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Description

1

Stepping up Testing of Employees

It is proposed that the cost of Covid-19 screening for SOCSO registered foreign workers will be borne fully by SOCSO in red zones to identify possible Covid-19 clusters at workplace.

2

Bantuan Prihatin Rakyat (“BPR”) Assistance

•Households earning up to RM5,000 per month will receive RM300; and

•Single category, earning up to RM2,000 per month will receive RM150.

3

Tax Deduction for Covid-19 Donations

It is proposed that donors who donated cash or in kind to those impacted by the pandemic will be eligible for a tax deduction based on their gross business income or aggregate income.

4

EPF i-Sinar Program

Those who are facing challenges due to the MCO and floods, the EPF will provide an advance of up to RM1,000 from the amount applied under the i-Sinar Category 2 facility.

5

Special Tax Relief on Purchase of Mobile Phones, Computers and Tablets (Flexible Work Arrangement)

Special tax relief of RM2,500 on the purchase of mobile phones, computers and tablets which expired on 31 December 2020 will be extended for another year until 31 December 2021.

6

Provision of Free Internet Access

Provision of free 1 Gigabit data offered to public to browse websites, including for educational purposes, will be extended until 30 April 2021.

7

Sales Tax Exemption on Passenger Vehicles

It is proposed that the sales tax exemption for locally assembled and imported passenger vehicles which expired on 31 December 2020, will be extended to 30 June 2021.

8

Moratorium for PTPTN Borrowers

It is proposed that PTPTN bollowers affected by the Covid-19 pandemic or floods are eligible to apply for a three-month PTPTN loan repayment moratorium. Application can be made until 31 March 2021.

9

Enhancement of Wage Subsidy Program

Wage Subsidy Program 3.0 will be enhanced to include all employers operating in the MCO states.

•RM600 per employee for earning less than RM4,000; and

•Wage subsidy limit of 200 employees for each employer will be increased to 500 employees.

10

Employment Insurance System Program

It is proposed that the Government will relax the conditions for the Employment Insurance System program. Employees who do not meet the minimum contribution conditions, or whose contract was not extended after having being renewed for at least 3 times previously, are now eligible to apply for the assistance of 30% of their monthly salary for a period of 3 months.

11

Prihatin Special Grant

Prihatin Special Grant Plus assistance is reintroduced:-

•RM1,000 to 500,000 SMEs in the 7 MCO states; and

•RM500 to 300,000 SMES in the rest of the sates.

12

Financial Assistance to Taxi and Bus Drivers

•One-off financial assistance of RM500 will be provided to tourist guides, drivers of taxis, school buses, tour buses, rental cars and e-hailing drivers; and

•Exemption from excise duty and sales tax for the transfer and disposal of private taxies, provided the vehicle is owned for five (5) years. Effective 1 January 2021 to 31 December 2021.

13

Electricity Bill Discounts

•A special discount of 10% on electricity bills from January to March 2021 to 6 business sectors nationwide, which include hotel operators, theme parks, convention centres, shopping malls, local airline offices and travel/tour agencies; and

•Electricity rebates given to all TNB users, at a rate of 2 cents per kilowatt-hour, which is equivalent to a reduction of up to 9% for a period of 6 months. Effective 1 January 2021 to 30 June 2021.

14

Bus and Taxi Hire Purchase Rehabilitation Scheme

Syarikat Jaminan Pembiayaan Perniagaan will introduce a Bus and Taxi Hire Purchase Rehabilitation Scheme. Through this, sightseeing buses and taxi operators can restructure their financing and enjoy a 12-months moratorium and lower monthly repayments.

15

Rental Reduction Special Deduction

A special tax deduction has been given to landlord who provides at least 30% rental reduction on business premises to SMEs, for rental period 1 April 2020 to 31 March 2021.

It is proposed under PERMAI that the special tax deduction will be expanded to cover non-SMEs. The special deduction period will also be extended until 30 June 2021.

16

Human Resource Development Fund (“HRDF”) Levy Exemption

HRDF will be exempted for companies that are unable to operate during the MCO and CMCO periods.

Provision

Description

6

Income Tax Rebate for New SME

Under PENJANA, new SMEs which are incorporated and commenced its operation within 01.07.2020 to 31.12.2021, is eligible for a tax rebate of RM20,000 for 3 consecutive years of assessment (“YA”). Under the Finance Act 2020, the income tax rebate has been extended to include Limited Liability Partnership (“LLP”).

 
Effective YA 2021.

34(7)

34A(1) 34A(4) 34A(4A) 34B(1)

Tax Treatment on Research and Development Expenditure

Tax Deductions for research and development under the aforesaid provisions has been amended to be applicable to a person resident in Malaysia. The deduction is also applicable to a pioneer status company.

39

Deduction to Labuan Company

Restriction of tax deduction will be extended to payments made to all Labuan entities regardless whether they fulfilled the substance requirements. The substance requirements herein are referred to:-

i.Adequate number of full-time employees in Labuan; and

ii.Adequate amount of operating expenditure in Labuan.

44A(3)(c)

Group Relief

The amendment seeks to clarify that when the surrendering company and the claimant company are indirectly owned by another company resident and incorporated in Malaysia through the medium of other companies, these medium companies must be resident and incorporated in Malaysia.

45A(1)

47(1)(b)

Disabled Spouse Relief

Additional tax relief limited to disabled spouse be increased from RM3,500 to RM5,000.

46(1)(c)

Parental Medical Relief

Income tax relief for medical expenses and parental care be increased from RM5,000 to RM8,000.

46(1)(f)

Education Fees Relief

Courses claimable under this tax relief be extended to cover course of study undertaken for the purpose of upskilling or self-enhancement. These courses must be conducted by a body recognized by the Director General of Skills Development under the National Skills Development Act 2006.

Limited to maximum of RM1,000 for each YA. Effective YA 2021 and YA 2022.

46(1)(g)

Medical Treatment Relief

Medical relief for serious diseases for taxpayer, spouse and child be increased from RM6,000 to RM8,000.

The tax relief is now extended to include vaccination for pneumococcal, human papillomavirus, influenza, rotavirus, varicella, meningococcal, Tetanus-Diphtheria-Acellular-Pertussis (“TDAP”) combination and Coronavirus Disease (“Covid-19”).

Limited to maximum of RM1,000 for each YA. Effective YA 2021 and subsequent YA.

46(1)(h)

Medical Check-Up Relief

Medical check-up expenses be increased to RM1,000. Effective YA 2021 and subsequent YA.

46(1)(p)

Lifestyle Relief : Subscription of Electronic Newspaper

The lifestyle relief has been extended to include subscription of electronic newspaper. Effective YA 2021 and subsequent YA.

46(1)(r)

Tax Relief for Fees paid to Child Care Centres and Kindergartens

Under PENJANA, fees paid to child care centres and kindergartens has further increased RM1,000 to RM3,000. Effective YA 2020 and YA 2021.

46(1)(s)

Domestic Travel Relief

Income tax relief of RM1,000 is given to individual resident for domestic travel expenses which include accommodation expenses and entrance fees to tourist attraction. Travel expenses incurred from 01.03.2020 to 31.12.2021.

46(1)(t)

Lifestyle Relief under Flexible Work Arrangement

Additional income tax relief of RM2,500 be provided for individual who bought a personal computer, smart phone or tablet for his own, wife or child use. Applicable for purchases made from 01.06.2020 to 31.12.2020.

46(1)(u)

Lifestyle Relief : Sports Equipment

Lifestyle relief has been increased to RM3,000 with the additional RM500 allocated for the cost of purchasing sports equipment, entrance or rental fee to any sports facility and payment of registration fee for any sports competition where the organizer is approved and licensed by the Commissioner of Sports under the Sports Development Act 1997.

Effective YA 2021 and subsequent YA.

6(1)(m)

6(1A)

65B

Incentive Scheme

New tax incentive be introduced for the establishment of Global Trading Centre for companies carry out qualifying trading activities to enjoy a concessionary rate of 10% for a period of 5 years and renewable for another 5 years.

The business of a person from the qualifying activity shall be treated as separate and distinct business and source of that person. Any loss for a YA which is carried forward can only be deducted from the source of income of the qualifying activity. Any unabsorbed losses during the period of an incentive scheme can only be utilized for a period of 7 consecutive YA after the YA in which incentive scheme ends.

Effective YA 2021 and subsequent YA.

77A(1A)

Tax Submission of a Limited Liability Partnership

LLP shall file its tax return via e-filing. The Inland Revenue Board (“IRB”) no longer accepts manual filing. Effective YA 2021 and subsequent YA.

83(2)

83(3)

83(4)

Employer Tax Obligation : Notification of Death of Employee

The employer is required to notify the Director General upon the death of an employee in a prescribed form within 30 days from informed death. Effective 01.01.2021.

In respect of new employment, termination of employment and leaver cases, the due date for submission of written notice (previously was prescribed form) has been replaced from one month to 30 days.

103B

Tax Payable notwithstanding Institution of Proceedings under any other Written Law

The Section is introduced to provide that the institution of any proceedings under any other written law against the Government or the Director General shall not relieve any person from liability for payment of tax, debt or other sum due and payable by the taxpayer. Effective 01.01.2021.

104(1A)

Certificate to Prevent Taxpayers from Leaving the Country

To improve the efficiency for the Commissioner of Police or Director of Immigration, certificate may be issued to the aforesaid authorities through an electronic medium or by way of electronic transmission.

109D

Withholding Tax on Income Distribution from Real Estate Investment Trust (“REIT”)

Withholding tax deducted from the income distribution from a REIT listed on Bursa Malaysia would be the final tax paid. Therefore, the income distribution received by unit holders (after deduction of withholding tax) shall be disregarded for the purpose of ascertaining the chargeable income of the unit holders.

Schedule 1

Part I

Review of Income Tax Rate for Individual

The tax rate for resident taxpayer be reduced by 1% for

chargeable income band of RM50,001 to RM70,000.

Effective tax savings of RM200.

Effective YA 2021.

113B

124

There are updates in this year’s Finance Act 2020. The Government introduced penalties for non-compliance on transfer pricing where there were none in the past. And, we are seeing more and more tax queries raised by the IRB concerning Transfer Pricing. This shows that the IRB is taking more interest in this grey area of business tax law.

For multinational companies and larger companies which have related party transactions but have yet to prepare a Transfer Pricing Documentation, you may want to have your Documentation prepared as soon as possible because from 1 January 2021 onwards, failure to furnish the Transfer Pricing Documentation to the IRB will expose the company to penalties ranging from RM20,000 to RM100,000.

In addition to the penalty, a surcharge of not more than 5% on any transfer pricing adjustment will be imposed by the IRB on all tax audit and investigation cases, whether the adjustment is taxable or not.

Currently, a penalty is imposed when a transfer pricing adjustment is made during a tax audit, resulting in additional tax payable. The penalty is to be applied on the amount of additional tax payable. However, in cases when a transfer pricing adjustment does not result in additional tax payable, penalties cannot be imposed. Hence, Section 140A(3C) and Section 140A(3D) will be introduced in the year 2021 for the IRB to impose a surcharge of not more than 5% on any transfer pricing adjustment regardless of whether the adjustment is taxable or not.

Schedule 1

Part XVII

Schedule 1

Part XVIII

Preferential Tax Rate for Incentive Scheme

The Section introduced to provide preferential tax rate for chargeable income for a person (business) in respect of an incentive scheme approved by the Minister. The chargeable income shall be taxed at the rate of not more than 20%. The Ministry may prescribe the applicable rate, YA and conditions under the approved incentive scheme.

Similar treatment applies to chargeable income of an individual resident who is not a citizen having and exercising an employment in a company that carries on a business in respect of a qualifying activity under an incentive scheme approved by the Minister. The chargeable income shall be taxed at the rate of not more than 20%.

Effective YA 2021 and subsequent YA.

Schedule 3

Para 70A

Definition of Plant

A new definition of plant has been added to Paragraph 70A of the Schedule 3.

”Plant” means an apparatus used by a person for carrying on his business but does not include a building, an intangible asset, or any asset used and that functions as a place within which a business is carried on.

Effective YA 2021 and subsequent YA.

Schedule 6

Para 15(1)(b)

Compensation for Loss of Employment

The income tax exemption for Compensation for Loss of Employment be increased from RM10,000 to RM20,000 for each full year of service.

Effective YA 2020 and YA 2021.

Schedule 7A

Para 2B

Special Reinvestment Allowance (“RA”)

Special RA is reintroduced for existing manufacturing and agriculture companies which have exhausted their eligibility to qualify for RA.

Effective YA 2020, YA 2021 and YA 2022.

14(5A)

15(4A)

Power to Remit Penalty Imposed due to Failure to Retain and Remit

If an acquirer fails to retain and remit the amount of Real Property Gains Tax (“RPGT”) due to incorrect or wrong notification provided by the disposer, the Director General is empowered to remit the whole or any part of the penalty imposed on the disposer on his discretion. Effective 01.01.2021.

21B

Duty of Acquirer to Retain and Pay Part of the Consideration (Non Citizen / Non Permanent Resident)

‘

The Section is introduced to provide clarification to an acquirer. Acquirer shall retain the whole of the money or a sum not exceeding 7% of the total value of the consideration relating to the disposal of a chargeable asset by disposer under Part III of Schedule 5, which includes an executor of an estate of a deceased person who is non citizen and non permanent resident. Effective 01.01.2021.

21C

Tax Payable notwithstanding Institution of Proceedings under any other Written Law

The Section is introduced to provide that the institution of any proceedings under any other written law against the Government or the Director General shall not relieve any person from liability for payment of tax, debt or other sum due and payable by the taxpayer. Effective 01.01.2021.

22

Certificate to Prevent Taxpayers from Leaving the Country

To improve the efficiency for the Commissioner of Police or Director of Immigration, certificate may be issued to the aforesaid authorities through an electronic medium or by way of electronic transmission. Effective 01.01.2021.

57A

Authorization to Submit on behalf of Taxpayer

The Section is introduced to empower tax agent, and advocate and solicitors of High Court to furnish a return via electronic medium on behalf of a taxpayer. Effective 01.01.2021.

Schedule 5

Disposal of Chargeable Asset by an Association registered under Societies Act 1966

The Section is introduced to clarify that association registered under Societies Act 1966 will subject to RPGT equivalent to the rate imposed on Companies incorporated in Malaysian or a Trustee of a Trust.

P.U. (A) 2/2021

Income Tax (Deduction for Expenditure for Expenditure on Issuance or Offering of Sustainable and Responsible Investment Sukuk) (Amendment) Rules 2021

The special deduction for expenditure incurred on issuance or offering of sustainable and responsible Sukuk investment introduced in YA 2016 shall be extended from YA 2020 to YA 2023.

P.U. (A) 5/2021

Income Tax (Deduction for Expenditure on Issuance of Sukuk and Retail Sukuk Structured Pursuant to the Principle of Wakalah) (Amendment) Rules 2021

For the purpose of ascertaining the adjusted income of a company from its business in the basis period for a YA, there shall be allowed a special deduction equivalent to an amount of expenditure or additional expenses incurred by the company on the issuance of:-

a.A Sukuk structured pursuant to the principle of Wakalah comprising a mixed component of asset and debt

Total amount of deduction allowed shall be equivalent to the amount of expenditure allowed under these rules.

b.A Retail Sukuk structured pursuant to the principle of Wakalah comprising a mixed component of asset and debt, approved or authrorised by the Securities Commission Malaysia under the Capital Markets and Services Act 2007.

Total amount of deduction allowed shall be equivalent to the amount of expenditure and twice the amount of additional expenses allowed under these rules.

P.U. (A) 6/2021

Income Tax (Exemption) (No. 7) 2011 (Amendment) Order 2021

Tax exemption is given to individual who is a non-Malaysian citizen from the payment of income tax in respect of fees received by that individual in his capacity as a director of a Labuan entity. The tax exemption has been extended from YA 2011 to YA 2025.

P.U. (A) 418/2020

Sales Tax (Amendment) (No. 2) Regulations 2020

Effective 1 January 2021, Sales Tax drawback has been extended to include taxable goods which are imported into a free zone for the purpose of re-export and the re-exportation was made at the same free zone of importation. Such taxable goods include:

a)Cigarettes;

b)Tobacco products;

c)Smoking pipes (including pipe bowls);

d)Electronic cigarettes and similar personal electric vaporising devices; or

e)Preparation of a kind used for smoking through electronic cigarette and electric vaporising device, in forms of liquid or gel, not containing nicotine.

P.U. (A) 420/2020

Sales Tax (Imposition of Sales Tax in Respect of Designated Area) (Amendment) Order 2020

Effective 1 January 2021, the following goods imported into Designated Areas will subject to sales tax:-

a)Cigarettes;

b)Smoking pipes (including pipe bowls);

c)Electronic cigarettes and similar personal electric vaporising devices; or

d)Preparation of a kind used for smoking through electronic cigarette and electric vaporising device, in forms of liquid or gel, not containing nicotine.

P.U. (A) 419/2020

Service Tax (Digital Services) (Amendment) (No. 2) Regulations 2020

The Service Tax Regulation has been amended to take into consideration of the:-

1.Transitional Rules due to change of Service Tax rate and adjustment in the course of business;

2.Where there is a reduction or addition to the service tax amount, foreign registered person shall make deduction or addition of service tax in the return for the taxable period with credit note or debit note;

3.Specification of credit note and debit note; and

4.Any person who is eligible to claim for refund under Paragraph 38(1)(a), subsection 34(6) or 40(3) of the Service Tax Act 2018, shall apply to the Director General in the form and manner as he may determine.

Effective 01.01.2021.

P.U. (A) 422/2020

Service Tax (Amendment) (No. 2) Regulations 2020

The Service Tax Regulation has been amended to take into consideration in the case of a registered person who has ceased to be a registered person. Such person shall make a deduction or addition of Service Tax in the return for the last taxable period during which he was registered.

Effective 01.01.2021.

Basis Period

Statutory Deadline

E-Filing Extension

Annual Tax Filing

Individual (Tax Resident) : Form BE
Individual (Non Tax Resident) : Form M

01.01.2020 – 31.12.2020

30.04.2021

15.05.2021

Annual Tax Filing

Individual (Tax Resident with Business Income) : Form B
Individual (Non Tax Resident with Business Income) : Form M

Partnership : Form P

01.01.2020 – 31.12.2020

30.06.2021

15.07.2021

Year End

Statutory Deadline

E-Filing Extension

Annual Tax Filing

Company : Form C
Limited Liability Partnership : Form PT

30.04.2020

30.11.2020

31.12.2020

31.05.2020

31.12.2020

31.01.2021

30.06.2020

31.01.2021

28.02.2021

31.07.2020

28.02.2021

31.03.2021

31.08.2020

31.03.2021

30.04.2021

30.09.2020

30.04.2021

31.05.2021

31.10.2020

31.05.2021

30.06.2021

30.11.2020

30.06.2021

31.07.2021

31.12.2020

31.07.2021

31.08.2021

Period

Statutory Deadline

E-Filing Extension

Employee Statement of Remuneration : Form EA

01.01.2020 – 31.12.2020

28.02.2021

–

CP58 to Agent, Dealer or Distributor

01.01.2020 – 31.12.2020

31.03.2021

–

Employer Tax Filing : Form E

01.01.2020 – 31.12.2020

31.03.2021

30.04.2021