KUALA LUMPUR, Oct 11 — Putrajaya will raise the tax bracket for millionaires earning RM2 million onward to 30 per cent, Minister of Finance Lim Guan Eng announced when tabling Budget 2020 today.
The move will likely draw support from the majority of Malaysians amid growing anger over rising income inequality.
Finance Minister Lim Guan Eng, who in the past had been hesitant to raise income tax for the rich despite strong demand from a growing number of economists, said the policy will only affect 2,000 rich households.
The tax rate for the top 5 per cent income earners is currently 28 per cent.
“This is to make our tax structure more progressive,” Lim said when announcing the policy.
Putrajaya projected its tax income to rise to RM244.5 billion in 2020, an increase of over RM11 billion. This estimate excludes the RM30 billion in dividends expected from oil income.
The new tax bracket for the rich will be part of a tax reform drive meant to tighten leakages. Lim announced a slew of initiatives to achieve this, including a plan to introduce a Tax Identification Number for all businesses or Malaysians above 18 who earn an income.
The minister said this means 18-year-olds who have some sort of income will be taxed accordingly.
Putrajaya will begin a round of talks with stakeholders to discuss the policy starting next year, he added.