APRIL 8 — As of today, the movement control order (MCO) is still in place and will only be reviewed on April 10, 2020 as to whether a further extension is necessary to break the chain of infection. Given the number of cases it is very likely that a further two weeks extension will be ordered. Many of course are waiting with bated breath for the news, including a large section of the small and medium enterprises.
Trades around the world are in a major standstill. Containment of Covid-19 outbreak is one issue; the deteriorating of economy is another. It is therefore imperative for every government to provide some form of financial assistance to weather through the Covid-19 storm.
Prime Minister Tan Sri Muhyiddin Yasin has unveiled two stimulus packages so far. The intention behind them is of course to somewhat ease Malaysian from the burden of Covid-19 outbreak. The first ESP package is stated to be valued at RM 250 billion. The Additional ESP touted as Prihatin SME of RM10 billion is stated as additional reliefs provided under the first ESP with the intention to assure two thirds of the workforce will remain employed. In summary the additions are as follows:-
What is it?
It is a subsidy introduced by the government to allow SMEs to retain its local staff force by subsidizing the staff’s wages for a period three months.
How does it work?
Application can only be submitted by the Employer via online PERKESO with the link below starting 9th of April 2020 with a dateline of 15th of September 2020:
What are the criteria?
The employer and employee must be registered or contributed under Perkeso;
Employer must be registered under Companies Commission of Malaysia (SSM);
The subsidy is only applicable for employees with RM 4,000 monthly salary and below;
The employer must ensure that these staff are not dismissed, forced to take unpaid leave or a pay cut during the three-month period whereby the subsidy is provided. Furthermore, employers are not allowed to dismiss these employees following three months after the end of the wage subsidy period.
Who is not eligible?
Employers who registered or commenced business on or after January 1, 2020;
Employers and employees which has yet to be registered or contributed under SOCSO;
The employees which has received financial assistance from Employee Retention Programme (ERP) in the same month;
Employees who have a monthly salary of RM 4,001 and above;
Employees who have been dismissed from work; and
Workers from public sectors, federal and state statutory bodies, all statutory bodies which are exempted from remuneration, local authorities, self-employed individuals (do not have an employer) including freelancers, foreign workers and expatriates.
How much is the subsidy?
Documents required for application of Wage Subsidy:-
List of staffs name [letter can be obtained by the same Perkeso linked above];
Banking details of the employer (front page to bank statement);
Copy of the Business Registration Number (BRN) which was registered by the employer during the opening of the bank account (please refer to the bank);
Copy of SSM/ ROS/ ROB/ Professional, Scientific or Technical Services authorities registration or business license;
Declaration of PSU50 [letter can be obtained by the same Perkeso linked above]; and
** Proof of documents (e.g. financial statements or sales report which has been verified by management or similar declaration document).
** Notes: To include proof of documents for companies with 76 staff and above.
Successful application will result in subsidy being credited into employer account within 7-14 days upon approval.
Special Grant of RM3,000
What is it?
This is a special Prihatin Grant amounting to RM 3,000 which will be given to eligible micro SMEs which is registered with LHDN. The government will be receiving a list of eligible micro enterprises from the local authorities and SSM.
Registered Money Lenders urged to Provide Moratoriums to SMEs on Loan Repayment
What is it?
The Prime Minister has urged the money lenders registered under the Money Lenders Act 1951 to provide moratoriums on the monthly loan repayment for a period of six months starting April 2020 as per what Malaysian banks are offering.
* Abolishment of 2 per cent interest rate to 0 per cent for RM 500 million loans for Micro Credit Scheme granted by Bank Simpanan Nasional (BSN). The soft loan scheme for micro enterprises are also extended to Tekun Nasional with an increase limit to a maximum of RM 10,000 at 0 per cent interest for each enterprise.
* Exemption on rental payment or discounts on rental expense to SMEs for renting the premises owned by Government-Linked Companies (GLCs) such as MARA, Petronas, PNB, PLUS, UDA and others. [For a duration not mentioned]
* The Prime Minister has also urged private premise owners to follow suit which is by reducing the monthly rental imposed to their SME tenants during the MCO period and three months after. These owners that provide rental reduction or waiver to SMEs tenants will be given further tax deduction which is equivalent to the amount of rental deduction for the months of April to June 2020. Further tax deduction will be given to the owner provided that the reduction of rental is at least 30 per cent from the usual rent rate.
Other Initiatives (Cont’d)
* 25 per cent reduction of foreign workers levy fee for all companies whereby these foreign workers permit will expire within the period of April 1 to December 31, 2020. However, this is not applicable to domestic help sector.
* Automatic moratorium of 30 days from the date the MCO is lifted for companies to lodge the required statutory documents to CCM /SSM.
* For companies with year ended September 30 to December 31, 2019, there is an option to submit application to CCM/ SSM to extend 3 months from the date the MCO is lifted for the lodgement of financial statements. No fees will be imposed for the extension application.
Tax — Adjusted Timelines
With MCO Phase 2 in operation, all government linked organization is coming up with extension to address the pressing datelines with no exception to matters relating to income tax requirement. The frequently asked questions on tax matters during the MCO period has also been updated on April 3, 2020.
Firstly, the dateline to submit the initial tax estimate and revision of tax estimate which due from March 18, 2020 to April 14, 2020 has been extended to April 30, 2020. Similarly, installment payment for the tax estimate which is due on or before April 15, 2020 is also given extension to April 30, 2020. Furthermore, the unprecedented 3rd month revision of tax estimate for companies with year ended December 31, 2020 has also been extended April 30, 2020 which allows Companies to have more time to evaluate and forecast its net profit.
Companies with small medium enterprises [SME] status are also eligible to defer its CP204 tax installment payments for three months starting April 2020 till June 2020. The basis to determine the Companies’ SME status is:
* Paid-up share capital of less than or equals to RM2.5 million ordinary shares at the beginning of basis period for a year of assessment; and
* Have a gross business income of RM50 million and below;
* Other conditions such as its related companies which do not fulfil any of SME requirements will automatically disqualify the Company with the SME status.
Tourism sector which has been severely affected and hence a longer deferment of CP204 tax installment payment is granted of up to six months starting from April 2020 till September 2020. The deferment of tax installments do not require application as it is automatically granted to all companies under tourism industries based on IRB’s record.
Any balance of tax shortfall (if any) has to be settled upon the submission of the income tax return since taxpayers are not required to pay the deferred CP204 tax installments.
For individuals with business income which is required to comply with the CP 500 tax installments may defer his/ her tax installments starting April 2020 till June 2020. This means the first and second installment which is due March 30, 2020 and May 30, 2020 respectively can be deferred. Moreover, the deferment is automatically granted and they do not need pay these deferred CP 500 tax installments until the income tax return has been submitted and thereon, any tax shortfall has to be paid at that point of time.
Another important question is on the late payment penalty. There will not be any late payment penalty if the tax payment is made on or before April 30, 2020 on all types of income tax payment which is due during the period from March 18, 2020 to April 14, 2020.
Withholding tax payment which falls between March 18, 2020 and April 14, 2020 can be made from April 15 until April 30, 2020 via telegraphic transfer (TT) by furnishing complete payment details to IRB via fax at 03-6201 9637 or email to [email protected]
Lastly, submission and payment of monthly tax deduction [CP38 – MTD /PCB) data due April 15, 2020 for March 2020 remuneration is also given extension of time till April 30, 2020. Although extension of tax payment is granted, however, the refund of tax credit is still being process at the usual speed which is the cherry on top.
It remained to be seen whether the additional stimulus package will have the cushining impact on the economy. The focus appears to be centered on a trilogy of factors, employer-employee, tax and rents. Will this be sufficient? In our view this will depend on the numbers of days of no productivity. If the days continue perhaps another stimulus with different target factors will be needed.
*Datuk Harjit Singh Sidhu is the principal director of HSS Advisory Sdn Bhd, a premier consulting outfit with specialisation in taxation, accounting and corporate advisory. Datuk Dr Abd Shukor Ahmad is a senior partner of Shukor Baljit & Partners, a leading law firm in Kuala Lumpur.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.