As Malaysia anticipates the announcement of the National Budget 2025 Malaysia, businesses and individuals are looking for key tax reforms that could support economic growth and alleviate financial pressures. We spoke to YYC’s leading tax experts to gather their insights on what they hope to see in the upcoming budget. From business incentives to personal tax relief, here’s the budget 2025 wishlist from YYC’s Tax Directors, reflecting the evolving needs of Malaysians in today’s economic landscape.

1. Jeremy Tan, YYC Tax Advisory Director – Malaysia Tax Incentives for Renovation, Digitalization, and Global Trading Centre Tax Incentive

Jeremy Tan, YYC Tax Advisory Director, highlights the need for targeted Malaysia tax incentives to support digitalization and Malaysia’s goal of becoming a global trading hub. His suggestions include:

• Special Tax Deduction for Renovation & Refurbishment
  Jeremy proposes reintroducing a tax deduction for landlords who renovate or refurbish old office buildings in key economic zones like Bukit Bintang and Jalan Sultan Ismail. This incentive would encourage modernization through digitalization and automation, aligning with the NIMP 2030 initiative.
  (Reference: NIMP 2030)
• Global Trading Centre Incentive (GTC) 2.0
  He also suggests reintroducing and expanding the Global Trading Centre Incentive, particularly for local trading companies. By relaxing conditions and broadening the scope to include local trading activities, Jeremy believes Malaysia can strengthen its position as a global trading hub, offering local businesses the same tax benefits as manufacturers.
  (Reference: MIDA – Global Trading Centre Guidelines)

2. Zen Chow, YYC Executive Director cum Tax Practice Leader – Personal and Business Tax Reliefs

Zen Chow, YYC Executive Director cum Tax Practice Leader, focuses on easing the tax burden for both individuals and businesses. His wishlist includes: 

• Increase in Individual Tax Relief
  Zen calls for an increase in personal income tax relief from RM9,000, which has remained stagnant for over 14 years, and suggests raising the RM3,000 relief for medical and education insurance, which has been unchanged for 24 years. These adjustments are crucial given the rising costs of living and insurance.
• Permanent Tax Relief for Digital Devices
  He also advocates for the permanent implementation of the RM2,500 tax relief for purchasing computers, tablets, and smartphones, a relief that was temporarily available from YA 2020 to YA 2022. This would help foster digital transformation in Malaysia.
• Business Tax Reforms
  Zen suggests several reforms to business tax Malaysia to ease financial burdens on companies. He recommends increasing capital allowance limits for motor vehicles and allowing businesses to claim capital allowances on renovation expenses. Additionally, he proposes offering further deductions to companies that hire women employees on maternity leave, encouraging greater workforce participation.

3. Jinhson Kwong, YYC Tax Director – Tax-Free Bonuses and GST Malaysia

Jinhson Kwong, YYC Tax Director, offers recommendations that focus on supporting the B40 group and addressing Malaysia tax structure. His suggestions include:

• Malaysia Tax-Free Bonuses for the B40 Group
  Jinhson proposes making annual bonuses of up to RM10,000 tax-free, especially for lower-income earners in the B40 group. This would provide immediate financial relief and boost disposable income.
• GST Malaysia 2.0
  Jinhson hints at revisiting the Goods and Services Tax (GST), suggesting a reintroduction that could provide a fairer tax system while potentially boosting government revenue.

(Reference: The Star, October 13, 2024)

4. Tommy Chan, YYC Tax Director – Green Initiatives and Electric Vehicle (EV) Tax Deduction Malaysia

Tommy Chan, YYC Tax Director, places a strong emphasis on sustainability and ESG initiatives. His recommendations are:

• Special Tax Deductions for Electric Vehicles (EVs)
  Tommy advocates for reinstating the special deduction for leasing electric vehicles and allowing capital allowance claims on EVs without the current RM50,000 cap. This could incentivize businesses to adopt more sustainable transportation options.
• ESG Grant for SMEs
  He suggests introducing an ESG grant to help small and medium enterprises (SMEs) improve their ESG practices, aligning with the broader push towards sustainability.
• Green Tax Incentives for Individuals
  Tommy proposes extending green tax incentives to individual taxpayers and calls for new tax relief measures to ease the burden on the M40 group, who often face financial pressure but receive limited tax breaks.

5. Wai Hoor Chew, Head of Tax at YYC – R&D and ESG Tax Deduction Malaysia

Wai Hoor Chew, Head of Tax at YYC, advocates for stronger Malaysia tax incentives in innovation and sustainability. His wishlist includes:

• R&D and ESG Tax Deduction Malaysia
  Wai proposes increasing tax deductions or offering double tax deductions for SMEs engaged in research and development (R&D) and ESG initiatives. This would help startups and small businesses innovate and stay competitive.
• Simplified Access to Malaysia Tax Incentives
  Wai calls for simplifying the application process for SMEs to access Malaysia tax incentives. Streamlining criteria and reducing paperwork would allow more SMEs, particularly those in emerging industries, to benefit from these tax breaks.

6. Fong Ying Chai, YYC Tax Expert – Personal Tax Relief and MSME Support

Fong Ying Chai, YYC Tax Expert, focuses on reforms that support individual taxpayers and small businesses (MSMEs). Her recommendations include:

• Malaysia Tax-Free Bonuses for Private Sector Employees
  Fong Ying advocates extending the tax-free bonus benefit, currently provided to civil servants since 2023, to private sector employees. This would boost disposable income and stimulate spending.
• MSME Recovery Assistance
  Fong emphasizes expanding grants, soft loans, and Malaysia tax incentives across more industries to support MSMEs, critical for Malaysia’s post-pandemic recovery.
• Recalibration of Income Classification and Tax Brackets
  She recommends updating the classifications for B40, M40, and T20 to better reflect Malaysia’s current economic realities, and recalibrating personal income tax brackets to reduce the tax burden on lower and middle-income earners.

What These Budget 2025 Wishlist Proposals Mean for Malaysians

If the government considers these proposals from YYC’s tax directors, Budget 2025 Malaysia could bring significant changes, benefiting both businesses and individuals. These targeted tax deductions Malaysia, tax relief, and tax incentives would encourage economic growth, support digitalization, and foster sustainability, ensuring a prosperous future for all Malaysians.