The ESP has been announced by Tun Dr Mahathir Mohamad on 27 February 2020. The ESP focuses on 3 main strategies:
Strategy I : MITIGATING IMPACT OF COVID-19
Strategy II : SPURRING RAKYAT CENTRIC ECONOMIC GROWTH
Strategy III : PROMOTING QUALITY INVESTMENTS
ESP PROPOSALS include the followings:
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INCOME TAX |
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| PERSONAL INCOME TAX | |
| Special income tax relief on domestic travel | To promote domestic tourism, a special income tax relief of up to RM1,000 will be provided to individuals for expenses on domestic tourism made from 1 March 2020 to 31 August 2020, but limited to:
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| CORPORATE INCOME TAX | |
| Deferment of monthly tax instalments | Businesses in the tourism industry such as travel agencies, hoteliers and airlines will be given a deferment of their monthly tax instalments for six (6) months from 1 April 2020 to 30 September 2020.
The application for deferment is to be submitted to the Inland Revenue Board (IRB) |
| Revision of income tax estimation | Businesses be allowed to revise their estimate of tax payable in the 3rd month of instalments (in addition to the 6th and 9th month revision as allowed under the law), should the 3rd instalment falls in the year of 2020.
The application for revision is to be submitted to the IRB from 1 March 2020. |
| Tax deduction on equipment provided to employees | Expenses incurred by companies to provide employees with disposable Personal Protective Equipment(PPE) such as face masks are eligible for tax deduction under sub section 33(1) of ITA 1967. Whereas, expenses for non-disposable PPE products can be claimed as capital allowance. |
| Further deduction to hotel operators for training expenses | Companies are encouraged to send employees for training in courses relating to tourism industry, hotel operators or tour operating business approved by the Ministry of Tourism, Arts and Culture (MOTAC) and to claim existing double tax deduction. |
| Accelerated capital allowance (ACA) for machinery and equipment including information and communication technology (ICT) equipment | ACA (20% initial allowance and 40% annual allowance) be given on qualifying capital expenditure for the purchase of machinery and equipment (including ICT equipment) incurred from 1 March 2020 to 31 December 2020 |
| Special deduction on costs of renovation & refurbishment | As a measure to promote businesses to undertake renovation and refurbishment in readiness of the subsequent upturn, cost of renovating and refurbishing business premises of up to RM300,000 will be given tax deduction limited to qualifying expenditures incurred from 1 March 2020 to 31 December 2020 |
| Double deduction for establishment of regional office by International Shipping Companies | International Shipping Companies that established and operate business in Malaysia be given double deduction on pre-commencement expenditure for setting up regional offices in Malaysia.
The application must be received by MIDA not later than 31 December 2021 |
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INDIRECT TAX |
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| Service tax exemption for hotels
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Service tax on accommodation services provided by Hotels, defined as operators of accommodation premises as prescribed under Group A, First Schedule of the Service Tax Regulations 2018 are exempted from levying service tax on taxable services provided from 1 March 2020 to 31 August 2020. |
| Review on condition for purchase of duty free goods for persons entering Malaysia | With effect from 1 April 2020, the conditions for purchase of duty-free goods at international airport will be relaxed as follows:
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| Import duty and sales tax exemption on equipment and machinery for port operators | Port operators will be given import duty and sales tax exemption on imported or locally purchased of equipment and machinery used directly in port operation from 1 April 2020 to 31 March 2023. |
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HUMAN RESOURCE DEVELOPMENT FUND (HRDF) |
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| Exemption from HRDF levy
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An exemption from HRDF levies from 1 April 2020 to 30 September 2020 (6 months) will be given to the following categories of businesses:
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EMPLOYEE PROVIDENT FUNDS (EPF) |
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| EPF – Employee contribution | Effective from 1 April 2020 to 31 December 2020 (9 months), the minimum employee contribution to EPF will be reduced from 11% to 7%. However, employee can elect to maintain the current contribution of 11%. |
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ELECTRICITY |
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| Electricity discount of 15% | Effective from 1 April 2020 to 30 September 2020 (6 months), a special discount of 15% on monthly electricity bills will be given to 6 categories of businesses:
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BANTUAN SARA HIDUP (BSH) |
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| BSH enhancement | In the spirit of shared prosperity, the government will enhance BSH as follow:
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