The year 2022 has been filled with multiple challenges, some of which were largely expected and some have been unprecedented in scale. Whilst many had predicted a swift return to “business as usual” in the post-pandemic era, developments in the macro environment that took place around the world have necessitated adjustments to be made to existing business plans. From the Malaysian perspective, the county recorded strong growth towards the end of the year, fueled by post-pandemic demand. The positive signs for a return to economic growth also represent opportunities for taxpayers to capitalize on with the right planning and foresight.
In October 2022, we highlighted the fact that these opportunities were manifesting themselves in the form of a post-pandemic TIDE (Taxation, Inflation, Digitalisation and Expansion). As we close off the year, the TIDE has not receded and there are many action areas that can be looked into, especially from a tax perspective. Our observations are that, as Malaysia resets after a change in government, tax developments will continue to take shape as the new government looks to rebuild the economy and emphasize a return to sustainable economic growth in 2023.
As such, this write up focuses on the key “Tax Aways” for the year 2022, which will highlight some of the important takeaways from a tax perspective that taxpayers need to be aware of before we go forward into the new year. Some of these items may be new, as they have only been implemented or announced in recent months, making this publication a timely resource for taxpayers who are in the midst of preparing for the new year. Therefore, we encourage taxpayers to take stock of these takeaways for the year 2022 so that you may better position yourselves for the challenges ahead.
From all of us at Crowe Malaysia, we would also like to take this opportunity to wish all our clients a very Happy New Year ahead and greater success in the year 2023.
In line with the global movement on ESG, carbon tax is expected to be introduced in Malaysia and it is crucial to understand how carbon tax will affect businesses.
New and extension of tax incentives for green initiatives are expected to be announced in the upcoming Budget 2023.
The role of taxation in the ESG equation especially the tax strategies, tax policies, tax reporting and tax incentives.
Companies are advised to purchase assets (if any) before the year end as capital allowances will be eligible to be claimed in the current year of assessment (YA).
Non-Malaysian tax residents planning to become tax residents next year and this year must ensure they spend their holidays in Malaysia, at least from Christmas until New Year - in line with the rules of Section 7(1)(b) of the Malaysian Income Tax Act, 1967 (MITA).
Individuals are eligible to claim tax reliefs of up to RM2,500 on the cost of purchase, installation, rent, hire purchase as well as subscription fees for EV charging facilities for YAs 2022 and 2023.
The domestic travel tax relief of RM1,000 will only be eligible for claims until 31 December 2022 in respect of entrance fees to tourist attractions and accommodation fees on premises registered with the Ministry of Tourism, Arts, and Culture Malaysia.
Individual taxpayers must remember to keep all receipts and supporting records where applicable for seven (7) years as evidence when making tax relief claims.
Tourism tax exemption given to foreign tourists staying in registered premises will expire on 31 December 2022. The registered premises will be charging the tourism tax effective 1 January 2023.
Sales Tax will be imposed on the sales of Low Value Goods to consumers in Malaysia from 1 April 2023.
Foreign professionals will be able to enter Malaysia under a social visit pass that is valid for 30 days with permission to work on emergency and critical work.
Professional Visit Passes (PVP) are newly designed to allow qualified foreign digital nomads to travel and work in Malaysia for up to 12 months. The PVP can be renewed for another year.
This programme is open to foreign businessmen and tycoons, except those from countries with which Malaysia has no diplomatic relations to enable investors, entrepreneurs and foreign talents to live and work or study in Malaysia for up to 20 years.
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