Malaysia unveils new taxes, subsidy cuts in leaner 2024 budget

KUALA LUMPUR – Malaysia said it would impose new taxes and cut subsidies to boost the nation’s fiscal position as it faces headwinds from a sluggish global economy.

Prime Minister Anwar Ibrahim said his government would introduce a capital gains tax for the sale of unlisted shares at a rate of 10 percent from March next year, and raise the levy on some sales and services – like logistics and karaoke venues – from six to eight percent.

The measures come as Southeast Asia’s fifth largest economy faces anemic global growth, elevated interest rates and a weak ringgit currency.

“As a measure to improve service quality and assistance to the people, the Unity Government is responsible for expanding the revenue base,” Anwar said as he unveiled the next financial year’s national budget in parliament.

“Starting next year, some taxation reform measures will be implemented,” he added, including new taxes of five to 10 percent on luxury watches and other high-value goods.

The Prime Minister, who is also the finance minister, revealed a leaner budget of 393.8 billion ringgit ($83.28 billion), compared to the 397.1 billion ringgit in the current fiscal year.

Some subsidies will be cut, such as for chicken and eggs, since prices have declined, Anwar said, but not other subsidies that would harm poor people if pulled, including for petrol, cooking oil and rice.

The budget for subsidies and social assistance for next year is expected to drop by more than a third, to 52.8 billion ringgit from the projected 81 billion ringgit for 2023.

Savings from subsidy cuts will be channelled to increased cash aid for poor people, from 8 billion ringgit to 10 billion ringgit, Anwar said.

Revenue collection will also be improved and corruption leakage plugged, he vowed.

Revenue next year is expected to jump to 307.6 billion ringgit from 303.2 billion ringgit.

Malaysia’s economy is expected to grow by around four percent this year, down from a previous estimate of five percent.

Forecast growth for next year is four to five percent, according to the prime minister.