 5.1 5.6
6 4.7
4.0 4.1 In 2017, all sectors are expected to
4
1.2 1.5 1.1 1.4 continue their positive growth track.
2
0
Growth in the construction sector
-2 continues to be propelled by the rail
-4 infrastructure projects, urban housing
-3.3
2015 2016e 2017f and affordable housing segments.

Sources:
Budget 2017 speech, Malaysias Ministry of Finance (MoF)
Asian Development Outlook (ADO) 2016 Update
BNM annual reports
MoF economic reports

Take 5: Budget 2017 Malaysia Page 2

Selected sector initiatives
RM1.3b subsidy for paddy price, seeds and fertilisers including cultivation of hill paddy
RM286m to increase the production of palm oil, rubber, cocoa and pepper
RM260m for Rainy Season Assistance of RM200/mth for three months to 440,000
rubber smallholders
RM250m for rubber production incentive for rubber smallholders
RM250m for monthly living allowance of RM200 to RM300 to 57,000 fishermen
RM140m to implement the Distribution of Necessary Goods Programme; open 4
Agriculture and MyFarmOutlets and upgrade 150 Agrobazaar Rakyat 1Malaysia
produce RM100m to improve the quality of palm oil products, replant oil palm and upgrade estate
roads
RM100m for the Youth Agropreneur Development Programme to produce entrepreneurs
involved in the production of high-value agricultural products
RM50m for scientific research to enhance the quality of palm oil products
RM30m to be provided by the Malaysian Palm Oil Board (MPOB) for the replanting of oil
palm by smallholders
RM20m to upgrade roads in smallholders oil palm estates

RM7.4b allocated to 20 public universities

RM1.4b to four university hospitals
RM300m to five research universities
RM100m research fund for higher education institutions
RM4.3b to continue providing scholarships through the Public Service Department
(RM1.6b), Majlis Amanah Rakyat (MARA), (RM2b), Ministry of Higher Education
(RM250m), Ministry of Health (RM208m), Ministry of Education (RM194m), Ministry of
Human Resources (RM28m) and Ministry of Youth and Sports (RM21m)
RM1.1b for hostel meal assistance programme
Education RM1.1b for additional payment assistance for school fees; textbook assistance and per
capita grant assistance
RM600m special fund for improvement and maintenance of schools
RM570m to reconstruct 120 destitute schools as well as upgrade 1,800 science
laboratories
RM478m to complete construction of 227 primary and secondary schools
RM340m to provide free tablets to assist teaching (by MCMC)
RM300m for the 1Malaysia Supplementary Food Programme for primary school students
RM300m to replace book vouchers with student debit cards to purchase books,
stationery, computer devices and internet access

Income tax and stamp duty exemption for International Currency Business Units (ICBU)
which operate Islamic banking and takaful business activities transacted in foreign
currencies to be extended to the year of assessment 2020
Insurance credit facilities with coverage valued up to RM1b by EXIM Bank to small
medium enterprises (SMEs)

Financial RM3b to fund managers licences under the Securities Commission to invest in potential
services and small and mid-cap companies
RM200m financing as well as insurance credit facilities with coverage value up to RM1b
capital market
for SMEs from EXIM Bank
RM165m for one-off increase in Private Retirement Scheme (PRS) incentive to RM1,000
for PRS contributors
RM75m initial funding through the Capital Market Development Fund to establish a
Capital Market Research Institute
Special step-up end-financing scheme for PR1MA houses, in collaboration with BNM, EPF
and banks

Take 5: Budget 2017 Malaysia Page 3

Selected sector initiatives
More competitive and advanced broadband infrastructure : initially higher speed for the
same price and within two years, double the speed with a 50% price reduction
Increase ethernet broadband speeds in public universities to a maximum of 100 Gbps
Information and Introduction of new location categories such as the Malaysian Digital Hub and the
communication introduction of Digital Free Zones
technology
(ICT) RM1b to widen the coverage as well as enhance the quality of broadband, to reach up to
20 Mbps throughout the nation
RM162m for the Malaysia Digital Economy Corporation (MDEC) to implement digital
programmes e.g. e-commerce ecosystem and Digital Maker Movement

RM4.6b to maintain state roads under Sistem Maklumat Rekod-Rekod Jalan Raya
Malaysia (MARRIS)
RM2.1b for infrastructure and socioeconomic development in five economic corridors
namely Iskandar Malaysia, Northern Corridor Economic Region (NCER), East Coast
Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of
Renewable Energy (SCORE)
RM1.2b to build and upgrade 616km of village roads and bridges
RM495m to continue 69 flood mitigation projects
RM114m to upgrade Sarawak interior roads under the Jiwa Murni Programme
RM100m to install 97,000 street lights and 3,000 LED lights in 7,500 villages
nationwide
National Blue Ocean Strategy (NBOS):
Build four Urban Transformation Centres (UTC) in Negeri Sembilan, Perlis, Pulau
Pinang and Selangor
Build three Rural Transformation Centres (RTC) in Selangor, Sabah and Sarawak
Provide job centres in every UTC for job matching
Increase four buses for mobile Community Transformation Centre (CTC) in the
interiors
Implement NBOS initiatives: 1Malaysia English, coding in schools; volunteering for
international professional, Global Entrepreneurship Community II
Infrastructure Transportation and logistics
RM55b (estimated) for the implementation of the new East Coast Rail Line (600km)
project connecting Klang Valley to the East Coast
RM1.1b to increase the frequency of Electric Train Service (ETS) via the purchase of 19
train sets
RM100m to restore the East Coast railway line along Gua Musang Tumpat
Build and upgrade infrastructure: Jalan Lok Kawi Pengalat Papar in Sabah; Jalan
Kampung Keruak Gua Musang Kuala Berang; Batang Lupar Bridge, Sri Aman
To create Sea Basing in the East Coast of Sabah waters and Helicopter Forward
Operating Base
RM60m to provide grant of RM5,000 to purchase new vehicles and offer individual taxi
permits to 12,000 taxi drivers
RM60m for a launch grant to make the SOCSO scheme available to individual taxi drivers
earning less than RM3,000/mth
Utilities
RM732m to clean water supply to 5,200 houses and upgrade FELDA water supply
RM665m to address water supply issues: States Water Supply Plan
RM500m to establish Water Supply Fund
RM460m to provide electricity supply to 10,000 houses in rural areas
RM124 m electricity subsidy
Repowering of the Sandakan Power Station Project

Take 5: Budget 2017 Malaysia Page 4

Selected sector initiatives
Build and upgrade new hospitals and clinics in Perlis, Kuching, Mukah, Jempol, Muar and
Johor Bahru
Allocations of:
RM4.5b for the operations of 340 1Malaysia Clinics, 11 1Malaysia mobile clinics,
959 health clinics and over 1,800 rural clinics
Pharmaceutical RM4b for the supply of drugs, consumables, vaccines and reagents to all government
/ Healthcare hospitals and health facilities
RM536m to upgrade hospital facilities including cardiology treatment equipment and
the purchase of 100 ambulances
RM80m for initiatives to prevent and control contagious diseases, i.e., dengue and Zika
and expand the National Community Health Empowerment Programme
RM70m medical assistance to underprivileged patients

Stamp duty exemption on instruments of transfer and loan agreement for first-home-
ownership for the period 1 January 2017 until 31 December 2018:
Houses priced below RM300,000 100% exemption; and
Houses priced from RM300,000 to RM500,000 exemption on first RM300,000 with
balance subject to normal stamp duty rates
Rate of stamp duty on instruments of transfer of real estate exceeding RM1m will be
increased to 4% effective 1 January 2018 (from the current 3%)

Real estate
(incl. housing) RM200m to build 5,000 units of MyBeautiful New Home through the NBOS for B40 at
RM40,000 to RM50,000 per unit the Government will finance RM20,000 while the
remainder will be paid by installments by the owners
RM710m to build 9,850 new units and complete 11,250 Peoples Housing Programme
(PPR) houses
RM200m to build 5,000 Peoples Friendly Home units under Syarikat Perumahan
Negara Bhd (SPNB) with a subsidy of RM20,000 per unit
Allocations for Second-Generation House infrastructure development of:
RM200m to FELDA; RM100m to FELCRA; RM100m to RISDA

Guarantee up to RM15b provided under various schemes of Syarikat Jaminan

Pembiayaan Perniagaan (SJPP) is extended until year 2025
2% rebate on interest rate charged to SME borrowers under SJPP scheme (limited to
total accumulated funding of RM1b)
Proposed reduction in corporate tax rate for SMEs on first RM500,000 of chargeable
income, from 19% to 18%, with effect from the year of assessment 2017

RM300m to Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN) to assist small-scale

entrepreneurs to develop their businesses including a new scheme, TEMANITA for
women micro entrepreneurs
RM200m for the Entrepreneurship and Business Premises Financing Programme through
Perbadanan Usahawan Nasional Berhad (PUNB)
Small and RM200m for Working Capital Guarantee Scheme (WCGS) specifically for startups
medium RM200m loan financing by EXIM Bank to SMEs
enterprises RM150m for business financing programmes through Tabung Ekonomi Kumpulan Usaha
(SMEs) Niaga (TEKUN) and Amanah Ikhtiar Malaysia (AIM)
RM120m for MARA entrepreneurship programmes such as halal industry enterprises,
youth entrepreneurship development and training
RM100m Export Fund under Unit Peneraju Agenda Bumiputera (TERAJU) for Bumiputera
companies to penetrate international markets
RM100m to implement entrepreneurship programmes under AIM
RM100m to revitalize eUsahawan and eRezeki programmes under the Malaysia Digital
Economy Corporation (MDEC)
RM100m to SME Bank to increase opportunities for Bumiputera entrepreneurs
RM100m to enhance the viability of entrepreneurs and to expand their business capacity
through SME Bank
RM100m for Peneraju Skil dan Iltizam, Peneraju Profesional as well as Peneraju Tunas
through the Bumiputera Education Steering Foundation

Take 5: Budget 2017 Malaysia Page 5

Selected sector initiatives
Pioneer Status and Investment Tax Allowance application period for new 4 and 5 star
hotels extended by two years, to 31 December 2018
Increase in tax deduction from RM500,000 to RM700,000 to encourage private
Tourism sponsorship of local and foreign arts, culture and heritage shows and performances
and hospitality Extend eVisa to countries in the Balkans and South Asia regions

RM400m to intensify promotion and improve tourism facilities via clean air and eco-
tourism initiatives

Extend the double tax deduction for the Structured Internship Programme until Year of
Assessment 2019 for students pursuing tertiary education. The double deduction will be
expanded to include Malaysian students pursuing full-time vocational level education
(Malaysia Skills Certificate Level 3)
Matching grants to Technical Vocational Education and Training (TVET) institutions
which successfully obtain assistance in the form of equipment from industries

RM4.6b to enhance capacity of TVET institutions

RM400m to transform nine Institut Pendidikan Guru (IPG) campuses into polytechnics
and vocational colleges, including one for Technical Vocational Education and Training
Training (TVET) trainers
and education RM270m to upgrade teaching equipment in TVET institutions
RM360m for the Skills Development Fund Corporation
RM50m to enhance graduate employability by extending the 1Malaysia Training Scheme
(SL1M) for 20,000 graduates
Sports development
RM450m for hosting the 29th SEA Games and 9th Para ASEAN Games in 2017
RM122m to build and upgrade Youth & Sports Complex, 1Malaysia Futsal Complex and
Community Sports Complex
RM54m for the Athlete and Paralympic Athlete Preparation Programmes
RM50m for the construction of Football Academy Phase II in Gambang, Pahang
RM70m for the Elite Sports Podium Development Programme

RM522m allocated to the Malaysian Investment Development Authority (MIDA) to focus

Various sectors on certain identified industries, i.e., chemicals, electrical and electronics and R&D
activities

The proposed formation of the Collection Intelligence
Arrangement, bringing together the Inland Revenue Board,
Customs and Companies Commission of Malaysia, spells a new
age of transparency and information exchange in tax
enforcement and combating of inappropriate behavior. This is
consistent with international trends as governments increase
their focus on effective collections of revenue amid tough
economic conditions. More than ever, businesses will need to
do the right thing and follow through to ensure their reportings
are consistent and accurate across multiple interfaces.
Yeo Eng Ping
Asean Tax Leader,
EY

Take 5: Budget 2017 Malaysia Page 6

Towards tax transparency: BEPS
Todays international tax conversations are focused on the impact of the Organisation for Economic Co-
operation and Development (OECD)s Base erosion and profit shifting (BEPS) initiative on cross-border
supply chains. BEPS seeks to ensure that tax is paid in the jurisdiction where economic activities take
place by combating tax mitigation measures that exploit gaps and mismatches in tax rules; aggressive
transfer pricing strategies and the use of tax treaties that shift profits to low or no-tax locations.

The resultant international tax changes will transform the global tax environment in which multinationals
(MNCs) operate. Businesses that do not attempt to anticipate the impact of these changes may struggle
to adapt to new approaches and comply with new rules. Now is the time to evaluate the potential BEPS
pressure points for your business and develop plans for ensuring that your business models and
structures are aligned with the new global tax mindset.

How will BEPS impact your business?

Significant BEPS recommendations What to expect from BEPS?

1 Mandatory annual country-by-country

reporting for large multinational groups
meeting certain thresholds
Tighter rules on transfer pricing arms-
2 length-principle1 compliance and
documentation
Increased reporting obligations
Increased scrutiny on intangible property
ownership and financing structures
A greater emphasis on a transactions
substance and its alignment with the
business

3 Limit interest deductions More complex transfer pricing rules

Stricter limitations on access to treaty

Neutralise the effect of hybrid mismatch benefits resulting in denial of treaty
4 arrangements2 protection in certain cases

The need for more proactive engagement

Lower the permanent establishment3 with tax authorities to avoid and resolve
5 thresholds for taxable presence in a disputes as well as gain certainty
country
Increased use of cross-border dispute
resolution channels
6 Enhanced substance required to access
tax treaty benefits4

How should companies prepare for BEPS?

Operational
Understanding Tax planning Tax authorities Communication
considerations

Know and understand Build consideration of Re-examine supply Consider Advance Share updates on
what the current potential BEPS chains Pricing the changing global
discussions and impacts into current Arrangements5 tax environment
recommendations are tax planning (APAs) and other frequently with
and how these impact Analyse current and early engagements management, the
the company future financing with tax authorities audit committee
arrangements and other affected
stakeholders

Take 5: Budget 2017 Malaysia Page 7

Towards tax transparency: BEPS
CbC Reporting and Transfer Pricing documentation
The IRB has indicated its intention to introduce CbCR (Country-by-Country Reporting) and enhanced local transfer
pricing documentation requirements, in line with the OECDs recommendations.

CbCR at a glance
CbCR is an annual three-tiered filing which includes
Country-by-country report: contains financial and tax data by tax jurisdiction;
Master file: contains an analytical overview of a reporting entitys global
What is CbCR? operational model; and
Local file: contains detailed information on specific inter-company transactions
and assesses material transfer pricing positions according to the arms-length-
principle

Who is it applicable Any MNC with a total consolidated revenue equal to or above 750m (estimated at
to? RM3.48b on 7 October 2016)

When must the first Expected to be in respect of the fiscal year starting 1 January 2017 to be filed no
CbC report be filed later than 31 December 2018. Some other countries would require filing by 31
in Malaysia? December 2017, in respect of the fiscal year starting 1 January 2016.

CbC report filed annually with ultimate parents home tax authority;
How will it be filed? Master and local files are filed directly with the value-originating country tax
authorities i.e. local tax administrations in local jurisdictions

Why is it being Allows tax administrators a holistic view of company transfer pricing strategies and
implemented? other BEPSidentified risks

CbC report to be shared via the treaty network by the ultimate parents home tax
Where will the filed authority
tax information be Master and local files retained by the relevant value-originating tax authorities
circulated? Note: The CbC report will automatically be shared with foreign tax administrators according to
the Multilateral Competent Authority Agreement (MCAA) which Malaysia has signed.

Whilst Malaysia is only expected to require CbC reports to be filed starting from
31 December 2018, various other jurisdictions require these to be filed by 31
Immediate actions December 2017. Malaysian companies operating in such jurisdictions would
required need to appoint a surrogate parent, in an appropriate jurisdiction, to file a CbC
report on behalf of the Group.
Companies may need to notify the tax authorities in certain jurisdictions in which
they operate of the identity of the surrogate parent. This may need to be done as
early as 31 December 2016.

Notes:
1 The standard adopted by the OECD and in many jurisdictions mandates that the result related parties obtain from an intercompany transaction approximates the
result that uncontrolled parties would have obtained had they undertaken the same transaction under the same circumstances.
2 Arrangements exploiting differences in the tax treatment of instruments, entities or transfers between two or more countries
3 Term used in tax treaties to recognise the existence of a taxable presence in a particular jurisdiction. The source jurisdiction (i.e. country in which the income
arises) is generally only permitted to tax business income of a non-resident that is attributable to a permanent establishment (provided that the non-resident has
access to an applicable tax treaty).
4Recommendations include the introduction of tax treaty provisions to prevent double non-taxation and new tests that need to be met to qualify for tax treaty
benefits.
5 An arrangement between a taxpayer and at least one tax authority specifying the pricing method that will be applied in relation to related-company transactions
over a period of time.

Source of definitions:
OECD Tax Glossary
EY Worldwide Transfer Pricing Reference Guide (2015-16)

Take 5: Budget 2017 Malaysia Page 8

Key personal tax and corporate tax
proposals
There is a proposal to establish a Collection Intelligence Arrangement under the Ministry
of Finance, involving the Companies Commission of Malaysia, Inland Revenue Board and
Enhancement
Royal Malaysian Customs. This should result in greater efficiency in tax enforcement and
in tax
revenue collections. In keeping with the digital age and increased used of data analytics,
enforcement the collaboration and information sharing between the agencies will be a game-changer
for tax enforcement.

Personal tax
Several existing tax reliefs for the purchase of reading materials, sports equipment and
computers and subscription to broadband internet will be combined into a new tax relief
known as lifestyle relief.
Tax relief for
The lifestyle relief will also include purchase of printed daily newspapers, smartphones /
lifestyle tablets, internet subscription and gymnasium membership fees.
The lifestyle relief will be capped at RM2,500 per year of assessment and is effective
from the year of assessment 2017.

Tax relief for

New tax relief of up to RM1,000 for a parent who enrols his/her child of up to six years
fees paid to
of age in child care centres or kindergartens registered with the Department of Social
child care
Welfare or the Ministry of Education
centres and This relief is effective from the year of assessment 2017.
kindergartens

Corporate tax

Reduction of A company with a paid-up capital of up to RM2.5m or a limited liability partnership

corporate tax (LLP) with a total contribution of capital of up to RM2.5m is categorised as an SME for
income tax purposes. Qualifying SMEs are currently subject to income tax at the
rate for
preferential tax rate of 19% on their first RM500,000 chargeable income. The remaining
qualifying small
chargeable income will be subject to income tax at the prevailing tax rate of 24%.
and medium It is proposed that the preferential tax rate for qualifying SMEs on the first RM500,000
enterprises of chargeable income be reduced from 19% to 18%
(SMEs) This proposal is effective from the year of assessment 2017.

Tax rate reduction of between 1% to 4% for companies (including SMEs), on incremental

chargeable income:
% increase in chargeable Tax rate reduction (%) Tax rate on incremental
income vs preceding year chargeable income (%)
Reduction of
income tax rate
for increased < 5% NIL 24
chargeable 5% - 9.99% 1 23
income 10% - 14.99% 2 22
15% - 19.99% 3 21
> 20% 4 20

This is applicable for the years of assessment 2017 and 2018.

Expansion of
the scope of
It is proposed that the existing tax incentives be extended to include production of
halal products
nutraceutical and probiotic products by halal industry players in Halal Parks.
eligible for tax
This is applicable to applications received by the Halal Development Corporation (HDC)
incentives for from 22 October 2016.
halal industry
players

Note: At the point of publication, the Finance Bill 2016 is not yet available. The above are based on the Page 9
Take 5: Budget 2017 Malaysia 2017 Budget speech.
Stamp duty, Goods & Services Tax (GST)
and other proposals
Stamp duty on
instrument of The rate of stamp duty on instruments of transfer of real estate worth more than RM1
transfer of real million, will be increased from 3% to 4% effective from 1 January 2018.
estate

Review of GST To streamline the GST treatment between imported goods and locally-sourced goods, it
treatment is proposed that no GST be charged on locally-sourced goods which are deposited into
under the Approved Warehouses and subsequently supplied within and between such Approved
Warehousing Warehouses under the Warehousing Scheme.
Scheme Effective from 1 January 2017.

It is proposed that the GST relief currently provided to private charitable entities on the
purchase of equipment for disabled persons, be extended to disabled persons who
Enhancement purchase such equipment directly. GST relief on the purchase of qualifying equipment
of GST relief will be available to valid Orang Kurang Upaya (OKU) card holders who purchase such
for persons equipment from suppliers designated by the Social Welfare Department.
with disability The list of equipment eligible for the GST relief has also been extended from 11 items to
31 items.
This proposal is effective from 1 January 2017.

To streamline the GST treatment in the free zones which consist of Free Industrial Zones
Review of GST
(FIZ) and Free Commercial Zones (FCZ), several special GST treatments have been
treatment in
proposed.
Free Zones This proposal is effective from 1 January 2017.

Note: At the point of publication, the Finance Bill 2016 is not yet available. The above are based on the 2017 Budget speech.

Aside from Malaysias broadband speed upgrade,

initiatives to establish the Malaysia Digital Hub and
the worlds first Digital Free Zone is a clear signal of
the Governments focus in accelerating the growth
of Malaysias digital economy.
Amarjeet Singh
Malaysia Tax Leader,
EY

Take 5: Budget 2017 Malaysia Page 10

Contacts
Dato Abdul Rauf Rashid
Malaysia Managing Partner, EY
Asean Assurance Leader, EY
Tel: +603 7495 8728
abdul-rauf.rashid@my.ey.com
Yeo Eng Ping
Asean Tax Leader, EY
Tel: +603 7495 8214
eng-ping.yeo@my.ey.com
Amarjeet Singh
Malaysia Tax Leader, EY
Tel: +603 7495 8383
amarjeet.singh@my.ey.com
Anil Kumar Puri
International Tax Services, EY
Tel: +603 7495 8413
anil-kumar.puri@my.ey.com
Pearlene Cheong
Research and Content, EY
Tel: +603 7495 8638
pearlene.cheong@my.ey.com
Take 5: Budget 2017 Malaysia
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