The PENJANA (Pelan Jana Semula Ekonomi Negara) or the National Economic Recovery Plan has been announced by YAB Tan Sri Muhyiddin Yassin on 5 June 2020.  The PENJANA focuses on 3 key thrusts

“Empower People”

“Propel Businesses”

“Stimulate The Economy”

 

PENJANA PROPOSALS include the following proposals relating Income Tax and Real Property Gains Tax:

INCOME TAX
Flexible work arrangement (FWA) incentives

Proposed:

i.      Further tax deduction for employers which implement FWAs or undertake enhancement of their existing FWAs

(Effective from 01.07.2020)

ii.     Income tax exemption of up to RM5,000 for employees who receive benefits in the form of mobile phone, laptop or tablet

(Effective from 01.07.2020) 

 

iii.     Special individual income tax relief up to RM2,500 on purchase of mobile phone, notebook and tablet

(Effective from 01.06.2020)

Fee paid to childcare centres and kindergartens

Current:

Relief of RM2,000 is given for individual taxpayers who enroll their children up to 6 years of age, in childcare centres or kindergartens registered with the Department of Social Welfare or the Ministry of Education

 

Proposed:

Tax relief for fee paid to childcare be increased from RM2,000 to RM3,000

(Effective from Y/As 2020 & 2021)

Tax relief for COVID-19 related expenses

Current:

Tax deduction be given on provision of Personal Protective Equipment (PPE) to employees.  Whereas, expenses for non-disposable PPE products can be claimed as capital allowance.

 

Proposed:

i.      Extension of scope of allowable expenses to include Covid-19 screening test;

ii.     Claimable of capital allowance for Personal Protective Equipment (PPE) and thermal scanners.

Special deduction on cost of renovation & refurbishment of business premises

Current:

Cost of renovating and refurbishing business premises of up to RM300,000 will be given tax deduction limited to qualifying expenditures incurred from 01.03.2020 to 31.12.2020.

 

Proposed:

The above special tax deduction be extended to 31.12.2021.

Accelerated capital allowance (ACA) for machinery and equipment including information and communication technology (ICT) equipment

Current:

ACA (20% initial allowance and 40% annual allowance) will be given on qualifying capital expenditure for the purchase of machinery and equipment (including ICT equipment) incurred from 01.03.2020 to 31.12.2020

 

Proposed:

The above ACA be extended to 31.12.2021.

Special deduction on rental discount given to tenants which are SMEs

Current:

Minimum rental reduction of 30% of original monthly rental charged to the SME tenant will be given a special deduction for the month of April 2020 to June 2020.

Proposed:

The above special deduction be extended to 30.09.2020.

Tax rebate for establishment of new businesses (SME)

Proposed:

Income tax rebate up to RM20,000 per year for 3 years of assessment be given to newly established SME between 01.07.2020 to 31.12.2021.

Tax incentive available for Company relocating into Malaysia

Proposed:

New investment in manufacturing sectors with capital investment:
§  between RM300 million – RM500 million 0% tax rate for 10 years
§  above RM500 million 0% tax rate for 15 years
 

Conditions

i.      Foreign company that relocates its business into Malaysia and commences business operation within 1 year from the date of approval

ii.     Investment must be done within 3 years

iii.    Application must be made from 01.07.2020 to 31.12. 2021.

Existing company in Malaysia relocating overseas’ facilities into Malaysia with capital investment above RM300 million

100% Investment tax allowance for 5 years.

Application must be made from 01.07.2020 to 31.12.2021.                                                               

Existing company carrying out manufacturing or selected agriculture activities Special reinvestment allowance will be given from Y/A 2020 to Y/A 2021.
Tax exemption for tourism sector Tourism sector be given tax exemption from 01.07.2020 to 30.06.2021.
Deferment of monthly tax instalments for tourism sector

Current:

Businesses in the tourism industry such as travel agencies, hoteliers and airlines are given a deferment of their monthly tax instalments for six (6) months from 01.04.2020 to 30.09.2020.

Proposed:

The deferment of monthly tax instalments will be deferred until 31.12.2020

Special income tax relief on domestic travel

Current:

Special income tax relief of up to RM1,000 will be provided to individuals for expenses on domestic tourism made from 01.03.2020 to 31.08.2020, but limited to:

i)              Accommodation expenses at premises registered with Ministry of Tourism, Arts and Culture Malaysia (MOTAC); and

ii)             Entrance fees to tourist attractions.

Proposed:

The above special income tax relief will be extended to 31.12.2021.

 

REAL PROPERTY GAINS TAX
RPGT exemption for disposal of residential homes

Proposed:

RPGT exemption be given to individuals who are Malaysian citizens and dispose their residential homes from 01.06.2020 to 31.12.2021.  This exemption is limited to the disposal of 3 units of residential homes per individual.