Tax Update Event

12 November 2024

Avante Hotel

Malaysia has introduced several tax changes in its 2024 budget aimed at enhancing economic growth and modernizing tax systems. Here are the key updates:

1. Sales and Service Tax (SST):

• The service tax rate will increase from 6% to 8%, effective March 1, 2024. However, essential services such as food and beverages, telecommunications, parking, and logistics will retain the 6% rate.

• The service tax base has also been broadened to include additional services such as logistics, underwriting, and brokerage .

2. E-Invoicing Implementation:

• E-invoicing will be introduced in phases, starting August 1, 2024, for businesses with an annual turnover above RM100 million. For smaller businesses, implementation will begin in July 2025 or later. This system aims to enhance tax compliance and reduce fraud by digitizing financial transactions .

3. Global Minimum Tax (GMT):

• Malaysia will adopt the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two framework by 2025, ensuring multinational enterprises (MNEs) with revenues above €750 million are taxed at a minimum rate of 15%. This aligns with international efforts to reduce tax base erosion .

4. Incentives and Reliefs:

• New tax incentives target global service hubs, offering reduced income tax rates of 5% or 10% for up to 10 years. Conditions include meeting operational and employment criteria .

• Environmental, Social, and Governance (ESG) initiatives are supported with tax deductions of up to RM50,000 annually for related expenditures, including sustainability reporting and e-invoicing consultations .

These reforms reflect Malaysia’s efforts to modernize its tax landscape, improve transparency, and align with global tax standards. For more detailed analysis or personalized advice, consulting local tax experts is recommended.