(April 3): The Movement Control Order (MCO) has affected all of us, something which we all accept as necessary to curb the spread of Covid-19. The restricted movement during this period undoubtedly causes an impact on the economy.
It is notable that 98.5% of business establishments in Malaysia are small and medium enterprises (SMEs), where they are regarded as the backbone of the economy, according to SME Info.
SMEs contributed 38.3% to the national GDP in 2018 and 66.2% of the total employment in Malaysia, according to the Department of Statistics and SME Corp. The restriction of movements in many countries has placed the economy in a state of distress due to the suspension of business and industrial operations.
In addition to giving leadership during this challenging time, our Prime Minister has recently unveiled the PRIHATIN Rakyat Economic Stimulus Package (PRIHATIN) generously worth RM250 billion. By large, the PRIHATIN has been lauded for its rakyat-centric nature, befitting its acronym. The government’s aim is a noble one — to ease the financial burden of the rakyat and cushion the impact on the economy. On the economic front, the government has committed RM100 billion to help various types of business, including the SMEs.
As the SMEs are seeking more assistance from the government, one of the approaches that the government can consider is some special tax relief. This is not something unprecedented as companies with paid-up capital of RM2.5 million or less pay lower corporate tax rate, something which many SMEs benefit from. There is no doubt that the SMEs welcome the extension of time for tax filings and tax payments due during the MCO period. The additional tax relief measures that the government can consider are:
Some of these tax proposals have been implemented elsewhere, which serve as an indication of their appeal. More importantly, these proposals may help SMEs to weather the present challenges and express the government’s empathy on the challenges faced by the SMEs.
S. Saravana Kumar, Covid-19 Patient No. 53, is a well-known tax lawyer and a Partner of law firm Rosli Dahlan Saravana Partnership (RDS). He heads the Tax, SST & Customs practice of RDS.
Yap Wen Hui is a legal and tax trainee with RDS. A barrister by training, she read law at the University of Warwick.
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