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201801015330 (1277346-U)

Malaysia Budget 2021 Updates

07 Nov 2020
Malaysia Budget 2021 Updates:
  • Employee EPF contribution rate is reduced from 11 to 9% beginning January 2021 for a period of 12 months.
  • Allow EPF Members to withdraw EPF savings from Account 1 who have lost their jobs. The amount allowed will be limited to RM500 a month with a total of up to RM6,000 over 12 months. Eligible contributors can apply beginning January 2021.
  • Allow EPF Members to withdraw from EPF Account 2 to purchase insurance and takaful products which are approved by EPF relating to life and critical illnesses coverage for themselves and their family.
  • The maximum tax relief for disabled husband and wife increased to RM5,000 from RM3,500.
  • The Private Retirement Scheme (PRS) tax relief of RM3,000 a year has been extended till year of assessment 2025.
  • To encourage parents to save for the costs of their children’s higher education fees, a tax relief of up to RM8,000 for National Education Savings Scheme (SSPN) net savings will be extended until year of assessment 2022.
  • The limit of ‘lifestyle tax relief’ has been increased to RM3,000, which is an increase of RM500 specifically for sports-related expenditure, including entrance fees for sports competitions. The scope of the relief has also been expanded to include subscription of electronic newspapers.
  • The maximum tax relief for individual, spouse and children's medical expenses for serious medical ailments has been increased to RM8,000 from RM 6,000.
  • The maximum tax relief for medical treatment, special needs and care expenses for parents has been increased to RM8,000 from RM 5,000.
  • Tax relief for a full health screening had been increased to RM1,000 from RM 500. Furthermore, scope of health screening expanded to include expenses on vaccine such as for pneumococcal, influenza and Covid-19.
  • Reduction of personal income tax rate by 1% for chargeable annual income of RM50,001 – RM70,000.
  • The income tax exemption limit for compensation on loss of employment will be increased from RM10,000 to RM20,000 for each full year of service.
  • The scope of tax relief on self-education fee of RM7,000 be expanded to include courses of up-skilling or self-enhancement. The maximum relief for education fee under this scope to be limited to RM1,000.
  • To encourage more individual investors to participate in equity crowdfunding (ECF) platforms, an income tax exemption of 50% from the invested amount or limited to RM50,000 will be given.
  • Additional tax deductions for employers who employ senior citizens. This tax deduction will be extended until 2025.
  • 6 months HRDF levies exemption will be given (effective from 1 January 2021). This exemption will only cover the tourism industry and companies affected by the COVID-19 crisis.
  • Tax Incentive for manufacturers of pharmaceutical products including vaccines to invest in Malaysia, preferential tax rate of 0 to 10% for 10 years.
  • Additional tax deduction for employers who employ Ex-Convict, Parolee, Supervised Person and Ex-Drug Dependent. This tax deduction will be extended until 2025.
  • Returning expert may choose to be taxed at a flat rate of 15% for a period of 5 consecutive years. This is extended till year 2023.
  • Wage Subsidy Program to be continue for another 3 months for Tourism and Retail sector for RM 600 per employee per month for salary below RM 4,000 and limit of 200 employees per application increased to 500 employees.
  • SAVE 2.0 program, an e-Rebate of RM200 program for households who buy any energy efficient locally manufactured air conditioner or refrigerator.
  • Full stamp duty exemption will be given to Sales & Purchase and Loan agreement for the purchase of a first home worth not more than RM500,000. This exemption will be for the S&P sign from January 2021 to Dec 31, 2025.
  • RM1,000 Grant Khas Prihatin for Sabah's traders, hawkers, taxi drivers, e-hailing, rental cars and tour drivers.
  • One-off RM50 into e-wallet accounts for those aged 18 to 20 years via the eBelia Programme.

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