MARCH 26 — The efforts taken collectively which resulted in 95 per cent of Malaysians staying in are highly commendable. Well done my fellow Rakyat. Malaysians do adhere, of course with constant reminder by honourable Prime Minister Tan Sri Muhyiddin Yasin to “Stay at Home” during this Movement Control Order (MCO) period.
On March 25, 2020 at 1pm, the government had announced that there will be another 14 days of extension as there are still new confirmed cases reported. On the other hand, death toll is standing at 20 reported by Kementerian Kesihatan Malaysia (KKM) via Twitter update at 10.30pm on the same day.
This move is extremely vital and necessary because should the MCO be lifted after 31st of March 2020, more infected cases will be reported as business operates as usual, and previous efforts will all go down the drain.
However, if 95 per cent Malaysians were to stay at home, what will happen to the economy? A dent is no longer accurate to describe the current Covid-19 climate. During this trying moment, our country is going through challenging times coupled with slowing down of the economy around the globe. Nevertheless, efforts are taken by the government to flatten the curve and maintaining a fair balance of Malaysia’s economy with the newly announced stimulus incentives.
As a tax man, I know that many employers are worried of not meeting their sales targets and the inevitable slowdown in Company’s collection. In view of the above, the main concern for most employers is to ensure that they are able to pay their employees the basic salaries within the stipulated contractual agreement. Of course, a slowdown in collection will pose a challenge in meeting such obligation.
The government could consider some of these measures to assist employers until the business picks up.
1. To allow Small Medium Enterprises (SME) to defer their corporate tax payments to Inland Revenue Board (IRB) for six months;
2. To allow all employees’ monthly tax deduction (PCB) to be deferred for six months;
3. To allow individuals with business income to defer their respective bi-monthly tax instalments (CP500) payments for six months; and
4. Employers to be given the option to not contribute EPF for the next six months and with the employee’s contribution portion should be given back to the employees as extra disposable income for them to use for the next six months.
All forms of tax savings by the SME, individual tax and EPF contribution can be channelled back to the economy when both the companies and employees spend their additional funds which will indirectly assist the economy as all those involved in the supply chain will benefit from the additional funds spent – the ripple effect.
Although the above 1, 2 and 3 measures will definitely reduce IRB’s collection, the government should not look at tax collection as a primary source of income in this current junction but rather give it back to the Rakyat during this trying time. Therefore, I propose, deferment of tax should be for all income tax payments due from April 2020 to September 2020.
Today it is all about survival. The Rakyat needs three basic things to ensure that they are able to take care of their loved ones and it is well narrated in a blockbuster Bollywood movie in the 70s called Roti Kapada Aur Makaan which translates to Roti (Food), Kapada (Clothing) and Makaan (Shelter) which can only be obtained through employment.
The measures proposed by me may be hard for the government to implement but like I said, it is about survival and not entirely about the economy. We will cross the economy part when the storm is over but for now it is all about our day to day life.
*Datuk Harjit Singh Sidhu is CEO of HSS Advisory Sdn Bhd.
**This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.