Govt announces RM332.1b national budget, including one-off prosperity tax of 33%

Govt announces RM332.1b national budget, including one-off prosperity tax of 33%

29 Oct 2021

The government on Friday (Oct 29) announced an RM332.1 billion expansionary Budget for 2022, with the deficit to Gross Domestic Product (GDP) expected to fall to 6% from 6.5%.

This is nearly 3% more than the RM322.5 billion announced for Budget 2021.

Presented by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz in the Dewan Rakyat, the national Budget comprises RM233.5 billion in operating expenditure, RM75.6 billion in development expenditure and RM23 billion for the Covid-19 fund.

Another RM2 billion is allocated for contingencies.

The Health Ministry was allocated RM32.4 billion,  including for Covid-19-related expenses, including RM2 billion for vaccination programmes and another RM2 billion for consumables.

Meanwhile, the Ministry of Education has the largest allocation at RM52.6 billion, while the High Education Ministry was allocated RM14.5 billion.

A one-off additional company income tax was announced dubbed Cukai Makmur, whereby earnings above the RM100 million-mark will be taxed at a rate of 33%, instead of 24% for the first RM100 million — both for the assessment year 2022.

Zafrul also announced an RM40 billion SemarakNiaga financing programme for companies across all sizes comprising direct financing, loan guarantee and equity injection.

For small and medium enterprises (SMEs), RM14.2 billion in funding is provided via entities like Bank Negara Malaysia, MARA, MIDF and PUNB.

Cash aid under the renamed Keluarga Malaysia Aid is increased to RM8.2 billion for 9.6 million recipients, from RM7 billion in 2021, being part of a sum of RM31 billion in subsidies, assistance and incentives for the year.

A larger allocation of RM6.6 billion is provided to support vocational education (TVET), with an additional RM200 million for joint programmes with industry members.

The government also allocated RM4.8 billion under JaminKerja to create 600,000 jobs, including via hiring incentives and the continuation of Malaysia Short-term Employment Programme (MySTEP) for government-linked bodies. Another RM1.1 billion is allocated for employee training programmes.

Other measures include 100% relief for electric vehicles (EV) import duty, excise duty, sales tax and road tax. Installation of the charging facility also comes with an income tax relief cap of RM2,500.

Meanwhile discounts were announced for PTPTN student loans, ranging from 10% to 15% depending on repayment methods.

Overall, infrastructure project allocation amounted to RM3.5 billion including for the Central Spine Road, while another RM2.9 billion was allocated for projects covering G1-G4 contractors including maintenance of universities and community colleges.

Sabah and Sarawak’s development expenditure amounted to RM5.2 billion and RM4.6 billion respectively.

Source: The Edge Markets