~ Tax Perks
Posted by faisalrenzo on June 28, 2011
Flat 15 per cent rate, two duty-free cars to woo Malaysians home.
KUALA LUMPUR: Malaysia is dangling new carrots, including a flat income tax rate, in its effort to woo back those working abroad.
Prime Minister Datuk Seri Najib Razak said returning Malaysians would be eligible for a flat income tax rate of 15 per cent for five years, under the new transitional income tax incentive.
“I certainly hope these changes will encourage more Malaysians working abroad, with their varied experience and expertise, to return and play an active part in our country’s economic transformation,” he told a 2,000-strong crowd of local and foreign fund managers as well as corporate executives at the Invest Malaysia conference yesterday.
Fund managers met by Business Times said the tax incentive might help address a talent shortage seen in many industries across Malaysia, including banking, but also expressed concern that it might be seen as unfair to other Malaysians.
One of them, Gerald Ambrose, head of the Malaysian operations of Aberdeen Asset Management said: “That was a surprise. It was discussed at the Talent Corporation lab before — I was on the lab — and it was decided that maybe a lot of Malaysians who never left would get a bit browned off. I think it might act as some incentive (to bring back Malaysians) but I personally feel that things are so bad in the United Kingdom and the United States that lots of Malaysians are going to come back anyway.” But Talent Corporation Malaysia Bhd, which took over the task of reversing the brain drain since Jan 1 this year, is optimistic such measures would work.
Speaking to Business Times yesterday, its chief executive officer, Johan Mahmood Merican, said in the past, these efforts were managed by the Human Resources Ministry under a scheme called the “Expert Scheme”, introduced in 2001.
“Up till the end of last year, the scheme managed to attract 750 people with expertise and vast knowledge in various fields.” Talent Corporation now takes the lead for the Returning Experts Programme (REP), its parameters and qualifying criteria which have been revised to better meet the needs of the nation’s Economic Transformation Programme.
“We revised the incentive package to make it more attractive, not only for local experts but also their families,” Johan said.
Other REP revisions include greater emphasis on relevant work experience as opposed to qualifications and two tax-free locally-assembled vehicles instead of two imported cars previously.
A statement issued by Talent Corporation at the event yesterday noted that diploma holders with at least 10 year s’ of overseas work experience now qualified for REP if they had the relevant industry experience in a National Key Economic Area.
The revised incentive packages take immediate effect. REP applications submitted from now will be eligible for the new transitional income tax incentive and the tax-free locally assembled cars.