Promoting Small and Medium Enterprises

  • All SME assets in the form of plant and machinery acquired in the years of assessment 2009 and 2010 be given Accelerated Capital Allowance to be claimed within one year. In addition, SMEs are allowed to claim full Capital Allowance on all small value assets within one year.
The government has proposed tax incentives to improve cashflow and enhance competitiveness of small and medium enterprises and to increase investments in modern and sophisticated machinery and equipment.

In tabling the 2009 Budget in the Dewan Rakyat, Prime Minister Datuk Seri Abdullah Ahmad Badawi said SMEs be given Accelerated Capital Allowance on expenses incurred on plant and machinery acquired in year of assessment 2009 and 2010.

The allowance is to be claimed within one year — in the year of assessment the asset is fully acquired.

The prime minister also said SMEs be not subjected to the maximum limit of RM10,000 for capital allowance on small value assets in year of assessment 2009.

At present, the total value of small assets that qualify for capital allowance is limited to only RM10,000.

On imposition of income tax and tax incentives, the definition of SMEs is reviewed as a resident company in Malaysia, with a paid up capital of ordinary shares of RM2.5 million or less at the beginning of the basis period of a year of assessment whereby such company cannot be controlled by another company with a paid-up capital exceeding RM2.5 million, he said.

Currently, SMEs are subject to 20 percent income tax on the first RM500,000 chargeable income and 26 percent on the remaining chargeable income.


National Energy Plan

  • Exemption of import duty and sales tax on solar photovoltaic system equipment, import duty and sales tax on intermediate goods such as High Efficiency Motors and insulation materials; sales tax on locally manufactured solar heating system equipment; sales tax on locally manufactured energy efficient consumers goods such as refrigerators, air-conditioners, lightings, fans and televisions; and 100% import duty and 50% excise duty on new hybrid CBU cars, with engine capacity below 2,000 cc, be given to franchise importers. This exemption is given for a period of two years to prepare for the local assembly of such cars.
Car companies and environmentalists have lauded the incentives to promote greater use of renewable energy and more efficient energy usage provided in the Budget 2009 proposal.

"We have been waiting for it," said Honda Malaysia managing director and chief executive officer Atsushi Fujimoto.

"Hybrid cars, being environmentally friendly, is the direction being taken globally," he said.

Fujimoto said with the new incentives, the price of Honda's Civic Hybrid 1.3i-VTEC would be reduced as more Malaysians would be able afford the hybrid car.

Malaysia Energy Centre national project leader of solar projects Ahmad Hadri Haris said a removal of import duty and sales tax on solar photovoltaic system equipment would result in good savings for the consumer.
"This could mean a reduction of seven to 10 per cent of the cost of installing solar panel system. For an average house, this cost about RM75,000, so the reduction could come to about RM7,000. This means that more people would consider installing the system."

He also said removing import and sales taxes on high efficiency motors would mean that retailers could sell better motors at prices that were equivalent to or only just slightly more than normal motors.


Towards A Vibrant Capital Market

  • Tax exemption be given on fees received by domestic intermediaries, which successfully list foreign companies and foreign investment products in Bursa Malaysia. This measure will also enable domestic investors to acquire shares of foreign companies listed in the local exchange.
  • Current tax rate on dividends received by foreign institutional investors from Real Estate Investment Trusts (REIT) be reduced from 20% to 10%. Recognising that REITs is an attractive investment product for individuals as well, the Government also proposes a reduction in tax rate from 15% to 10%.

Ensuring Public Safety

  • RM5.4bil is allocated in the 2009 Budget to enhance the capacity of the Royal Malaysian Police (PDRM). Of this, RM4.8bil is for Operating Expenditure and RM600mil for Development Expenditure.
  • RM220mil is allocated in 2009 for the construction of police headquarters and stations nationwide.
  • For the period 2008 to 2010, a total of 22,800 constables and 3,000 inspectors will be recruited. In addition, the special incentive allowance for PDRM personnel will be increased from RM100 to RM200 monthly, effective Jan 1 2009.
  • All business premises installed with security control equipment be given Accelerated Capital Allowance, which is fully claimable within one year.