A summary of the new income tax tables to be followed by the Bureau of Internal Revenue (BIR).
The higher-income bracket will be negatively impacted while low-to-middle income will largely benefit from the change in income tax rates.
|Gross Income Per Year||Income Tax Rate|
|P250,000 and below||0%|
|P250,000 – P400,000||20%*Excess over P250,000|
|P400,000 – P800,000||P30,000 + 25%*Excess over P400,000|
|P800,000-P2,000,000||P130,000+ 30%*Excess over P800,000|
|P2,000,000 – P8,000,000||P490,000+ 32%*Excess over 2,000,000|
|P8,000,000||P2,410,000+ 35%*Excess over P8,000,000|
|Gross Income Per Year||Income Tax Rate|
|P250,000 and below||0%|
|P250,000 – P400,000||15%*Excess over P250,000|
|P400,000 – P800,000||P22,000 + 20%*Excess over P400,000|
|P800,000 – P2,000,000||P102,500 + 25%*Excess over P800,000|
|P2,000,000 -P8,000,000||P402,500 + 30%*Excess over P2,000,000|
|P8,000,000||P2,202,500 + 35%*Excess over P5,000,000|
As of 1, 2019, the EWT rates will range from 1% to 15%. Prior to this, the top rate was at 32%. While the said change is not yet in effect, the Bureau of Internal Revenue (BIR) has advised the reduction of the EWT rates for the following income payments to 8% from 10% or 15%:
(a) Professional fees, talent fees, commissions, etc. for services rendered by individuals
(b) Income distribution to beneficiaries of estates and trusts
(c) Income payment to certain brokers and agents
(d) Income payments to partners of general professional partnerships
(e) Professional fees paid to medical practitioners
(f) Commission of independent and/or exclusive sales representatives, and marketing agents of companies
Previous EWT rates for the said income payments were based on Revenue Regulations (RR). Normally, an RR is amended by the issuance of another RR. To reiterate, the advice on the reduction of the above EWT rates are processed via Revenue Memorandum Circulars (RMC). Assuming that this was not done properly, and a taxpayer would be subjected to a deficiency tax assessment. Due to an erroneous written official advice of a revenue officer, there appears to be basis to argue for the abatement or cancellation of penalties and/or interest on the deficiency tax assessment.
Filing frequency of FWT and EWT returns has been changed from a monthly to quarterly basis. The current stipulated deadline is on the last day of the month following the close of the quarter during which the withholding was made. For example, for the first quarter (i.e. January to March), the filing deadline would be 30th of April.This eases the compliance burden of taxpayers by reducing the number of FWT and EWT returns to be filed from 12 monthly returns to 4 quarterly returns. However, in the absence of the implementing RR (IRR), the following are some of the practical compliance issues taxpayers are faced with:
(a) Whether or not the BIR will issue new quarterly FWT and EWT returns
(b) Whether or not alphalists of payees will still be required
(c) Whether or not the new FWT and EWT returns will be available on or before the filing deadline
(d) Whether or not taxpayers will be provided enough time to adapt to the said returns
In recent news, the Parliament of Malaysia has just passed the Employment Insurance System (EIS). As has been noted, Malaysia saw to a loss of more than 38,000 jobs, especially in the retail, manufacturing and quarrying sector in 2016. Being a trading nation, Malaysia is highly susceptible to disruptions in the global economic chain. Therefore, this initiated the development of the EIS 2017 Bill, to serve as a financial buffer against the ill effects of the economic downturn.
The EIS Act went into effect on 1st January 2018, and all companies or enterprises with one or more employees are required to comply. Contributions were initiated since 1 January 2018 and payouts for retrenched workers will begin in 2019. Furthermore, exemptions are only applicable to the self-employed, public servants, domestic helpers and foreign workers. All in all, the EIS serves as a safeguard measure to assist retrenched workers through funding from both employers and employees.
The meaning of Loss of Employment is stipulated under section 30(1) & (2) of the Act. It also extends to retrenched staff who experienced sexual harassment or constructive dismissal at the workplace. This scheme is administered by the country’s Social Security Organisation (Sosco), to provide temporary financial assistance up to six months for each retrenched employee.
The EIS is based on a fixed rate basis. The contribution rate for the EIS consists of 0.2% from the employer and 0.2% of the employees’ monthly salary, totaling to 0.4% contribution. Moreover, it is subjected to a monthly contribution cap of RM59.30 for those with earnings RM4,000 and above.
The Insurance system consists of a list of activities that complement financial assistance. This includes training programmes, re-skilling, career counseling and job-seeking assistance. They effectively aid the Insured Persons (IP) to return to the workforce in the shortest possible time. Employees at an age range of 40-50 are most likely to benefit from this scheme. In addition, this moderates losses from any business contraction, downsizing or bankruptcy.
Altogether, failure to comply with EIS would result in a hefty fine not exceeding RM10,000 or imprisonment for a term no more than two years, or both, upon conviction.
AYP Malaysia provides comprehensive HR and payroll services that ensure continuous compliance with the new EIS. Contact us for error-free payroll processing for monthly financial contributions!
As of YA 2018, the total amount of personal income tax is subject to an yearly relief cap of $80,000. The cap on personal income tax relief applies to the total amount of all tax reliefs claimed. This includes any relief on voluntary CPF contributions made. Individuals who have met the qualifying conditions should continue to claim the personal reliefs.
In effect, $100 million worth of additional tax revenue a year is expected to be generated. This engenders a more progressive tax system, affecting only 1% of tax-resident individuals. SMU Professor Sum Yee Loong, a former Deloitte tax partner, remarked that the cap was a wise move. This will affect high income earners who are making S$150,000 or S$300,000 a year. On the contrary, the middle-income bracket who are earning S$50,000 to S$80,000 a year are not likely to be implicated. However, this change will also impact working mothers who are higher wage earners with two children, as well as some lower-income taxpayers. Taxpayers who have parents, grandparents and disabled family members in their care can also expect to take up additional burden.
Singapore’s personal income tax burden remains low and most Singaporeans are in support of the new cap. In addition, this tackles a potential loophole in the tax system and prevents further exploitation from certain group of taxpayers. This refers to self-employed individuals who divert a portion of their earnings to their spouses. That is to say, the aforementioned spouses are not wholly responsible in income generation.
The 20% tax concession for the value of home leave passages for expatriate employees will be removed with effect from YA 2018.
The home leave passages provided to expatriate employees, their spouses and children are taxable in full.
Recent global events such as the Brexit referendum, the United States’ presidential election and China’s slow economic growth have impacted many markets and economic conditions. A reserved approach to office expansions and industrial space commitment echoes the business sentiments for investments in the real estate industry. Moreover, there is a supply overhang in commercial properties that has led to weaker performance in price and rentals.
As such, property developers are not looking to develop new estates. Instead, selling or leasing existing units are higher in demand. Consequently, this indicates a greater demand for experienced residential & commercial leasing managers with strong business acumen, as well as asset & portfolio managers. Additionally, the Singapore Government has committed to the development of the Industry Transformation Map (ITM). This aligns with the Real Estate Industry’s jobs and growth strategy, which will be released within the year 2017.
Indonesia has a large domestic market. Consequently, private consumption and its political stability are factors that maintain the Indonesia’s economy.