Tax Highlights – Budget 2016

Tax Highlights – Budget 2016

Tax Highlights - Budget 2016

The Budget 2016 was presented on 23 October 2015.  2016 Budget allocates a total of RM267.2 billion, an increase from a revised allocation of RM260.7 billion for 2015. The initial allocation for 2015 was RM273.9 billion.

For 2016, federal government revenue collection is projected at RM225.7 billion, up RM3.2 billion from 2015.

We share some highlights that you need to know on Taxes in the Budget 2016.

Personal tax

  • Income tax increased from 25 per cent to 26 per cent for people earning between RM600,000 and RM1 million. Increased to 28 per cent for those earning above RM1 million.

Tax relief:

  • Parents with disabled children get RM6,000 tax relief and another RM8,000 if their child furthers their studies at a higher education institute.
  • Tax exemption of RM8,000 instead of RM6,000 for children above 18 in an education institution both local or overseas.
  • Children supporting parents, even if not living together, will receive a tax relief of RM1,500 for both parents, if the parents are above 60.
  • Tax exemption of RM4,000 instead of RM3,000 for those with a spouse with no income.
  • Middle class families with a household income between RM3,860 and RM8,320 will get RM2,000 tax relief for every child under 18.


  • Goods and services tax to increase government revenue by RM39 billion, versus RM27 billion in the first eight months of 2015. Some basic goods to be zero-rated, including over-the-counter drugs, baby milk, nuts-based food, noodles.
  • Prepaid phone users will get GST rebate, which will be credited to their accounts. From Jan 1 next year.
  • For medicine, it would be increased from 4,215 kinds of medicine to 8,630 kinds of (zero-rated GST) medicine.
  • GST flat rate: all controlled medicine, including 95 brands of over-the-counter medicine used for diseases such as cancer, high blood pressure and heart diseases.
  • More Small-time farmers can register under flat-rate GST scheme and increase two percent income – threshold for those who can apply decreased from RM100,000 to RM50,000.
  • Exemptions from GST for all items that are being re-imported after being temporarily exported for promotion, research or display.
  • For oil and gas industries, GST exemptions given to re-import of equipment exported temporarily for rent. For teaching material and equipment, for skills and vocational training.

Corporate taxation

  • A special reinvestment allowance of 60% of qualifying capital expenditure will be extended to companies engaged in factory or agricultural activities whose reinvestment allowance incentives have expired
  • Double tax deduction up to RM 50,000 per year of assessment will be granted on research and development projects for small and medium-sized enterprises. This deduction will be granted from years of assessment 2016 to 2018
  • The 100% tax exemption for travel companies will be extended to 31 December 2018


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