To help and support businesses through this difficult and uncertain economic period, the government of Malaysia, as well as many other countries around the world, has introduced a massive number of tax incentives. However, the recently introduced tax schemes can make it quite challenging and confusing; thus, in this article, you will learn about every major tax incentive in Malaysia. The purpose of this article is to help Malaysian companies get up-to-date information about taxation policies and develop an effective COVID-19 response strategy. Companies that are relying on different accounting services in Malaysia should also be familiar with these incentives to ensure they are getting suitable services and avoiding as much taxation as possible.
A timeline of the service tax measures for COVID-19 in Malaysia is as follows:
- On 30th March, the government announced several service tax incentives in Malaysia to help businesses during the coronavirus outbreak. As a result of such measures, taxes on hotel services were cut from 6% to zero. A similar incentive was provided to selling tobacco and alcohol in hotels until 31st August 2020.
- On 16th April, the deadline for the sale and service tax was extended from March to 12th May.
- On 1st May, due to the pandemic and worsening economic conditions, the deadline for the service tax for the months of February and March was extended. Moreover, tax incentives were announced for the tourism industry.
- On 2nd June, the government again postponed the date of sales tax submission until 30th June. Moreover, the penalties or interest on late submission was completely removed.
- On 2nd July, the Malaysian government announced multiple service tax incentives for the tourism industry. Moreover, the tax payment instalments were delayed to 31st December. It was also announced that the tourism tax will be zero from 1st July 2020 to 30th June 2021. The 30th March decision of reducing tax on hotels and accommodation services was also extended till 30th June 2021.
Generally, value-added tax and services measures have the following attributes:
- Variations in time to submit taxes for different industries.
- Specific helplines to get quick answers to inquiries.
- An efficient system of automatically delayed remittances to give companies a much-needed cash flow boost. Remittances have taken a hit during the pandemic, and such efforts are made to support them.
- An exemption on the Tourism Tax — the previous rate was 6%, and it was reduced to 0% to support the economy amid the pandemic.
- Waving the interest on late payments.
- Reducing interest rates.
- Providing tax incentives for firms that provide essential services, like accounting services in Malaysia.
- Quick and automatic waivers on the fee for late submission of various taxes such as the Sales and Service Tax (SST) as announced by the Malaysian government.
The government also announced several measures for customs duty such as:
- Hiring more custom officers to maintain a smooth supply chain and prevent massive disruptions caused by the global pandemic.
- Reviewing policies, like allowing the export of surgical masks, ventilators and raw materials for PPE.
- Wavering late fees for paying bills.
- Establishing specific help desks to make the import-export process smooth and easy.
The Malaysian government also announced several economic relief packages to support different industries of the country. Announced in June, the National Economic Recovery Plan (PENJANA) – a comprehensive package viewed by the experts as a leading plan to recover the economy and uplift the economy – promises massive benefits, financial assistance and tax incentives in Malaysia. The service industry got unprecedented benefits under this plan.
In a Nutshell
Overall, the response of the Malaysian government to the COVID-19 pandemic has been quite positive and much appreciated. Financial institutions are still trying their best to come up with the best strategies and financial measures that will help businesses in the post-pandemic world.
Furthermore, many industries will be enjoying the tax incentives until 2021, which gives organizations plenty of time to recover their business without worrying about heavy taxes. Companies that rely on professional accounting services in Malaysia have a great chance of getting through this crisis as soon as possible because efficient accounting and recordkeeping ensure availability of all essential decision-making data. Moreover, having a complete picture of financial condition will help you in applying for suitable tax incentives in Malaysia and get some sort of tax exemption or relief to focus on rebuilding your business. For more information, feel free to get in touch with us.