Malaysia Budget 2011 Summary

Posted by Kris | Saturday, October 16, 2010 | | 3 comments »

Today, the Prime Minister announced the budget for 2010. Below are some interesting summary on the Malaysia Budget 2010.

1. More tax incentives for Islamic financial instruments issuance (We will see more products such as Sukuk, etc)

2.Tax incentives for Green energy companies.

3. Tax exemptions for hybrid cars, motorcycles, etc.

4. Attempt to boost food production in Malaysia by giving tax exemption to food producing companies.

5. Import duty abolished for "tourism related products" in order to boost tourism.

6. Tax relief up to RM5,000 for parent's medical expenses are widened to cover a wider conditions. I think that the tax reliefs now covers the expenses incurred to hire a caretaker, special needs and when buying medicine from a certified pharmacy. (receipts are needed, of course)

7. Stamp duty exemption of 50% given on stamp duty for property not exceeding more than RM350,000. Previously the exemption is for only property not exceeding RM250,000. This applies for the 1st residential property such as houses, condominium, apartment and flat. Those this mean that the government acknowledges that the property prices are on a increase thus, needed a increase caps to lessen the burden of average buyers.  This also applies to the loan agreement contract.

Another interesting portion is the establishment "Skim Rumah Pertamaku"  through Cagamas Berhad which will provide a guarantee of 10% down payment for properties values less than RM220,000 for citizen with income less than RM3,000. This means, you don't need to pay any 10% down-payment when you fulfilled the conditions above and can get a 100% loan amount. This is what i understand though, although i am not sure how this scheme picks its participants. (There are bound to be quotas for these schemes)

Nevertheless, finding a decent RM220K property can be very challenging tasks nowadays in prime urban areas. And i don't think many big developer will build property at these prices since the profit margin will be very low. Vacant land prices itself is growing steadily these few years. 

8.Service charge has been increased from the normal 5% to 6%!!! to boost government coffers

9. Private pension fund is established. I am not sure what is the benefit of this setup as compared to KWSP aka EPF.

10. No toll increase for 5 years for 4 of PLUS highways.

11. Goodies for civil servants in terms of allowances, etc.

12. Eligibility for application for Permanent Resident shortened from 10 years to 5 years.

This Malaysia Budget 2011 does not impose a lot of taxes on the usual suspects such as cigarette, alcohol, gambling etc. Nevertheless, the new 6% service charge will in some way be a testing ground for the government to implement the GST in the coming days. So don't be surprised that you need to pay more service tax each time you dine at Macdonalds or KFC. :P

Not much significant tax breaks for the average JOEs on the street. T.T

What I need is a income tax breaks/cut/reduction !! :P


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3 comments

  1. ChampDog // 9:19 PM  

    Looks like everyone talks about this topic now and you're fast. :)

    I think the PPF is for self-employed who doesn't have the EPF.

    Haiz, 6% service charge...

  2. Kris // 1:06 AM  

    Hahaha.. I am a fast reader, ChampDog :P

    I read through the speech and only point out the major points of the budget and summarized those that might impact an average rakyat.

    Looks like no personal income tax cuts this year while the 6% service charge is going to impact everybody regardless of their earning power. More like a blanket tax for all. T.T

  3. kampunginvestor // 1:24 PM  

    I didn't really read into details about the budget yet but some of the good things for my company for the property sector is that, they have increased the loan for government servant from 350k to 450k.

    For house buyers buying houses lower then 220k will be entitled to FULL Loan. ^^