Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 11): Audit firms lauded the measures announced in Budget 2020 as the budget is seen to be focused on driving growth for the long term, amid the current uncertain global environment.

Pricewaterhouse Coopers Malaysia tax leader Jagdev Singh pointed out that this is the first budget that provides some clarity on the nation’s approach in navigating the digital and high-technology economy.

Among the digital-related initiatives that he pointed out were the customised incentive to attract Fortune 500 companies and global unicorns, the incentive for export-oriented Malaysian businesses and the 10-year income tax exemption for intellectual property (IP)-generated income from patents and copyright software, which requires substantial research and development activities to be undertaken in the country.

“These measures, coupled with a more customer-centric approach in attracting and facilitating these investments through InvestKL, and MIDA’s role as an account manager, as well as the expeditious process of approval, will hopefully differentiate us from our neighbours.

“Various incentives and grants were also announced to encourage businesses in both the manufacturing and services sectors to pursue digitalisation and automation. This encourages the adoption of new technology, as well as the reinvestment and upskilling of the workforce that will increase productivity and efficiency,” he said.

Meanwhile, KPMG head of tax, Malaysia, Tai Lai Kok, said the customised investment incentives to attract Fortune 500 companies and global unicorns “would have raised a few eyebrows” as customised tax incentives are nothing new.

He said the government has awarded them in the past to investors that make significant contributions to the economy.

“In view of this, it will be interesting to see what plans the government will have, to make this initiative a success. It will certainly be necessary to target and court these global giants like never before, in order to secure positive results,” Tai said.

He commended the tax incentives to promote high-value added activities in the electrical and electronics (E&E) industry.

“This will certainly be very welcome by the E&E players, where continuous capital investment and innovation is key to their being able to compete in international markets,” Tai said.

Tai explained typically saying companies that have enjoyed tax incentives like Pioneer Status or Investment Tax Allowance (ITA) can thereafter claim Reinvestment Allowance for 15 consecutive years for reinvestment projects.  

Then, no further tax incentives are available after their expiry. 

With the announcement today, the government proposed a new ITA incentive of 50% of qualifying capital expenditure be given to companies in the sector, even after the 15-year period has expired.

Ernst & Young Asean and Malaysia tax leader Amarjeet Singh also lauded the digital-centric initiatives announced in the budget, which includes the measures encouraging Malaysian individuals and corporates to embrace digitisation.

“These measures will propel Malaysia into the digital age, removing physical barriers and opening up access to markets, knowledge and opportunities,” he said.

Amarjeet also said the budget sends a clear message to investors that Malaysia aims to be the preferred investment destination, given it is business-friendly and focused on driving investments in the right sectors and activities that will culminate in long term and sustainable growth.

“The various initiatives introduced are clearly targeted at investments which will move us up the value chain, including introduction of customised incentive packages for mega investments, budget allocations to improve infrastructure and digital connectivity, enhancing employment conditions, improving overall ease of doing business and providing various grants for R&D and innovation,” he said.

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