The 2015 Budget was tabled by the Prime Minister and Finance Minister, Dato Sri Najib Tun Razak on 10 October 2014. There are no major surprises in the budget as the main focus is in the impending implementation of the Goods and Services Tax (GST) on 1 April, 2015.

This is the last budget under the 10th Malaysia Plan. The budget addresses key issues to promote fiscal sustainability, accelerating growth and prospering the Rakyat (people) thus placing the nation on firmer growth path towards Vision 2020.

The budget announced the increase in development expenditure to 4.1% of GDP up from 3.9% in 2014, bucking the declining trend of past five years. The majority of these expenditures will be concentrated on mega infrastructure projects in line with the 11th Malaysia Plan and New Economic Model goals of making the economy more sustainable, competitive and investment-friendly towards achieving developed nation status. Accordingly, a new Malaysian National Development Strategy (MyNDS) will be formulated to speed up and streamline high-impact projects.

The Rating Agency of Malaysia forecasts a slight slowdown in economic growth to 5% in 2015 from an expected 5.6% in 2014. A weak external sector is expected to be offset by robust private domestic demand and an uptick in public expenditure and investments.

The personal income tax rate deduction of 1% to 3% and expansion of chargeable income band exceeding RM100,000 with effect from Year of Assessment (YA) 2015. Corporate tax reduction of 1% to 19%, 24% from 20% and 25% with effect from YA2016.

In recognising the importance of developing human capital many of the training incentives are extended and enhanced. This is a welcomed initiative given the buoyant nature of the job market and the need to offer training as a staff retention technique. The budget proposed that further deduction be given on training expenses incurred by companies for its employees to obtain industry recognised certifications ad professional qualifications such as in the field of accounting, finance and project management with effect from YA2015.

Presently, Malaysia remains the largest Sukuk market accounting for 60% in the international level. To further enhance Malaysia as a Islamic Finance centre for issuance of Sukuk, it is proposed that the deduction for expenses incurred for the issuance of Sukuk under the principles of Ijarah and Wakalah be extended for another three years until YA2018.

One of the interesting tax incentives newly introduced in this budget is the introduction of customised incentives for Principal Hubs in early 2015 to encourage multinational companies' global operational centres to be set up in Malaysia and the launch and implementation of the Services Sector Blueprint.

The GST will come into effect on 1st April, 2015 replacing Sales and Services Tax (SST). It is expected that there will be a slowdown in private demand on the back of rising inflationary pressures and teething problems in the first year of implementation of the GST.

Inflation is expected to hit 3.8% in 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.