Prime Minister Datuk Seri Abdullah Ahmad Badawi in his third Malaysian Budget 2007 address as the Finance Minister announced tabled a surprise expansionary Budget 2007 in Parliament in his 2007 budget speech today.
Malaysian Budget 2007 Highlights

Corporate Tax Reduction

# The reduction of 1% in the Corporate Tax from the existing 28% to 27% in 2007 and 26% in 2008

Small and medium scale companies (SMEs) with paid up capital not exceeding RM2.5 million are taxed at 20% on chargeable income up to RM500,000 and the remaining amount The rate will be 27% for the year of assessment 2007 and 26% for the year of assessment 2008.

# current limit on deduction given to companies on contributions for charitable activities increased from 5% to 7% of
the aggregate income.

# such deductions will be extended to contributions made towards approved sports activities and sports bodies.
The condition is that the sum of the two types of contributions does not exceed 7% of the aggregate income.

# deduction on expenditure incurred by companies sponsoring local arts, culture and heritage performances increased to
RM500,000 per year from RM300,000.

Tax Exemption

# 10 year tax exemption for Venture Capital companies investing at least 50 per cent of their investment funds in seed capital.

Property Development and Construction

# Special regulations be formulated and published in the government gazette with the purpose of bringing the property development and construction contract business within the ambit of paragraph 36(a)(iv) of the Income Tax 1967.
The proposal, effective from year of assessment 2006, has been made to provide certainty in the tax treatment with respect to the computation of the gross income and adjusted income from the property development and construction contract business.

Information, Communications and Technology

# Double deduction of expenses incurred in promoting Malaysian information, communications and technology (ICT) brands abroad

RM149 Million To Promote Visit Malaysia Year 2007

# Extension of income tax exemption for operators who provide tour packages with at least 500 inbound tourists per year or 1,200 local tourists per year by another five years until the year of assessment 2011.
Tour operators would also be given excise duty exemption of 50 per cent on locally assembled four-wheel-drive vehicles.
In addition, income tax exemption to employees provided local leave passage by employers, which currently is given for fares, will be extended to include expenses on accommodation and meals.