UPDATE ON BUDGET 2022 PROPOSALS
31 December 2021
We are pleased to provide you the following important updates from the Ministry of Finance (“MOF”) on the following Budget 2022 proposals :-
1. Taxation of Foreign Sourced Income Received in Malaysia
It was proposed in Budget 2022 that the exemption of foreign sourced income received by any person (other than resident companies carrying on the business of banking, insurance or sea or air transport) under paragraph 28, Schedule 6 of the Income Tax Act, 1967 (“ITA”) be removed for Malaysian residents. This proposed removal is effective 1 January 2022 and the Finance Bill 2021 which amends the above under the ITA has been passed by the Parliament.
In response to the feedback received from various parties, the MOF has announced on 30 December 2021 that the following foreign sourced income received from 1 January 2022 to 31 December 2026 shall continue to be exempted from income tax subject to conditions* which will be set out in the guidelines to be issued by the Inland Revenue Board (“IRB”):
|Category of Taxpayer
||Type of Income Exempted from Tax
|Resident Companies and Limited Liability Partnerships
|Resident Individuals (Except for resident individuals who carry on business through a partnership)
||All classes of income
* the conditions to be imposed on the above exemptions are likely to be aimed at ensuring compliance with the EU Council requirements (ie. to prevent double non-taxation).
All income derived from sources outside Malaysia and received in Malaysia by non-residents (individuals, companies and others) shall continue to be exempted from income tax under the amended paragraph 28, Schedule 6 of the ITA.
The MOF has also stated that foreign sourced income received in the year of assessment 2022 is excluded from the computation of tax for the purpose of Cukai Makmur.
2. Stamp Duty Review on Contract Note for Trading Listed Stocks
It was proposed in Budget 2022 that the stamp duty rate on contract note in respect of trading of shares listed on Bursa Malaysia be increased from 0.1% to 0.15% and the stamp duty cap of RM200 for each contract note be removed with effect from 1 January 2022.
In response the feedback received from various parties, the MOF has announced that the stamp duty cap be reinstated with a higher cap of RM1,000 and the amount of stamp duty in excess of RM1,000 will be remitted for transfer of shares/stocks listed on Bursa Malaysia from 1 January 2022 to 31 December 2026.