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MALAYSIA TAX UPDATES: JULY 2019

Updated: Aug 2, 2019

Sugar Tax Commenced

The sugar tax in Malaysia was expected to be implemented 01 April 2019 but it was postponed to 01 July 2019, allowing time for manufacturers and the Customs Department time to prepare. An excise tax of 40 sen per litre is levied on sweetened beverages with more than 5g (grams) of sugar or sugar-based sweeteners per 100ml, that includes, carbonated, flavoured and other non-alcoholic beverages. Juice or vegetable-based drinks that contain more than 12g of sugar per 100ml will also be taxed.


According to the World Health Organization, it is reported that 13.3% of Malaysians are obese and 38.5% are overweight and in addition to having the highest proportion of diabetics at 14.9%.


Back in March, the PM Tun Dr. Mahathir Mohamad said that there will be no new taxes except for sugar tax. He also said beginning next year, the government will use the revenue collected from the sugar tax to provide free healthy breakfast for all primary school children.


Source : Media Report


Digital Tax Is Scheduled For 2020

Malaysia will implement a digital tax from next year onwards with a rate set at 6%. The government has reported that the tax is being introduced to level the playing field between local and foreign companies operating in Malaysia.


The tax will be applicable to companies earning more than RM500,000 from Malaysian consumers, and on any person providing digital services regardless of the individual's nationality outside of Malaysia.

Source : Media Report


Crude Palm Oil Export Duly To Remain At Zero

Malaysia has kept its crude palm oil export duty unchanged at 0% for the month of August. The Southeast Asian nation had said in May last, that it would defer the imposition of export duties on crude palm oil to December 31, in the effort to boost crude palm oil exports and expansion into new markets.


Malaysia, is the world's second-largest producer of palm oil, with a calculated oil reference price of RM1,905.38 per tonne for August. Pricing above RM2,250 will incur a duty.


Source: Reuters

New Cap On Interest Expense Deductions

The Inland Revenue Board has issued new rules restricting the deductibility of interest expenses or any other payments that are economically equivalent to interest, to ensure that deductions is in proportion with its business income, effective 01 July 2019. The rules are intended to prevent tax base erosion through the use of excessive interest expense deductions to reduce domestic tax.


The (new) restrictions on deductibility of interest under Section 140C of the Income Tax Act 1967 and Rules will only be applicable on a business source where the basis period of a person start on or after July 1, 2019. In a scenario where the basis period of a person begins prior to July 1, 2019, the interest restriction under Section 140C of the Act and the Rules will not be applicable.


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