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2010 Budget Highlights

Some of the highlights of the Budget 2010 presented by the Prime Minister Datuk Seri Najib Tun Razak are as follows;

  • Employees EPF contributions will be raised again to 11 per cent on a voluntary basis with immediate effect. However, from Jan 1, 2011 employees’ EPF contribution will revert to 11 per cent.
  • The Government proposes existing personal tax relief of RM6,000 for EPF contributions and life insurance premiums be raised to RM7,000.
  • Government allocates RM2.3 billion to build and upgrade infrastructures in rural areas.
  • Government provides RM41 million to improve income and quality of life of the Orang Asli Community by implementing various projects.
  • Budget 2010 allocations totalled RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.
  • Federal Government revenue in 2010 to decline by 8.4 per cent to RM148.8 billion.
  • Budget deficit at 5.6 per cent of GDP compared with 7.4 per cent in 2009.
  • Effective Jan 1 2010, government agrees to allow agencies to retain 50 per cent of rentals received while the remaining 50 per cent will be remitted to the government as revenue.
  • The Government will implement fuel subsidy management system in early 2010.
  • The Government proposes the maximum income tax rate to be further reduced to 26 per cent from 27 per cent effective from the 2010 year of assessment.
  • Maximum tax rate for cooperatives will be reduced to 26 per cent while the fixed tax rate for non-resident individuals will be cut to 26 per cent.
  • Personal tax relief will be increased to RM9,000 from RM8,000 effective from the 2010 year of assessment.
  • The Government also proposes income tax on employment income of Malaysians and foreign knowledge workers residing and working in Iskandar Malaysia be imposed at 15 per cent compared with the maximum 26 per cent for the rest of the country.
  • Government to launch a scheme in January 2010 that enables EPF contributors to utilise current and future savings in Account 2 to promote house ownership.
  • RM14.8 billion is allocated to manage, build and upgrade hospitals and clinics.
  • The Government will issue 1Malaysia Sukuk totalling RM3 billion.
  • The Government will establish the 1Malaysia Retirement Scheme to be administrated by EPF.
  • To introduce a basic insurance and takaful scheme for motor insurance protection by mid-2010.
  • To expand micro insurance and takaful coverage for small-scale businessmen to benefit from coverage ranging from RM10,000 to RM20,000 with a premium as low as RM20 per month.
  • Stock market to be further liberalised to enhance efficiency.
  • Liberalise commission-sharing arrangements between stockbrokers and remisiers by allowing flexible brokerage sharing at a minimum rate of 40 per cent for remisiers and to have commission-sharing fully liberalised effective January 1, 2011.
  • Allowing 100 per cent foreign equity participation in corporate finance and financial planning companies.
  • All public-listed companies to offer e-Dividend and stockbroking companies to provide e-Payment options.
  • Current tax incentives to develop financial services, particularly Islamic finance, extended to 2015.
  • Twenty per cent stamp duty exemption on Islamic financing instruments.
  • Tax exemption on banking profits derived from overseas operations.
  • Double deduction on expenditure incurred in promoting Malaysia as an international financial centre.
  • Deduction on expenditure incurred to set up islamic stockbroking companies.
  • Deduction on expenditure incurred on the issuance of Islamic securities.
  • Government to encourage all syariah-compliant financial and banking institutions such as Bank Muamalat and Bank Islam to offer Ar-Rahnu scheme.
  • Government to ensure regional corridors be developed according to schedule. Todate 126 of 195 planned projects are at various stages of implementation. Planned investments totalling RM221 billion have exceeded the 9MP target of RM145 billion.
  • Government to allocate RM3.5 billion for infrastructure and basic amenities and training programmes and socio-economic projects to support implementation of private sector projects.
  • Government is in the final stage of completing a study on imposing Goods and Services Tax (GST). The rate will be lower than the current sales and service tax.
  • Income tax for 2010 based on income derived from 2009 will be allowed to be paid in instalments in five years.
  • A five per cent tax to be imposed on gains from disposal of real property from Jan 1, 2010.
  • A RM50 service tax to be imposed on each principal credit card and charge card and RM25 a year on each supplementary card from Jan 1, 2010.
  • RM100,000 to be imposed for each AP to open AP holders effective Jan 1, 2010. A portion of the collection will be channelled to the Bumiputera development fund in the automotive sector.
  • Malaysia’s economy to grow by two to three per cent in 2010.
  • Mining to grow 1.1 per cent, manufacturing 1.7 per cent, agriculture 2.5 per cent, construction 3.2 per cent and service sector 3.6 per cent.
  • Private consumption to expand 2.9 per cent while private investments 3.4 per cent.
  • Per capita income to increase by 2.5 per cent to RM24,661.
  • TNB to spend RM5 billion to implement electricity generation, transmission, distribution projects in 2010.
  • RM149 million allocation to develop food farming industry such as fruits, vegetables, organic farming, herbs, seaweeds and swiftlet nests.
  • RM58 million to develop basic infrastructures for livestock farms and establish supply chains for beef and mutton production.
  • A consortium comprising FELDA, FELCRA and RISDA will be established by the end of 2009, with a paid-up capital of RM300 million and with each agency contributing RM100 million.
  • Government to provide subsidies, incentives and assistance amounting to some RM2 billion to farmers and fisherman to safeguard their interests.
  • Government to allocate RM9 billion to finance infrastructure projects, with RM4.7 billion for road and bridge projects, RM2.6 billion for water supply and sewerage services, RM899 million for rail facilities, RM820 million for ports and sea services and RM276 milliion for airport projects.
  • To consolidate 79 SME funds to 33 to simplify access to SME financing to be coordinated by SME Corp.
  • To allocate RM350 million to SME Corp, with RM200 million set aside for SME soft loans, RM100 million for capacity enhancement and the balance for branding and promotion.
  • Financial institutions to approve micro-financing in six days and disbursement in four days.
  • To allocate RM538 million for implementation of various SME programmes, with RM281 million to state economic development corporations, RM200 million to TEKUN and RM57 million for purchase of business premises and infrastructures.
  • Government to sanction RM20 million to intensify green awareness activities and practise environment-friendly lifestyle.
  • Develop Putrajaya and Cyberjaya as pioneer townships in Green Technology as a showcase for the development of other townships.
  • Establish a RM1.5 billion fund to promote green technology, with a maximum RM50 million financing for suppliers and RM10 million for consumer companies. Applications for financing through the National Green Technology Centre to commence on Jan 1, 2010 and 140 companies are to benefit.
  • Building owners obtaining GBI Certificates from tomorrow until Dec 31, 2014 are to be given income tax exemption equivalent to additional capital expenditure.
  • Stamp duty exemption to buyers of buildings with GBI Certificates from tomorrow till Dec 31, 2014.

Source : BERNAMA

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