Citizens and permanent residents aged 18 and above will automatically receive a tax identification number (TIN), use of which will be mandatory for all documents and instruments, Finance Minister Tengku Zafrul Aziz said today.

He said this was one of the government's initiatives to ensure a sustainable source of revenue to finance national expenditure through more efficient tax administration.

The concept of TIN was first presented in Budget 2020, and was meant to be implemented in January 2021.

However, it was later postponed to January 2022.

According to the Inland Revenue Board (LHDN), TIN is an income tax number equivalent to those already in the agency's records. Taxpayers who already had an income tax number prior to Jan 1, 2022 will continue using that number as their TIN.

Zafrul said the next initiative would be LHDN's implementation of e-invoicing in stages, starting in 2023 with system development and pilot projects.

He also announced that the individual income tax rate for permanent residents within the RM50,000-RM100,000 range would be reduced by two percentage points.

This means that the income tax rate for those in the RM50,000-RM70,000 range will be reduced from 13% to 11% while the income tax rate for the RM70,000-RM100,000 bracket will decrease from 21% to 19%.

The taxable income range of RM250,000 to RM400,000 meanwhile will be combined with the RM400,000 to RM600,000 range, bringing the tax rate to 25%.

With these measures, the government expects tax savings of up to RM1,000 for the middle income group (M40) and up to RM250 for the high income group (T20).

"It is estimated that RM800 million will be available as surplus income for the people to spend," Zafrul said.

As part of efforts to encourage more women to return to work, he said, the government proposed income tax exemptions for the assessment years of 2023 to 2028.

Tax relief of up to RM3,000 to be extended to 2024 meanwhile will be given to parents who send their children to registered nurseries and kindergartens.

The government will also expand the scope of tax relief for life insurance premiums or life takaful contributions to cover voluntary EPF contributions of up to RM3,000.

"This is to further encourage voluntary contributions to the EPF," he said, adding that the voluntary contribution limit would be increased from RM60,000 to RM100,000 per year.

Individual taxi owners will be granted exemptions from excise duties and sales tax for the sale, transfer or disposal of taxis, including executive taxis and airport taxis.

For micro, small and medium enterprises, the tax rate for taxable income for the first RM100,000 will be reduced from 17% to 15% beginning from the assessment year 2023.

In the tourism sector, meanwhile, the government has proposed a special tax deduction for hotels that buy local handicraft products with a purchase cost of up to RM500,000 and tax exemptions for tour operators that bring in 200 foreign tourists a year, or at least 400 local visitors.

Those who donate to trust account funds for the treatment of rare diseases will also be given a tax deduction equal to the value of their donation.

In the agricultural sector, the tax incentive period for food production projects will be extended until the end of 2025, with the scope of incentive expanded to include modern agricultural projects based on controlled environment agriculture.

Meanwhile, technology-based companies will receive a tax deduction that covers the cost of listing on the main market of Bursa Malaysia.