Tax Update of Budget 2010 - Impact on Individuals

Income Tax

  • A reduction in the maximum individual tax rate from 27 per cent to 26 per cent.
  • 15 per cent tax rate for local and foreign knowledge workers who apply and start work in Iskandar Malaysia before 2015.
  • Increase in personal relief from RM8,000 to RM9,000.
  • Tax relief for EPF contribution and life insurance is increased from RM6,000 to RM7,000.
  • This increase of RM1,000 is for relief on annuity premium paid from 1 January 2010 for retirement scheme offered by insurance companies.
  • A new tax relief of up to RM500 per year is given for internet broadband subscription fee from 2010 to 2012.

Service Tax on Credit Cards and Charge Cards

Service tax on credit/charge cards of RM50 and RM25 on the principal card and supplementary card respectively.

Real Property

The reintroduction of Real Property Gains Tax (RPGT) on disposal of real property with effect from 1 January 2010. RPGT was abolished on April 1, 2007. However there will have exemption of the RPGT, the exemptions to the individuals are given as follows:

  • The level of exemption is increased from RM5, 000 to RM10,000 or 10 per cent of the chargeable gains, which ever is the higher
  • Gifts between parent and child, husband and wife, grandparent and grandchild and
  • Disposal of a residential property once in a lifetime

    The amount of RPGT payable is 5% of the chargeable gain as seen below:-

  • Those purchasing buildings with Green Building Index (GBI) certificates from developers will be given stamp duty exemption on instruments of transfer of ownership.
  • RM200 mil allocation to revive some of the country’s abandoned low-cost and medium-cost housing projects.


  • 1Malaysia Retirement Scheme for two million self-employed and non-wage earners. Government will contribute five per cent, subject to maximum of RM60 per annum, for every contribution of RM100 on top of existing dividends paid by EPF. The government’s contribution is only for a period of five years where contributors may withdraw their savings upon attaining the age of 55
  • Utilization of current and future savings in Account 2 together with the take home pay to get higher mortgage financing eligibility in 2010
  • Reverting employees’ EPF contribution rate to 11 per cent in 2011.


Government will issue Islamic bonds 1Malaysia Sukuk worth RM3 billion. This bond will be offered to all Malaysians aged 21 and above, with a minimum investment of RM1,000 and a maximum of RM50,000. It will have a maturity of three years with a 5 per cent annual rate of return paid quarterly.

Islamic Financing

20 per cent stamp duty exemption on Syariah financing instruments has been extended to 2015.

Related statistics

  • 18 per cent out of 5.72 million EPF active members have enough savings at the age of 54 to finance their retirements.
  • Malaysia’s population life expectancy at birth for male had increased from 71.1 in 2004 to 71.6 years in 2008, while for female; the life expectancy has increased from 75.9 to 76.4
  • Malaysia has about two million active individual taxpayers
  • The electronic filing (e-filing) of the income tax return has increased from 189,330 in 2006 to 712, 283 in 2007, 1,194, 280 in 2008 and 1,524, 217 in 2009.