APRIL 29 — While many SMEs started to receive the Wage Subsidy Scheme, which is a timely assistance to many of them, many are asking about the details subsequent to this payment.
One common question that I receive is whether this subsidy is taxable. Current accounting standards state that the subsidy shall be treated as “other income”, which means, under normal circumstances, this subsidy is taxable.
If the subsidy is deemed taxable, the employers are subjected to tax. The company has to pay 17 per cent tax for taxable income of less than RM500,000. As a result, the employers are not receiving the full RM1,200 wage subsidy per employee in real value, and the government is not getting the full intended impact from its economic stimulus/recovery program. In reality, the RM13.8 billion announced for the wage subsidy is translated to less than RM11.5 billion.
It is absurd that the government is still levying such taxes to the SMEs in time of crisis. It is also illogical to provide wage support on one hand, and then only to be returned a portion on the other hand. By remaining silent on this, Lembaga Hasil Dalam Negeri (LHDN) will only create more confusion and uncertainties to the SMEs.
While many questions such as this are best raised in Parliament for debate by members of Parliament. However, due to the ‘muted’ arrangement that has been arranged so far, I believe it is best for the Finance Minister to clarify this matter on air as soon as possible.
*YB Lee Chean Chung is Treasurer General of Parti Keadilan Rakyat.
**This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
