Incentives for businesses in Malaysia from PENJANA – a comprehensive economic recovery plan which will involve RM35 billion injection into the economy
Putrajaya has announced a comprehensive economic recovery plan which will involve wage subsidies, upskilling, tax holidays for investors, grants, and other incentives.
In a televised address on 5 Jun 2020, Prime Minister Tan Sri Muhyiddin Yassin said these measures were contained in the Plan Jana Semula Ekonomi Negara or “Penjana” for short, which will involve RM10 billion in direct fiscal injection.
According to Finance Minister, Tengku Zafrul Datuk Seri Zafrul Abdul Aziz, the Short-Term Economic Recovery Plan is the fourth of the six-phase 6R approach (Resolve, Resilience, Restart, Recovery, Revitalise and Reform) in weathering the health and economic challenges due to the Covid-19 pandemic.
Government incentives for new start-ups:
- To encourage the setting up of new businesses in Malaysia, the Government has provided income tax rebate up to RM20,000 per year for 3 years of assessment of newly established SMEs between 1 July 2020 to 31 December 2021.
- If you are a new business set up and are thinking of renovating and refurbishing your business premises, The Government has extended the special tax deduction for renovation and refurbishment to 31 December 2021.
- Have a new software/ program and would like to test it out? No problem. The Government has allocated RM80 million to develop an innovation sandbox to pilot new technology solutions and encourage innovation and creativity that can propel digitalisation of service delivery.
Government incentives for micro enterprises and SME:
- The Government has introduced Micros and SMEs E-Commerce Campaign to encourage the adoption of e-commerce by micro enterprises and SMEs. Eligible micro enterprises and SMEs will be provided with the below to shift their traditional business towards digitalisation.:
- On-boarding training
- Seller subsidy
- Sales support
- Bank facilities of RM2 billion to assist affected SMEs at a concession rate of 3.5%. The financing facility will be made available in mid-June 2020 with a maximum loan size of RM500,000 per SME.
- Bank facilities of RM400 million to assist affected micro enterprises at a concession rate of 3.5%. The financing facility will be made available in the beginning of June 2020 with a maximum loan size of RM50,000 per enterprise.
- RM50 million microfinancing is earmarked for women entrepreneurs.
- To assist as well as incentivise SMEs to digitalise operations and trade channels, grants and loans will be provided to eligible enterprises under the following programmes:
- SME Digitalisation Matching Grant totalling RM100 million, in partnership with telecommunication companies
- SME Technology Transformation Fund totalling RM500 million loan (application opens from July 2020)
- Smart Automation Grant totalling RM100 million, capped at up to RM1 million per company
Government incentives for all entitled business owners
- The Wage Subsidy Programme introduced by the Government will be extended for a further 3 months from mid-June to end September 2020 with a subsidy of RM600 per employee for all eligible employers.
- Employers receiving wage subsidy are entitled to implement reduced work week and reduced pay. The maximum allowable reduced pay is 30%.
- Employers may receive wage subsidy for employees on unpaid leave, with the wage subsidy being paid directly to the employee.
- The following are the incentives provided by the Government for businesses that hire the unemployed:
- Apprenticeships for school leavers and graduates
- RM600 per month for up to 6 months
- Unemployed individual below 40 years old
- RM800 per month for up to 6 months
- Unemployed individual of 40 years old and above
- RM1,000 per month for up to 6 months
- Apprenticeships for school leavers and graduates
- Employers implementing Flexible Work Arrangements (FWAs) will be entitled to further tax deduction.
- Individual income tax exemption of up to RM5,000 to employees who receive a handphone, notebook & tablet from their employer.
Government incentives for Property Sector – RM1 billion
To stimulate the property market and provide financial relief to home buyers, the Government has provided the following tax exemption for sale and purchase of properties:
Home Ownership Campaign (HOC)
For the purchase of residential homes priced between RM300,000 to RM2.5million, subject to at least 10% discounts provided by the developer
- Stamp duty exemption for transfer instrument in respect of the first RM1million of the home price
- Full stamp duty exemption for loan agreement in relation to S&P signed between 1 June 2020 to 31 May 2021.
- RPGT exemption for disposal of residential homes from 1 June 2020 to 31 December 2021.
The above exemption is limited to the disposal of 3 units of residential homes per individual.
Government incentives for Foreign Direct Investment – RM50 million
The Government of Malaysia has introduced the following tax incentives for companies relocating to Malaysia:
- 0% tax rate for 10 years for new investment in manufacturing sectors with capital investment between RM300million to RM500 million.
- 0% tax rate for 15 years for new investment in manufacturing sectors with capital investment above RM500million.
- 100% Investment Tax Allowance for 5 years for existing company in Malaysia relocating overseas facilities into Malaysia with capital investment above RM300million.
- Special Reinvestment Allowance for manufacturing and selected agriculture activity from YA2020 to YA2021.
- Manufacturing License approval for non-sensitive industry within 2 working days.
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The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
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