Malaysia's carbon tax bill in final drafting stages

Malaysia is nearing the completion of its carbon tax legislation, a move aimed at bolstering the nation's commitment to achieving net-zero carbon emissions by 2050. The draft bill is in its final phase, with Deputy Finance Minister Liew Chin Tong emphasizing its alignment with other national policies, including the National Carbon Market Policy and the National Climate Change Bill.

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The drafting of the basic law for the carbon tax is in the final stage to ensure the implementation achieves the set objectives.

The specifics of the carbon tax mechanism, including the tax rate and emission scope, are yet to be finalized. These details will be announced by the government, pending further deliberation. The legislation is designed to be implemented in phases to mitigate the impact on industries, particularly small and medium-sized enterprises, which are currently navigating market uncertainties exacerbated by Middle Eastern conflicts.

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The National Climate Change Bill will serve as the basis for policies and legal frameworks in implementing the carbon tax.

Initially, the carbon tax will focus on the iron, steel, and energy sectors, identified as major contributors to greenhouse gas emissions. This phased approach aims to ensure a smoother transition and prevent undue burden on businesses. The government is committed to balancing environmental goals with economic stability, ensuring that the implementation supports Malaysia's broader climate objectives.

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At present, the carbon tax mechanism and the amount of carbon tax collected have not yet been finalized and will depend on the tax rate, emission threshold, and scope of emissions announced by the Government.