KUALA LUMPUR: The government has proposed to introduce a new band for taxable income in excess of RM2 million and taxed at 30 per cent, which is a 2 percentage point increase from the current 28 per cent rate.
Finance Minister Lim Guan Eng said this was to ensure a more progressive personal income tax structure.
"This increase will affect approximately 2,000 top income earners in the country," he said while tabling the 2020 Budget, here, today.
Lim said the government expects to collect RM244.5 billion in revenue in 2020, an increase of RM11.2 billion from 2019, after excluding the one-off Petronas special dividend of RM30 billion.
Lim said despite the healthy increase in tax revenue, the government collected significantly lower taxes than some other countries.
In 2017, Malaysia’s tax revenue relative to the Gross Domestic Product was only 13.1 per cent, while countries such as Vietnam, South Korea, Poland and Chile collected 19.0 per cent, 15.4 per cent, 16.8 per cent and 17.4 per cent, respectively.
For small-medium enterprises, the income tax rate for chargeable income up to the first RM500,000 was reduced by 1 per cent to 17 per cent in 2019.
To further support the growth of SMEs, the chargeable income subjected to 17 per cent rate will be increased to RM600,000, subject to the SME having a paid-up capital of not more than RM2.5 million and annual sales of not more than RM50 million, he said.