Shortly after the announcement of the PRIHATIN stimulus package worth RM250 billion, the Government announced today that additional measures will be taken to help Malaysian Small and Medium Enterprises (‘SMEs') cope with the economic effects of the COVID-19 pandemic and Movement Control Order (‘MCO'). The additional measures are as follows: -

(i)        Enhanced Wage Subsidy Programme - RM7.9 billion

(ii)       Special PRIHATIN Grant for Micro SMEs - RM2.1 billion

(iii)      Removal of 2% interest rate under Micro Credit Scheme

(iv)     Lowered Foreign Worker Levy

(v)      Premises owned by Government Linked Corporations (‘GLCs') will waive rental for Retail SMEs

(vi)     Additional tax deduction for private sector landlords who reduce rental on business premises and buildings

(vii)    Moratorium on the submission of statutory documents

(viii)   Extension of Time (‘EOT') for the submission of financial statements

Together these measures are designed to lower the running costs of SMEs while also helping them to maintain their current workforce.

Enhanced Wage Subsidy Programme

The Enhanced Wage Subsidy Programme is an augmentation to the previously announced wage subsidy programme.

Employers may claim assistance under the Enhanced Wage Subsidy Programme subject to the following conditions:

It is unclear if the employer still needs to show a loss of income of at least 50% since January 2020.

Special PRIHATIN Grant for Micro SMEs

This is a special grant of RM3,000 for eligible Micro SMEs who have registered with the Inland Revenue Board (‘IRB').

SME Corporation Malaysia guidelines define Micro SMEs as enterprises (whether in manufacturing, services or other sectors) with an annual sales turnover of less than RM300,000 or less than 5 full-time employees. Though it is unclear if this definition will be used by the Government.

Removal of 2% Interest Rate under Micro Credit Scheme

The Bank Simpanan Nasional soft loans under the previously announced Micro Credit Scheme will now be offered with 0% interest (down from 2%) and without the need for collateral.

Micro Credit Scheme will also be extended to TEKUN Nasional (maximum RM10,000 loan per company, with 0% interest).

Lowered Foreign Worker Levy

Foreign worker levies have also been lowered by 25% for foreign workers with work permits expiring this year. This does not include foreign domestic helpers.

GLC Rental Waiver

SMEs renting GLC-owned business premises or offices will enjoy a waiver of rental or a discounted rental rate.

Tax Incentives for Private Sector Landlords

Private sector landlords who lower rental rates by at least 30% for SME tenants will be able to claim additional tax deductions. The amount of tax deduction will be equal to the reduction of rental from April 2020 to June 2020.

As with other tax deductions implemented in the past, it is likely that this deduction will be implemented via Gazette order. Though it must be noted that unlike the majority of previously gazetted double deductions, a reduction of rental is not a revenue expense but a reduction of income.

Moratorium on the submission of statutory documents

Suruhanjaya Syarikat Malaysia (‘SSM') will automatically extend the deadline for the submission of statutory documents by 30 days from the end of the MCO.

Extension of Time (‘EOT') for the Submission of Financial Statements

Upon application, SSM will allow companies a 3-month EOT for the submission of financial statements. The EOT applies to companies with financial years ending 30 September 2019 to 31 December 2019. Late submission fees will not be imposed.

Prepared by: Abu Daud Abd Rahim, Khairul Anwar Mohamed & Demetria Rinesha Samuel