1. FWA(Flexible Work Arrangement) Incentives
• To encourage employers to implement FWAs or enhance their existing FWAs, a further tax deduction on the expenses incurred will be given to employers. (1 July 2020)
• To encourage work-from-home arrangements, a tax exemption of up to RM 5,000 will be given to employees who receive a handphone, notebook and tablet from their employer. This exemption is limited to one unit for each category of asset. (1 July 2020)
• Special tax relief of up to RM 2,500 will be given to resident individuals who purchase handphone, notebook and tablet for this work- from-home arrangement. (1 June 2020)
2. Relief for Child Care (Year of assessments 2020 and 2021)
• To ease the transition to the new normal or working-from-home, the above tax relief will be increased from RM 2,000 to RM 3,000.
3. Special income tax relief for domestic travel- ling expenses
• A special income tax relief of up to RM 1,000 is given to resident individuals for domestic travelling expenses incurred between 1 March 2020 to 31 August 2020. To support the tourism sector, it is proposed that the special income tax relief be extended to 31 December 2021.
4. Tax deduction for COVID-19 related expenses
• Expenses incurred by companies to provide employees with disposable PPE(Personal Protective Equipment) e.g. face mask, be given tax deduction and non-disposable PPE products are given a capital allowance.
5. Financial stress support for businesses
• A special tax deduction will be given on renovation and refurbishment expenditure up to a limit of RM 300,000 incurred from 1 March 2020 to 31 December 2020.
• Extension of Accelerated Capital Allowance
on eligible capital expenditure on machinery and equipment including ICT equipment to 31 December 2021. This allowance will be claimable over a two-year period as follows.
- Initial allowance of 20%
- Annual allowance of 40%
• Extension of period of special deduction to property owners who provide at least 30% rental reduction to their SME tenants to 30 September 2020 to cover rental reductions for the months of July, August and September 2020.
6. Set-up of new businesses (1 June 2020 to 31 December 2021)
• To encourage the establishment of new businesses and transactions such as mergers and acquisitions, it is proposed that financial relief be provided in the form of income tax rebate of up to RM 20,000 per year for the first 3 years of assessment for newly established SME between 1 July 2020 to 31 December 2021.
7. RPGT exemption for residential properties (1 June 2020 to 31 December 2021)
• RPGT exemption will be given to individuals who are citizens of Malaysia for the disposal of residential properties from 1 June 2020 to 31 December 2021. This exemption is limited to the disposal of three units of residential properties per individual.
8. Tax incentives for new investments in Malaysia (1 July 2020 to 31 December 2021)
• To encourage investment and relocation of manufacturing by foreign companies into Malaysia, it is proposed that the following tax incentives be given.
(1) 0% tax rate for 10 years for new investment in manufacturing sectors with capital investment between RM 300 million to RM 500 million. The operation must commence within 1 year from the date of approval and capital investment must be made within 3 years.
(2) 0% tax rate for 15 years for new investment in manufacturing sectors with capital investment above RM 500 million. The operation must commence within 1 year from the date of approval and capital investment must be made within 3 years.
(3) 100% Investment Tax Allowance for 5 years for an existing company in Malaysia relocating overseas facilities into Malaysia with capital investment above RM 300 million.
(4) Special Reinvestment Allowance for manufacturing and selected agriculture activity, from a year of assessment 2020 to year of assessment 2021. However, further clarifications from the Government is required pertaining to the rates and qualifying conditions.
1. Companies in the tourism industry such as travel agent, hotel operator and airline are allowed to defer their monthly income tax instalment payments for 6 months from 1 April 2020 to 31 December 2020.
Sales Tax and Service Tax
1. 100% sales tax exemption will be given on the sale of locally assembled passenger cars while 50% sales tax exemption will be given on imported passenger cars from 15 June 2020 to 31 December 2020.
2. Service tax exemption on accommodation services provided by a person operating an accommodation premises(i.e. hotel) which expires on 31 August 2020 is now extended to 30 June 2021.
3. To ease the financial stress of businesses affected by the COVID-19 and MCO, it is proposed 50% remission of penalty will be given for late payment of sales tax and service tax due and payable from 1 July 2020 to 30 September 2020.
1. Stamp duty exemption for SMEs for M&A(Mergers and Acquisitions) transactions completed between 1 July 2020 to 30 June 2021.
2. Under Home Ownership Campaign, the instruments of transfer and loan agreements for the purchase of residential homes priced between RM 300,000 to RM 2.5 million will be exempted from stamp duty and is limited to the first RM 1 million of the home price while full stamp duty ex- emption will be given to the loan agreements and applicable for sale and purchase agreements on residential properties executed between 1 June 2020 to 31 May 2021 and is subject to the developer providing a discount of at least 10%.
3. In order to support the tourism sector during the COVID-19 period, tourism tax will be fully exempted from 1 July 2020 to 30 June 2021.
4. In order to support the commodity sector, 100% export duty exemption will be given on crude palm oil, crude palm kernel oil and refined bleached deodorised palm kernel oil effective from 1 July 2020 to 31 December 2020.
5. Extension of Wage Subsidy Programme
The Wage Subsidy Programme announced in the earlier economic stimulus package was for the period from 1 April 2020 to 31 December 2020 and the last day of application on 15 September 2020. The subsidy program is now extended for a further 3 months and the subsidy amount is fixed at RM 600 per employee for all eligible employers, up to a maximum of 200 employees per company. Other eligibility requirements and application processes remain the same.
The subsidy programme is also enhanced to:
• Allow employers receiving wage subsidy to implement reduced workweek(e.g. 4-day work week with reduced payment of 20%) and reduced pay(the maximum allowable reduced pay is 30%).
• Allow employers to receive wage subsidy for employees on unpaid leave, subject to the employees receiving the subsidy directly(only applicable to the tourism sector and business which are prohibited from operating during CMCO).
6. Hiring and Training Assistance for Businesses
To encourage employers to hire the unemployed, the Government will introduce the following incentives.
a. RM 600 per month for apprenticeships for school leavers and graduates for up to 6 months.
• Unemployed workers
a. RM 800 per month for the employment of workers below 40 years old who are unemployed for up to 6 months.
b. RM 1,000 per month for the employment of disabled work- ers or workers 40 years old and above who are unemployed for up to 6 months.
c. A training allowance of RM 4,000 per individual will be extended to those retrenched but not covered under the EIS(Employment Insurance Scheme).
*Source: Inland Revenue Board of Malaysia