Budget 2008 Highlights: Business

The following are the highlights of the 2008 Budget for the business sector:




A single-tier tax system will be implemented from 2008 to improve the efficiency and simplify the adminstration of corporate tax.


Under the single-tier tax system, profits are only taxed at the company’s level and dividends received are exempted from tax.


A six-year transition period will be provided to ensure smooth implementation of the single-tier system.

A further reduction of corporate tax to 25 percent will be implemented in 2009. Corporate tax in 2008 is at 26 percent.


Effective January 1, 2008, private valuation will be allowed for purposes of assessment in stamp duty payment, for the transfer of properties.


Effective January 1, 2008, Customs Department will merge 16 customs forms into four.


Public Companies Accounting Oversight Board to be established under the auspices of the Securities Commission to monitor auditors of public companies.


Code of Corporate Governance being reviewed to improve quality of boards of public listed companies.


Companies with high standards of corporate governance and market conduct will be accorded green lane status, which includes shorter time frame for processing of corporate proposals and longer period of licensing.


Stamp duty exemption on instruments related to mergers and acquisitions of PLCs will be extended to December 31, 2010.


Petronas’s over 1,000 vendors told to merge to be more competitive globally. Stamp duty exemption to be given on all instruments relating to mergers of such vendors implemented by December 31, 2010.


Foreign ownership on fund management companies and REITs management companies will be allowed up to 70 percent with minimum Bumiputera ownership requirement remaining at 30 percent.


Commission rates for internet trading and cash upfront transactions will be fully negotiable to reduce cost of transactions in share investment by retail investors.


Clearing fees to be reduced to 0.03 percent from 0.04 percent, with maximum fee of RM1,000.


Minimum broking charges per transaction is fixed at RM40.


Islamic fund management companies will be allowed to be wholly owned by foreigners.


A RM7 billion fund will be channelled by EPF to be managed by Islamic fund management companies.


Islamic fund management companies will be allowed to invest all assets abroad.


Income tax exemption until 2016 will be given to fund management companies on all fees received in respect of Islamic fund management activities.


To attract greater middle eastern investments, tax incentives will be provided for existing stockbroking companies to set up Islamic stockbroking subsidiaries.


Three new stockbroking licenses to be issued to leading stockbroking companies that are able to source and intermediate business and order flows from the Middle East.


To further promote the Takaful industry, several tax treatment will be enhanced, including tax cut on the share of distributed profits.


Labuan Offshore companies to be given option to be taxe under the Income Tax Act 1967.


A 50 percent stamp duty exemption to be given on documents of transfer for the purchase of one house, of not more than RM250,000 per unit.


RM400 million initial fund has been earmarked by Pelaburan Hartanah Bumiputera Bhd to increase Bumiputera property investment in Iskandar Development Region (IDR).


Government to provide additional RM100 million for investments in healthcare services related projects in IDR.


SMEs will be given a two-year flexibility to pay taxes at the end of financial year instead of monthly instalments.


Last mile network facilities providers will be given investment allowance of 100 percent on capital expenditure incurred for broadband up to December 31, 2010.


Import duty and sales tax exemptions will be given on broadband equipment and consumer access devices.


RM12 billion will be spent, over the next four years, to improve public transportation system in Kuala Lumpur and Penang.


Penang Outer Ring Road Project will be implemented on a tender basis shortly.


The East Coast Economic Region, the Sabah Corridor and the Sarawak Corridor will be launched soon.


To eradicate hard core poverty, RM214 million will be allocated for Skim Pembangunan Kesejahteraan Rakyat; and RM117 million for Program Pengurangan Kemiskinan and Program Lonjakan Mega.


RM680 million to be provided for the construction of rural and village roads, RM462 million for rural water and electricity suppply projects, RM70 million for social amenities, and RM15 million for ICT education in rural areas.


Malaysian Communications and Multimedia Commission (MCMC) allocates RM45 million for the implementation of SchoolNet project to provide internet services to schools.


RM13 billion allocated for improving the quality of hospital services, purchasing medical supply and health equipment.


Ulu Kinta Allied Health Science College, Kuala Pilah Nursing College, Kluang Hospital, Tampin Hospital, Cheras Rehabilitation Hospital and Kuala Lumpur Women and Children Hospital will be constructed in 2008.


Pioneer status of 100 percent or investment tax allowance of 60 percent for five years will be given to companies undertaking investments in laboratories of international standards for testing of medical devices.


In efforts to inculcate corporate social responsibility (CSR), public limited companies (PLCs) will have to disclose their employment composition by race and gender, as well as programmes undertaken to develop domestic and bumiputera vendors.


Government will support efforts to set up a CSR Fund with an initial sum of RM50 million, to be used to jointly finance selected CSR projects.


RM9.7 billion to be allocated for various types of maintenance works.


RM176.9 billion to be allocated for 2008 Budget, up 10.9 percent from 2007, of which RM128.8 billion is for operating expenditure and RM48.1 billion is for development expenditure.


RM64 billion or 49.6 percent of operating expenditure is for fixed charges and grants, RM36.2 billion is for emoluments, RM25.5 billion for supplies an services, RM2.1 billion for purchase of assets and RM1.13 million for other expenditures.


The largest allocation for development expenditure at RM20.6 billion is for the agriculture, industry and infrastructure sectors; RM15.6 billion is for education, health and housing sectors; RM7.0 billion for security sector; RM2.9 billion for administration; and RM2.0 billion for contigencies.


The government expects to reduce its fiscal deficit to 3.2 percent of GDP in 2007 from 3.3 percent in 2006.


Fiscal deficit to be reduced further to 3.1 percent in 2008.


Economic growth in 2008 is projected at between 6.0-6.5 percent.