Budget 2018 an extension of current incentives — KPMG
KUCHING: A majority of Budget 2018’s incentives are mostly extensions of current incentives, and with lesser new incentives being introduced, Malaysians are now feeling the tightening measures.
In his commentary, following KPMG Tax Services Sdn Bhd’s (KPMG) director Tang Yeth Fong’s presentation on the 2018 Budget tax proposals at the KPMG Sarawak Tax Budget Seminar 2017, executive director of Corporate Tax Tai Lai Kok observed that there are very little new tax incentives being proposed these days.
“I recall many years ago, we will find new incentives in every single Budget. Nowadays, if anything, we are seeing extensions being added on from 2018 to 2020.
“You will notice that the incentives proposed by the government are extremely targeted and with a limited lifespan,” Tai said, adding that after maybe four years or five years, they will revisit again to see whether those incentives remain relevant.
“This clearly is very intentional by the government to start cutting down on the free flow of tax incentives that Malaysians have been enjoying in the past.
“Notwithstanding what we have, in so far as the cut downs are concerned, obviously we still have the normal incentives like the Pioneer Status and Investment Tax Allowance, but (for) selected sectors.”
While this is clearly an intentional reduction, in so far as the
I recall many years ago, we will find new incentives in every single Budget. Nowadays, if anything, we are seeing extensions being added on from 2018 to 2020.
incentive regime routine in Malaysia, Tai believed that “we are still extremely competitive” compared to other countries such as Thailand or Indonesia.
“But, the tightening is actually being felt,” he added. One of the extension of incentives Tai highlighted on was the extension period for application for incentives for new four and five star hotels.
The proposal was that the deadline to submit applicaton for Pioneer Status and Investment Tax Allowance for new four and five star hotels was extended for a further two years. This is effective for applications submitted to MIDA until December 31, 2020.
Tai explained that this proposal was introduced due to Visit Malaysia Year 2020 as the government wants to encourage new hotels to rebuild. However, this begged the question of existing hotels which may also need to rebuild.
“Existing hotels also need to be refurbished. In order for those hotels to stay relevant, they have to continue to reinvent themselves, they need to invest. Turn to Page B2, Col 1
Tang Yeth Fong, KPMG director