Following the global COVID-19 pandemic which has made a significant impact to the economy, our government has announced a comprehensive Economic Stimulus Package also known as Prihatin Rakyat Economic Stimulus Package. The allocated amount of RM 250 billion is 3 times the total allocated during 2009 financial crisis, aimed at helping the people and businesses to pull through these unprecedented challenging times.
The allocation is based on the three (3) main thrusts:
1. Deferment of Monthly Tax Installment Payments for Small and Medium Enterprises (SMEs):
All SMEs will be allowed to defer their monthly tax installment payment for three (3) months starting from 1 April 2020.
This measure is in addition to the deferment of tax installment payments for the tourism industry and the special revision of tax estimate in the month of third monthly installment announced under 1st ESP (Please refer to our previous post: Updates from MIRB). Further details expected to be provided by authorities on the qualifying taxpayers and whether SME for this purpose refers to those currently taxed at preferential tax rate of 17%
2. Deferment on the Taxability of Profit or Interest Income of Banks from Loans under Moratorium
Bank Negara Malaysia (BNM) has announced that banking institutions will be offering (i) Deferment of loan / financing repayments for a period six (6) months (‘’moratorium period”) effective from 1 April 2020 for SMEs and individual, (ii) Conversion of outstanding credit card facilities into three (3) year term loan, and (iii) Deferment or restructuring of loan / financing repayments for corporations.
The Government has announced that the income of banking institution from interest or profit on loan/ financing facilities under the moratorium, would only be taxable when interest or profit is received after moratorium period. Moratorium payments are extended to loans given to SMEs by TEKUN, MARA, cooperatives and other government agencies beginning 1 April 2020.
3. Additional Measures to Support SMEs:
BNM has enhanced its existing financing facilities under BNM's Fund for SMEs to provide greater assistance to SMEs in sustaining business and preserving jobs in the current economics condition. Features of the BNM's financing facilities for Malaysian SMEs are as follows:
Note: *Based on the definition of SMEs as approved by the National Entrepreneur and SME Development Council (NESDC) with at least 51% held by Malaysians.
Source:: www.bnm.gov.my/documents/2020/Additionalmeasures.20200327.appendix.pdf /
4. Restructuring of Employees' Provident Fund (EPF) contribution by employer
On 15 April 2020, the EPF Board will introduce the Employer Consultation Service programme that will include options for employers to defer, restructure, and reschedule the remittance of their monthly statutory EPF contributions (employer portion only) in respect of their employees.
5. Wage Subsidy Programme
The Malaysia Government will implement a Wage Subsidy Programme, whereby employers experiencing a drop of >50% in revenue since 1 January 2020 will receive a subsidy of RM 600/ month per employee (earning not more than RM 4,000) for three (3) months. The purpose of this programme is to reduce the rate of retrenchments, no-pay leave notices, or docking of salaries by employers especially those in the impacted industries for the coming three (3) months (i.e. for the duration of the Programme).
6. Employers in all sectors are exempted from remitting HRDF
Human Resources Development Fund (HRDF) levy for a period of six (6) months, starting April 2020, The levy is calculated at 1% per employee (or 0.5% per employee for employers who opt to register with the HRDF)
7. Six (6) months rental waiver
For school canteens, nurseries, cafeteria and convenience stores located in Federal Government premises including statutory bodies and agencies.
8. Additional fund of RM 4.5 billion
Will be given by BNM and the government by way of loans to SMEs and micro entrepreneurs.
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