Budget 2023 HR Roundup: Focus on Sustainable Growth
Prime Minister Datuk Seri Anwar Ibrahim presented Budget 2023 on 24 February 2023, with the theme "Developing Malaysia Madani."
The Budget is intended to build on Malaysia’s economic recovery momentum by leveraging on global trends and sustainable growth, as well as ensuring that this growth is spread equally among society. The three driving forces behind it, as summarized by the Government are:
- Inclusive and sustainable economic growth.
- Restoring confidence in institutions and governance.
- Combating inequality through social justice.
RM388.1 billion has been allotted by the government for Budget 2023, compared to RM385.3 billion for the stimulus-focused Budget 2022.
Talent and HR are also included in the slew of activities to motivate and develop the economy sustainably, keeping in mind the needs of the people in this trying time.
New and Restructured Income Tax Rates
HR practitioners take note for payroll and PCB. The income tax rate is altered for domiciled individuals as follows:
- Those earning RM100,001 to RM1 million, raised by 0.5 to two percentage points.
- Those earning between RM35,000 to RM100,000, lowered by two percentage points.
These measures are meant to increase taxes on the wealthiest taxpayers, while decreasing the tax burden on the middle class.
New Tax Reliefs
In line with its vision of sustainable growth, Budget 2023 also includes tax reliefs focused on health and well-being.
- The scope of tax relief for life insurance will be extended to voluntary contributions to the Employees Provident Fund (EPF) account, up to RM3,000.
- Individuals or companies donating to non-profit organizations undertaking sports development programmes at the grassroots level will qualify for a tax cut of up to 10% on aggregate income.
- Tax relief limit on medical treatment raised from RM8,000 to RM10,000, including relief covering rehabilitation treatment costs for children with learning disabilities such as autism, Down syndrome and specific learning disabilities up to RM4,000.
Encouraging Meaningful Employment
The Government sees meaningful, equal employment opportunities as a way to increase income for all levels of society. The following incentives to spur employment are included in Budget 2023:
- Employers will be provided wage subsidies through SOCSO of up to RM600 monthly to encourage hiring of disabled persons (OKU), the homeless, and ex-convicts.
- SOCSO will also provide incentives to employers of RM600 monthly for three months as an addition to the salary offered to hire technical and vocational education and training (TVET) graduates.
- Employers will also be provided a grant equal to 80% of the monthly salary to encourage women to return to work.
- The palm oil sector will be encouraged to emulate Sime Darby by employing local workers with a minimum salary of RM3,000 monthly and improving the working environment through mechanization and automation, including the use of robotics and artificial intelligence. A matching grant of RM50 million will be allocated.
- Investment promotion will be restructured based on outcomes, including high-value jobs, local firms in the supply chain, and the establishment of new industrial clusters.
- To support jobseekers, RM1 billion will be allocated to HRD Corp to train workers to increase productivity and income opportunities.
Recognizing Gig Workers
Gig workers are an increasingly important part of the economy. The World Bank estimates that 26% of Malaysians are employed in the gig economy. Thus, the Government is enacting the following measures in Budget 2023:
- Training fees for gig workers who undergo the microcredentials skills development programmes will be borne by the Government, with a liability of up to RM4,000.
- SOCSO will provide a monthly allowance of RM300 for three months as compensation for lost income to gig workers who are undergoing training programmes.
- A Gig Workers’ Policy will be formulated to protect their rights and welfare.
Other Highlights of Interest
- Micro-SME taxation rates for the first RM150,000 will be reduced from 17% to 15% in the 2023 assessment year.
- The number of forest rangers will be increased to 1,500 members. Aboriginal service, military and police veterans are priority hires.
- A “kill switch” policy will be implemented at all banking institutions, to enable each user to take immediate action to freeze their accounts, including preventing the use of online banking and ATM cards.
- Bankrupt individuals who owe less than RM50,000 will be given a second chance through immediate relief.
- SMEs will be given a matching grant of up to RM5,000 to digitalise their businesses, including subscribing to digitalisation apps like point-of-sales management, accounting systems, or HR software.
Learn how BrioHR can simplify HR for your business by getting a free demo here.
Prime Minister Datuk Seri Anwar Ibrahim presented Budget 2023 on 24 February 2023, with the theme “Developing Malaysia Madani.”
The Budget is intended to build on Malaysia’s economic recovery momentum by leveraging on global trends and sustainable growth, as well as ensuring that this growth is spread equally among society. The three driving forces behind it, as summarized by the Government are:
- Inclusive and sustainable economic growth.
- Restoring confidence in institutions and governance.
- Combating inequality through social justice.
RM388.1 billion has been allotted by the government for Budget 2023, compared to RM385.3 billion for the stimulus-focused Budget 2022.
Talent and HR are also included in the slew of activities to motivate and develop the economy sustainably, keeping in mind the needs of the people in this trying time.
New and Restructured Income Tax Rates
HR practitioners take note for payroll and PCB. The income tax rate is altered for domiciled individuals as follows:
- Those earning RM100,001 to RM1 million, raised by 0.5 to two percentage points.
- Those earning between RM35,000 to RM100,000, lowered by two percentage points.
These measures are meant to increase taxes on the wealthiest taxpayers, while decreasing the tax burden on the middle class.
New Tax Reliefs
In line with its vision of sustainable growth, Budget 2023 also includes tax reliefs focused on health and well-being.
- The scope of tax relief for life insurance will be extended to voluntary contributions to the Employees Provident Fund (EPF) account, up to RM3,000.
- Individuals or companies donating to non-profit organizations undertaking sports development programmes at the grassroots level will qualify for a tax cut of up to 10% on aggregate income.
- Tax relief limit on medical treatment raised from RM8,000 to RM10,000, including relief covering rehabilitation treatment costs for children with learning disabilities such as autism, Down syndrome and specific learning disabilities up to RM4,000.
Encouraging Meaningful Employment
The Government sees meaningful, equal employment opportunities as a way to increase income for all levels of society. The following incentives to spur employment are included in Budget 2023:
- Employers will be provided wage subsidies through SOCSO of up to RM600 monthly to encourage hiring of disabled persons (OKU), the homeless, and ex-convicts.
- SOCSO will also provide incentives to employers of RM600 monthly for three months as an addition to the salary offered to hire technical and vocational education and training (TVET) graduates.
- Employers will also be provided a grant equal to 80% of the monthly salary to encourage women to return to work.
- The palm oil sector will be encouraged to emulate Sime Darby by employing local workers with a minimum salary of RM3,000 monthly and improving the working environment through mechanization and automation, including the use of robotics and artificial intelligence. A matching grant of RM50 million will be allocated.
- Investment promotion will be restructured based on outcomes, including high-value jobs, local firms in the supply chain, and the establishment of new industrial clusters.
- To support jobseekers, RM1 billion will be allocated to HRD Corp to train workers to increase productivity and income opportunities.
Recognizing Gig Workers
Gig workers are an increasingly important part of the economy. The World Bank estimates that 26% of Malaysians are employed in the gig economy. Thus, the Government is enacting the following measures in Budget 2023:
- Training fees for gig workers who undergo the microcredentials skills development programmes will be borne by the Government, with a liability of up to RM4,000.
- SOCSO will provide a monthly allowance of RM300 for three months as compensation for lost income to gig workers who are undergoing training programmes.
- A Gig Workers’ Policy will be formulated to protect their rights and welfare.
Other Highlights of Interest
- Micro-SME taxation rates for the first RM150,000 will be reduced from 17% to 15% in the 2023 assessment year.
- The number of forest rangers will be increased to 1,500 members. Aboriginal service, military and police veterans are priority hires.
- A “kill switch” policy will be implemented at all banking institutions, to enable each user to take immediate action to freeze their accounts, including preventing the use of online banking and ATM cards.
- Bankrupt individuals who owe less than RM50,000 will be given a second chance through immediate relief.
- SMEs will be given a matching grant of up to RM5,000 to digitalise their businesses, including subscribing to digitalisation apps like point-of-sales management, accounting systems, or HR software.
Learn how BrioHR can simplify HR for your business by getting a free demo here.
Learn how BrioHR can simplify HR for your business by getting a free demo here.
