KUALA LUMPUR (March 19): The corporate tax rate for small and medium enterprises (SMEs) will be reduced to 17% this year, from 18% previously, according to Prime Minister Tun Dr Mahathir Mohamad.

Noting the corporate tax rate as "already competitive", Dr Mahathir said this reduction in corporate tax will only be for SMEs with paid-up capital of below RM2.5 million and businesses with annual taxable income of below RM500,000.

He highlighted that for large companies, while the tax rate is slightly higher, the effective tax rate is less than 10% due to these incentives.

Dr Mahathir noted that Malaysia currently offers over 130 types of incentives administered by 32 Investment Promotion Agencies (IPAs), with varied roles and responsibilities, and several approving agencies.

"Our proposal entails holistic and simplified tax investment incentives that would be attractive for future investments," he said at the Invest Malaysia 2019 forum today, adding that incentives will be granted to desired sectors and types of investment that the country needs, and tied to specific key performance indicators (KPIs).

Moreover, he added that agencies involved in granting and approving tax incentives will also be streamlined.

Meanwhile, Dr Mahathir also highlighted that there will be no new tax for this year, with the exception of sugar tax, which has already been announced.

"It is delayed a bit as we want to ensure that the mechanism is effective to primarily meet our health objectives," he said, adding that the government will use the revenue collected from the sugar tax to provide a free and healthy breakfast programme for all primary school children beginning next year.