Budget 2024: Growing the economy and enhancing rakyat’s welfare

14 October 2023

BUDGET 2024 is spot on focusing on the exact needs of our economy. The key priorities targeted by the Prime Minister is in the areas of:

1️⃣ Eliminating subsidies from the rich and realigning it to the needy
2️⃣ Attacking corruption whilst improving governance
3️⃣ Improving people’s welfare
4️⃣ Attracting foreign investments
5️⃣ Allocating expenditure to the areas of priority in the economy
6️⃣ Encouraging ESG expenditure and green initiatives
7️⃣ Managing our budget deficit

To fund the above and grow the economy, he had no choice but to increase the revenue base, particularly taxes. Here he has introduced capital gains tax, luxury tax, increasing service tax and expanding its scope, and mandating the introduction of e-invoicing in 2024. He will also review the expansion of stamp duty and reform the tax incentive system to be outcome based.

The key tax measures of importance:

🔹E-invoicing will be implemented from 1 August 2024 for companies with a turnover exceeding RM100m. The process of bringing all taxpayers into the e-invoicing system will be accelerated by 1 July 2025 as opposed to the original plan which was expected to be by 2027.

🔹Capital gains tax on disposal of unlisted shares would be imposed on companies at a rate of 10% of the net profit from 1 March 2024. However, for shares purchased before 1 March 2024, the tax will be at either 10% of the net profits or 2% of the gross sales value.

🔹Luxury tax between 5%-10% on watches, jewellery, and other high value items. The implementation date and thresholds are not fixed. More details are needed.

🔹Service tax on certain services will be increased from 6% to 8% and this will now cover logistics, brokerage, underwriting, karaoke, etc. However, food and beverage services and telecommunications services will remain at 6%.

Where has the Budget missed out?

🔸Taxation of high-net-worth individuals earning more than RM2,000,000 remains at 30%. This discourages high-net-worth individuals who are actively contributing to the economy. It will also encourage such individuals to form companies to arbitrage their tax affairs such that the maximum tax is limited to 24%.

🔸Although the government has announced the intention to reform the tax incentives, this budget has missed the opportunity to execute the reform.

🔸Widening the scope of service tax is good for increasing the tax revenue, the impact will be small.  We have again missed the opportunity to reintroduce GST which would have given the government much larger revenues and ease the cost of doing business to businesses. The opacity of SST ends up in cascading taxes or in double to triple taxation.

🔸This budget has not focused seriously on climate change.

Follow us on linkedIn for more updates regarding Budget 2024 tax measures.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (

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