New Budget welcomed by Malaysia’s leading accountancy body

The Malaysian government’s re-worked Budget is expected to positively impact the accountancy profession and its services to the economy, the Malaysian Institute of Accountants (MIA) has said.

In particular the organisation welcomed:

• announcement of financial zones.
• focus on tax measures to diversify tax revenues.
• measures to further develop and strengthen the sustainability and relevance of Islamic finance.
• measures to promote digital transformation.
• measures on ESG.

MIA welcomed the announcement of the Tun Razak Exchange (TRX) in Kuala Lumpur and Iskandar Malaysia in Johor as financial hubs/zones to attract high-quality foreign investments, which are expected to benefit the accountancy profession.

“To position Malaysia as a financial hub, the accountancy sector plays an important role in terms of providing access to professional accountancy services,” said MIA President Datuk Bazlan Osman.

“On one hand, the accountancy sector will benefit from exciting growth opportunities for its services as Malaysia strengthens its position as a financial hub. On the other hand, the competitiveness and international position of the Malaysian economy will be enhanced by a vibrant and flourishing accountancy sector.”

On the changes to the tax regime, Bazlan said: “Budget 2023 introduced tax measures that are aimed at diversifying sources of tax revenue through the imposition of wealth taxes and capital gains taxes, while being business-friendly to small and medium sized entities (SMEs),” said Bazlan.

He said the tax measures announced in Budget 2023 that are particularly relevant to MIA members are:

• Capital gains tax for disposal of unlisted shares by companies will be introduced from 2024.
• Preferential tax rate for SMEs will be reduced to 15% on the first chargeable income of RM150,000 (£27,600).
• Individual tax rate will be reduced by 2% for the chargeable income of RM35,001 (£6,500) to RM100,000 (£18,400) from YA 2023. For high income earners, there will be an increase in tax rate of 0.5% to 2% for chargeable income of RM100,001 to RM1 million (£185,000).
• Luxury goods of prescribed value will be subject to tax with effect from 2023.

 

Islamic Finance in the Spotlight

MIA said the Budget 2023 emphasised measures to strengthen the global leadership of Malaysia in Islamic Finance.

For its part, MIA has:

• collaborated with relevant stakeholders to create and promote awareness on Islamic social financing through webinars and articles at ASEAN (with the ASEAN Federation of Accountants) and international level (with the International Federation of Accountants).
• organised a focus group discussion with Islamic Finance regulators and industry players to identify opportunities and challenges in implementing Islamic social finance in Malaysia, and
• through the Islamic Finance Pupillage Programme, continuously nurtured Islamic Finance talent by upscaling knowledge within the accountancy profession to support developments in the Islamic Finance industry.

The accountancy body also welcomed the Budget

The accountancy body also welcomed Budget 2023’s provision of funding for digital transformation, which aligns with its Digital Technology Blueprint – to identify the availability of funding to assist MIA members in the adoption of digital technology.

“Additionally, MIA found that funding is the top three barriers of technology adoption in its three consecutive surveys on technology adoption by the accounting profession in Malaysia especially for the SMEs including the small and medium sized practices (SMPs). The grants available will support the digital transformation of these entities,” stated MIA CEO Dr. Wan Ahmad Rudirman Wan Razak.

MIA also welcomed the Government’s effort in combating cyberthreats, as cybersecurity is one of the top five technology trends affecting the accounting profession for three consecutive years as indicated in the said MIA survey.

The organisation said: “MIA commends the Government’s effort on driving digital transformation for various sectors as well as Government services and offering funding on digital content to promote local businesses.”

 

The environment, social and governance agenda

“As a leading advocate for the adoption and integration of the environment, social and governance (ESG) agenda by businesses, MIA commends Budget 2023’s generous allocations for enabling sustainable transformation,” said MIA CEO Dr Wan Ahmad Rudirman. He said the salient measures to note in the Budget include:

• Central bank Bank Negara Malaysia to provide a RM2 billion fund (£368m) to support start-up companies in green technology and encourage SMEs to adopt low carbon practice.
• Khazanah to provide RM150 million to encourage environmental-friendly projects, including supporting the carbon market and reforestation.
• A proposal to extend the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) until 31 December 2025, by enhancing the period of encouragement from three to five years for eligible green activities.
• RM30 million (£35,500m) allocation to support more activities in relation to Sustainable Development Goals (SDG).