In light of the ongoing COVID-19 outbreak, multiple measures have been introduced to help affected businesses. Below are the key tax-related measures relevant to our clients:
Measures relating to Income Tax
1. Income tax rebate for a new SME
An income tax rebate up to RM20,000 per year for the first 3 years of assessment (YA) will be given for Small and Medium-Sized Enterprise (SME), where the date of incorporation and commencement of business is during the period from 1 July 2020 to 31 December 2021.
The qualifying conditions are:
the business entity must be registered under Companies Act, 2016;
SME has paid-up capital of RM2.5 million and below, with annual turnover not exceeding RM50 million per annum;
the SME can claim a rebate of equivalent to the amount of capital expenditure or operating expenses incurred in each YA subject to a maximum expenditure of RM20,000 per YA;
Unused tax rebate during the current YA cannot be carried forward to the next YA; and
the new entity must use a separate plant, equipment and facilities which are not transferred from existing or related companies;
2. Tax benefits for COVID-19 related expenses
Expenditures incurred in relation to providing employees with disposable personal protective equipment (PPE) such as face masks and COVID-19 testing are deductible expenses under Section 33(1) of the Income Tax Act 1967 (ITA).
Capital allowances can be claimed for expenditures incurred in providing non-disposable PPE to employees such as purchase of thermal scanners.
The qualifying conditions are:
the expenditures incurred from 1 March 2020; and
the incentive is extended for an indefinite period.
3. Incentives for Flexible Work Arrangements (FWAs)
To encourage employers to adopt Work From Home (WFH) practice, a further tax deduction will be given to an employer who implements FWA or enhances their existing FWA conditions.
The incentives are in the form of double tax deduction, for 3 consecutive YA, YA 2020, YA 2021 & YA 2021 for the following expenses;
consultation fees.
capacity building for FWA including staff training cost.
cost of acquiring "virtual working environment" software.
The qualifying conditions are:
effective for applications received by Talent Corporation Malaysia Berhad from 1 July 2020 to 31 December 2022; and
the expenditure shall be confirmed by Talent Corporation Malaysia Berhad and the total expenditures should not be more than RM500,000 for each YA.
4. Personal tax exemption for employees who receive handphone, notebook and tablet from employers
It was announced in PENJANA that income tax exemption of up to RM5,000 be given to employees who receive Mobile Phones, Laptops and Tablets from their employers effective 1 July 2020.
The qualifying conditions are:
the exemption is effective from YA 2020; and
the exemption is not given to directors of controlled companies, sole proprietors and partnerships.
5. Personal tax relief on purchase of handphone, notebook and tablet
Currently, resident individual taxpayers can claim a lifestyle relief of up to RM2,500 for the purchase of books, personal computer, sports equipment, gym membership subscription and for the payment of monthly bill for internet subscription.
In addition to the above, a further income tax relief of up to RM2,500 will be given for the purchase of handphone, notebook and tablet.
The qualifying conditions are:
the tax relief is for YA 2020 for the purchases made from 1 June 2020 to 31 December 2020.
6. Personal tax relief for domestic travelling expenses
To promote domestic tourism, a special income tax relief of up to RM1,000 will be provided to individuals for expenses incurred on domestic travel. Personal income tax relief of RM1,000 is given to resident individuals for domestic travelling expenses such as;
accommodation expenses at premises registered with the Ministry of Tourism, Arts and Culture Malaysia; and
entrance fees to tourist attractions.
The qualifying conditions are:
the tax relief is for YA 2020 and YA 2021 for the domestic travelling expenses incurred during the period from 1 March 2020 to 31 December 2021.
7. Personal tax relief increased from RM2,000 to RM3,000 for fees paid to child care centres
To encourage parents to send their children to child care centres, the tax relief is increased from RM2,000 to RM3,000.
The qualifying conditions are:
the tax relief is for YA 2020 and YA 2021.
8. Accelerated Capital Allowance (ACA) for machinery and equipment including Information and Communications Technology (ICT) equipment
To incentivise businesses to undertake investments, Accelerated Capital Allowance (ACA) will be given for qualifying capital expenditure incurred on machinery and equipment, including Information and Communications Technology (ICT) equipment. Such ACA can be claimed within a two year period at the following rates.
Initial allowance – 20%
Annual allowance – 40%
The qualifying conditions are:
qualifying expenditures incurred from 1 March 2020 to 31 December 2021.
9. Deduction for Renovation and Refurbishment expenses
To promote businesses to undertake renovation and refurbishment in readiness of the subsequent upturn in the economy, a special deduction is given for the renovation and refurbishment expenditures up to a limit of RM300,000.
The qualifying conditions are:
capital expenditures incurred from 1 March 2020 to 31 December 2021; and
This tax deduction does not apply to expenditure which has been given an allowance under Schedule 2 or Schedule 3 of the Income Tax Act, 1967.
Measures relating to Sales and Services Tax (SST)
1. Remission of penalties for late payment of SST
A 50% remission of penalty given for late payment of SST penalty which is due and payable from 1 July 2020 to 30 September 2020.
2. Service tax and tourism tax exemption for hotels
The operators of accommodation premises such as hotels, inns, lodging house, service apartment, homestay and any other similar establishment are exempted from charging service tax on accommodation and any related services effective from 1 March 2020 to 30 June 2021.
Operators of accommodation are also exempted from charging tourism tax with effect from 1 July 2020 to 30 June 2021.
Further details:
The operators of the accommodation premises are exempted from levying service tax on provision of accommodation services and other related services.
Tourism tax exemption is given to foreign tourist staying at any accommodation premises registered under the Tourism Tax Act 2017.
Measures relating to Real Property Gains Tax (RPGT)
1. RPGT exemption relating to disposal of residential property
Gains arising from disposal of residential properties by Malaysian citizens between 1 June 2020 to 31 December 2021 will be exempted from RPGT. Such exemption is given for up to three (3) residential properties per individual.
Measures relating to Stamp Duty
1. Stamp duty exemptions relating to residential property
It was proposed that the Home Ownership Campaign (HOC) will be reintroduced and the following stamp duty (SD) exemption will be given:
On the instruments of transfer: on the first RM1,000,000 of the residential property value; and
On the loan agreement: full exemption
The qualifying conditions are:
the property is a residential property;
the residential property is priced between RM300,000 to RM2.5 million;
sales and purchase agreement signed from 1 June 2020 to 31 May 2021; and
the developer must give at least 10% discount on the price of the residential property.
You may refer to the link below for further details and other tax-related matters that are not listed above;