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Axcelasia Taxand, Taxand Malaysia, presents the 2018 Malaysian Budget highlights.
The Prime Minister who is also the Finance Minister delivered the 2018 budget proposals on Friday 27 October 2017. The Malaysian economy, the fourth largest amongst South East Asian nations, showed particular resilience. Amidst concerns over global uncertainties, Malaysia’s economy is expected to grow between 5.2% -5.7% in 2017 and between 5% -5.5% in 2018. The Government deficit is targeted at 3.0% of GDP for 2017 and 2.8% in 2018 due in part to an increase in expected tax revenue from both companies and individuals. The aim is to gradually reduce the deficit towards achieving a near- balanced budget in 2020.
Private investment will re-emerge as amongst the drivers of economic growth with the services sector becoming an important contributor to growth, making up 54.3% of GDP. The 2018 budget allocation will be at RM 280.25 billion up from RM 260.8 billion in 2017.
Discover more: 2018 Budget Highlights
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The 2018 Budget proposals in their various distributive measures are designed to have broad-based and wide-ranging socio-economic benefits. From a business perspective, the introduction of the Earning Stripping Rules (“ESR”), and the adoption of Multilateral Agreements for the exchange of information for tax purposes indicate that Malaysia has readily signed on to the international initiatives against what is termed base-erosion. This progressive trend will inevitably make compliance with tax obligations, particularly by corporates, more onerous.