KUALA LUMPUR (Oct 29): The measures announced in Budget 2022 were all encompassing and very comprehensive, with granular details on the allocations not seen in previous budgets, said PwC Malaysia tax leader Jagdev Singh.

"Budget 2022 does well in addressing immediate concerns of the nation in ensuring job creation and retention and encouraging capital spending whilst ensuring fiscal sustainability.

"It is also enlightening to note that it manages to introduce measures to drive the nation's environmental, social and governance (ESG) and digitalisation agenda, despite the challenging environment," he said in a statement.

Jagdev noted Budget 2022 continues one of the key focus areas from the previous budget, which is employment and upskilling of the Malaysian workforce, with the objective of bringing down the national unemployment rate to 4%.

"A progressive move is the expansion of the JaminKerja hiring incentive under the Social Security Organisation (SOCSO) with RM2 billion allocation to incentivise the hiring of unemployed Malaysians and targeted segments such as the handicapped, orang asli, ex-convicts and women returning to the workforce, by subsiding between 20% and 40% of the monthly salaries of these groups.

"The extension of the double deduction for businesses offering scholarships to students of higher educational institutions and further deduction for the Structured Internship Programme, along with expansion in scope to all courses and different levels of students respectively, would further spur businesses to invest in the workforce of the future," he added.

For "the man on the street", Jagdev said Budget 2022 enhances support for low-income households plagued by the impact of the pandemic through an increase in direct cash handouts as well as reaching out to a larger group of people.

"Budget 2022 continues to drive certain popular measures, such as the extension of the RM2,500 tax relief for smart devices, computers and tablets. It also recognises the growing trend of Malaysians going into the gig economy, by increasing tax relief for the Employees Provident Fund contribution by gig workers to RM4,000.

"To further alleviate the burden of the rakyat, other smaller measures include increasing the tax relief for SOCSO from RM250 to RM350, and expanding the relief to include the Employment Insurance System (EIS)," he added.

On expanding the tax base, Jagdev observed that given the challenging circumstances, Budget 2022 turns to measures other than the goods and services tax (GST) and capital gains tax to expand the tax base.

He cited the expansion of excise duties to cover premixes and e-cigarettes or vape products is in line with the government's goal of encouraging a healthier lifestyle, whilst increasing revenue collection.

Other measures, he said, are in line with Malaysia's international commitments, for example, imposing taxes on foreign income received in Malaysia by Malaysian tax residents.

"There is also a continued focus on taxing the digital economy, by expanding sales tax coverage to overseas low value purchases from online vendors delivered by air, and service taxes on e-commerce delivery service providers who were previously not subject to service tax.

"What is perhaps unexpected, but certainly represents a bold move by the government to increase tax revenues in the short term, is the increased ‘one-off’ tax rate of 33% on the portion of chargeable income in excess of RM100 million for the YA 2022," he said.

On the point on increasing compliance, Jagdev noted that tax amnesty programme had been introduced in previous budgets, with the last significant one revealed in Budget 2019 for direct taxes.

"Given the success then of collecting an additional RM8 billion of revenue, the government is now offering a 50% to 100% remission of penalties for voluntary disclosure of unpaid indirect taxes including the now abolished GST, sales and service tax, import duties and excise duties.

"To ensure this amnesty programme achieves the desired outcome, it will be good to see the government complement this with active measures to identify potential 'high-risk' taxpayers, and to encourage them to come forward to self-declare," he said.

Meanwhile, as with all its predecessors, Jagdev said Budget 2022 does not neglect the small and medium enterprises (SMEs), with a number of measures introduced to drive SME growth. These include an increase in the allocation for the digitalisation grant scheme, and enhanced access to funding for targeted sectors, such as the Halal, aerospace and green energy industries.

"Although certainly a welcome move, what remains to be seen, however, is the level of involvement by SMEs in high technology sectors such as aerospace," he said.

See more Budget 2022 highlights here.