Malaysians may end up having to pay a lower income tax rate soon. A study is underway to implement income tax cut and relief plan and reduce the burden of the country’s citizen who are facing a tough financial times now.
In the new income tax restructuring, priority will be given to lower income producing groups.
At the moment, roughly, those who are not married and earns income less than RM2,950 are exempted from income tax obligation. Exemption is also applicable for those who are married, have children and earn less than RM3,200. Presently, there are between 10 to 15 million Malaysian citizens who are currently working.
If the plan materializes, a formal announcement will be made in the upcoming Budget 2009, which is scheduled in August 2009. The last tax rate deduction implemented was way back in 2002 when 1-2% was cut off affecting about 90,000 tax payers. The income tax matters in Malaysia is under the jurisdiction of the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri – LHDN).
Income tax collection contributes about 10% of the government’s total revenue which amounts to about RM150 billion.