Latest Update on the IRB's Response to COVID-19 and Movement Control Order and Additional Measures for Prihatin Rakyat SME Economic Stimulus Package

To Our Valued Clients

As you are aware, the Inland Revenue Board ["IRB"] has on 18th March 2020, issued the Frequently Asked Questions ["FAQ"] on Tax Matters during the Movement Control Order ["MCO"] Period (18th March 2020 to 31st March 2020) in response to COVID-19 and MCO announced by our Prime Minister, YAB Tan Sri Dato' Haji Muhyiddin Bin Haji Mohd Yassin recently. Following the extension of the MCO period to 14th April 2020 and the announcement of the "Prihatin Rakyat Economic Stimulus Package" by the Government of Malaysia, the IRB has on 3rd April 2020, issued the updated FAQ on Tax Matters during the MCO Period (18th March 2020 to 14th April 2020) to address the consequential changes affecting taxpayers during the MCO period from 18th March 2020 to 14th April 2020.

Some of the pertinent updates included therein are as summarised below:-

1. Submission of notification of change in accounting period ["Form CP204B"] due during the period from 18th March 2020 to 14th April 2020 is extended until 30th April 2020.
2. Submission of the tax estimate which is due during the period from 18th March 2020 to 14th April 2020 is extended until 30th April 2020.
3. The IRB has specified that payment for the tax estimate instalment under Section 107C of the Income Tax Act 1967 ["ITA 1967"] (i.e. Form CP204 or Form CP204A, as the case may be) due on or before 15th April 2020 (i.e. April 2020 instalment) for companies is extended until 30th April 2020.
4. Companies related to the tourism industry (i.e. travel agencies, hoteliers and airlines) are earlier granted a deferment of their tax estimate instalment for 6 months from April 2020 until September 2020. The IRB has clarified that taxpayers are not required to submit manual application for such deferment of payment. It will be given automatically based on the IRB's records i.e. no application is required.

The above is also applicable to those companies related to the tourism industry with SME status [as explained in (5) below].
5. Businesses with Small and Medium Enterprises ["SME"] status are eligible for the deferment for payment of tax estimate instalment for a period of 3 months commencing from April 2020 until June 2020. The said deferment of payment is given automatically based on the IRB's records i.e. no application is required.

Based on item D.6 of the updated FAQ, businesses that qualify for SME are as follows:-
 
(i) have paid-up capital of RM2.5 million or less at the beginning of the basis period of a year of assessment; and
(ii) have a gross business income not exceeding RM50 million.
6. The deferred tax estimate instalment under Form CP204 need not be settled during the tax instalment period. The balance of tax payable, if any, shall be settled upon submission of the income tax return for the relevant year of assessment by the company. No penalty on late payment of tax estimate instalment under Section 107C(9) of the ITA 1967 will be imposed.
7. For individuals (with income other than employment income), payment for the first and second instalments (i.e. March 2020 and May 2020 instalments) under the instalment scheme ["Form CP500"] will be deferred. Deferment of these payments is given automatically to eligible taxpayers based on the IRB's records. Similarly, the deferred instalment payments need not be settled during the tax instalment period. Any balance of tax payable shall be settled upon submission of the income tax return for the YA 2020 by the individual. No penalty on late payment of instalment under Section 107B(3) of the ITA 1967 will be imposed.
8. Payment of withholding tax due that falls during the period from 18th March 2020 to 14th April 2020 can be deferred until 30th April 2020 without penalty.
9. Submission of Monthly Tax Deductions ["MTD"] data and remittance of MTD / payments under Notification to Employee of Tax Deductions by Employer ["Form CP38"] for March 2020 remuneration is extended until 30th April 2020.
10. Submission of real property gains tax ["RPGT"] return and payment of RPGT payable that falls during the period from 18th March 2020 to 29th April 2020 is extended until 30th April 2020.

A summary of the extended deadlines for submission of return forms and payment of tax during the MCO period is provided in the Appendix.

In addition, in response to the request for additional assistance from the Government for SME, our Prime Minister has on 6th April 2020, announced the "Additional Prihatin Rakyat SME Economic Stimulus Package" to provide additional measures to assist SME to get through this tough time.

Some of the additional measures are as summarised below:-

1. Wage Subsidy Programme

The Wage Subsidy Programme previously announced has been enhanced to provide wage subsidy for companies having local employees with monthly income of RM4,000 and below for a period of 3 months. The enhanced programme works in the following manner:-
 
Category of Employer Monthly Wage Subsidy Per Employee (RM)
Employers having >200 employees* 600
Employers having 76 to 200 employees 800
Employers having 1 to 75 employees 1,200

* For employers having more than 200 employees, the number of employee eligible for the wage subsidy is limited to 200.

Employers eligible for the above programme must be registered with Companies Commission of Malaysia or local authorities before 1st January 2020 and are registered for SOCSO. In addition, the employers are required to retain their employees for at least 6 months commencing from the first month the wage subsidy is received.
2. Special Deduction for Reduction or Waiver of Rental

Landlords giving reduction or waiver of rental to their tenants who are SME are given a special tax deduction equivalent to the amount of reduction in rental for the period from April 2020 to June 2020. The reduction of rental shall be at least 30% of the original rate of rental.
3. Reduction of Levy for Foreign Workers

All companies are eligible for a reduction of 25% on levy for foreign workers whose work permits expire during the period from 1st April 2020 to 31st December 2020. This reduction of levy does not apply to domestic help sector.
4. Special Prihatin Grant for Micro Enterprises

A grant of RM3,000 will be provided to each micro SME which are registered with the IRB.

For further information, kindly refer to the following:-

i. FAQ on Tax Matters during the MCO Period (18th March 2020 to 14th April 2020) Updated on 3rd April 2020;
ii. Speech for the Additional Prihatin Rakyat SME Economic Stimulus Package;
iii. Our email of 21st March 2020 on IRB/RMCD's Response to COVID-19 and MCO; and
iv. Our email of 30th March 2020 on Prihatin Rakyat Economic Stimulus Package.

Please do not hesitate to contact us if you need any clarification on the foregoing.