Tricor Insights - Malaysia 2024 Budget

The Malaysian 2024 Budget was announced on 13 October 2023 by the Minister of Finance, Datuk Seri Anwar Ibrahim. The 2024 Budget has a total allocation of RM393.8 billion, and is broadly distributed as follows: 77% Operating Expenditure; and 23% Development and Expenditure.

The main recipients of allocations for 2024 are the Education Ministry (RM58.7bil) and Health Ministry (RM41.2bil).

The economy is expected to grow moderately between 4.0% and 5.0% in 2024 (similar to projections for 2023). It is also worth noting that the International Monetary Fund forecasted that global economic growth in 2024 will slow to 2.9%, compared to 3.5% and 3.0% in 2022 and 2023 respectively. A similar trend is expected in terms of global inflation, which is expected to steadily decline to 5.8% in 2024.

Malaysia recorded approved investments amounting to RM 132.6 billion in the first half of 2023, with foreign direct investment (FDI) of RM63.3 billion, which demonstrates continued investor confidence in the country. The 2024 Budget is themed "Madani Economy: Empowering the People", and was formulated based on the following three priorities:

Best Governance for Agility of Services;
Restructuring the Economy to Soar Growth;
and Improving People's Living Standards.

The core focus area for the 2024 Budget is the stimulation of economic growth, while ensuring that subsidies are distributed fairly to the Rakyat, via implementation of targeted subsidies.

The Malaysian Government's revenue collection is expected to increase from RM303.2bil this year to RM307.6bil in 2024. This target is expected to be primarily achieved by broadening the revenue base, and complemented by the introduction of tax reform measures, starting from 2024.

Among the tax measures introduced by the Malaysian Government is the increase in service tax rate from 6% to 8%. The scope of taxable services for service tax was also widened to include logistics, brokerage, underwriting and karaoke services. However, to alleviate the burden on the Rakyat, the service tax increase will not apply to food, beverages and telecommunications.

From 1 March 2024 onwards, capital gains tax of 10% on the disposal of unlisted shares will apply. Tax of between 5% to 10% will also be imposed on selected high value (i.e. luxury) goods, such as watches and jewellery, based on the threshold value of the goods.

The Government also announced details relating to the implementation of global minimum tax in 2025 for taxpayers with global income of EUR750mil and above. Implementation details in relation to e-lnvoicing were also provided, whereby taxpayers with income or annual sales exceeding RM 1 00mil are required to implement e-lnvoicing from 1 August 2024 onwards.

In the ensuing pages of this report, we are pleased to present the economic outlook for 2024 and key tax measures introduced. These have been prepared based on the 2024 Budget Speech and Budget Speech appendices. We will issue another round of updates once the Finance Bill 2023 is issued.