The Malaysian 2023 Budget, which is themed “Developing Malaysia Madani”, was announced on 24 February 2023 by the Minister of Finance. 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 as follows:
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 of 4.5% in 2023.
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.
Overview of the revenue and expenditure of the 2023 Budget is graphically depicted below:
Tax Rates for SMEs
Tax rate applicable to SME taxpayers ( i.e. companies and limited liability partnerships) be further reduced with effect from the year of assessment (YA) 2023
The above is a gesture for the M40 with T20 providing support.
Overall, there are several good initiatives for small and medium sized companies and individuals. But there is no single or several large/mega projects that could excite entrepreneurs or business people. In addition, there isn’t something to address inflation, cost of living, affordable housing, senior citizens, detention centres and corruption. Luxury goods tax is shooting one-self in the foot and I don’t understand capital gains on unlisted shares – when it is usually on listed shares. He could have broadened the tax base for SST, imposed a forex transaction tax, an exit tax for remittances above a certain limit, and widened the windfall tax to include banks and energy companies.
Overall, an expansionary budget which was rather tame and bland. It was a blessing he didn’t pursue on GST because we don’t fulfil two conditions – developed nation and Gini coefficient of below 0.3. Perhaps, he was not bold enough so as not to “spook” some before the June state elections?
Reference:
Tricor Insights, Budget Edition, Special Edition: 2023 Budget (Part 1), Tricor Taxand
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