The government announced an RM332.1 billion expansionary Budget for 2022, the highest allocation compared with previous budgets. The national Budget comprises RM233.5 billion in operating expenditure, RM75.6 billion in development expenditure and RM23 billion for the Covid-19 fund.The government has introduced 3 initiatives to ease working capital requirements for SMEs, including Micro Credit Scheme, Business Financing and Alternative Financing, Bank Negara Malaysia Funds and Business Finance Guarantee Scheme. These schemes range from RM10,000 to RM 10 million in financing, and are suitable for micro enterprises to small medium enterprises (SMEs).
For Business 企业篇
1) SMEs allowed to postpone income tax instalments for six months until June 30, 2022.
2) JaminKerja initiatives to create 600,000 job opportunities with RM4.8 billion allocation.
3) Under the JaminKerja initiative, SME business owners who employ those who are not actively working can enjoy an incentive of 20% to 30% of the employee’s monthly salary.
5) Targeted wage subsidies for employers in tourism industry who have seen their income reduced by at least 30%.
6) Under the PERANTIS scheme, an allowance of up to RM900 per month for 6 months for graduates and school leavers from 18-30 years old on the executive level, for those with a diploma and above will be given.
7) Govt to introduce excise duty on chocolate or cocoa, malt, coffee, and tea-based premix drinks containing sugar.
8) Special tax exemption for building/commercial unit owners who give at least 30% rental discount.
9) A tax deduction on costs of renovation and renewal of premises up to RM300,000 until end of the year 2022, with an extension of special deduction for renovation of business facilities to comply with SOP requirements such as ventilation upgrades, customer seating and employee infrastructure.
10) Newly incorporated SMEs (incorporated between 1 July 2020 until 31 December 2022) are given an income tax rebate of RM20,000 for every year for the next 3 years.
11) Govt to extend 100% sales tax waiver on CKD passenger vehicles and 50% sales tax exemption on CBU passenger vehicles, including MPVs and SUVs, until June 30, 2022.
12) Govt to continue supporting equity crowdfunding and peer-to-peer financing with RM80 million allocation in matching grants under Malaysia Co-Investment Fund, in addition to Bank Pembangunan Malaysia Bhd’s RM100 million investment.
13) RM100 million for smart automation matching grants to benefit 200 manufacturing and services companies.
14) RM85 million for special assistance to over 20,000 registered tour operators.
15) RM250 million allocated for Shop Malaysia Online and Go-eCommerce Onboarding.
16) RM1.7 billion in subsidies, incentives for farming and fisheries industries, including RM1.5 billion in subsidies for seeds and fertiliser.
17) Govt, through the Securities Commission Malaysia, to make it compulsory for public-listed companies to have at least one female director on their boards.
18) Windfall profit levy threshold for crude palm oil prices to be increased from RM2,500 per tonne to RM3,000 per tonne for Peninsular Malaysia and from RM3,000 per tonne to RM3,500 per tonne for Sabah and Sarawak. The tax rate for Sabah and Sarawak will also be raised to 3%, in line with the rate in Peninsular Malaysia, when prices exceed the threshold.
19) SME Digitalisation Grant Scheme to be increased to RM200 million in 2022, with RM50 million for Bumiputera micro entrepreneurs in rural areas.
20) RM20 million to be allocated to each state for projects related to food security, tourism, and nature conservation.
21) Govt to introduce Cukai Makmur, a special tax on a one-off basis to companies generating high profits. The first RM100 million in taxable earnings will be taxed at 24% while the remainder will be taxed at 33% for the tax assessment year of 2022.
22) Sales tax to be imposed on low-value items sourced overseas that are sold by online sellers and sent to Malaysia via air courier.
23) Services tax to be imposed on delivery services provided by service providers including e-commerce platforms, except for food and beverage deliveries and logistics services.
24) Govt to introduce excise duty on liquid, gel-based vaping e-liquids.
25) 80,000 job placements in public sector, GLCs to be continued via MySTEP initiative. -50,000 for public sector -30,000 for government related companies *subject to job with salary of more than RM1200
26) Employers to get tax relief and exemptions on cost of boosters shots.
27) Income tax exemptions for organisers of artistic and cultural activities, as well as sports competitions and international-level recreational activities, to be extended until 2025.
28) Govt to provide full exemption on import, excise duties and sales tax for electric vehicles.
29) Bursa to launch Voluntary Carbon Market as voluntary platform for carbon credit trading between green asset owners and other entities.
30) Bank Negara to allocate RM1 billion towards assisting SMEs in adopting sustainable and low-carbon practices.
31) Govt to allocate RM6.6 billion for various initiatives under relevant ministries and agencies to strengthen and enhance technical and vocational education and training (TVET). RM200 million is also allocated for programmes such as the National Dual Training System and industrial certification programmes.
32) Matching grant of RM100 million for Bumiputera SMEs to explore aerospace industry.
For Individuals 个人篇
1) Government to introduce targeted aid called Bantuan Keluarga Malaysia (BKM) of RM2,000 for households with 3 or more children and a household income of below RM2,500.
2) Special RM2,500 tax relief for purchase of handphones, computers and tablets.
3) PTPTN borrowers to get 10-15% discounts, depending on chosen repayment option.
4) Tax deductions of RM2,000 to RM7,000 for upskilling courses.
5) RM150 Early Schooling Assistance for each student; total allocation of RM450 million to benefit 3 million students.
6) Daily milk program for poor students to be continued with RM400 million allocation.
7) eStart cashless transaction scheme to be introduced, which will see one-off RM150 deposited into e-wallets of those aged between 18 and 20.
8) Govt to fully bear cost of motor vehicle licences for the disabled (OKU).
9) Tax relief for cost of medical expenses/consultation involving registered psychiatrists, clinical psychologists, counsellors.
10) EPF to extend reduced minimum contribution rate of 9% until June 2022.
11) Real property gains tax removed for house sales from sixth year onwards.
12) 600,000 undergraduates from B40 families to get one tablet each, involving allocation of RM450 million.
13) 1.3 million civil servants Grade 56 and below to get RM700 special financial aid each; 1 million govt retirees to get RM350 each, altogether to involve RM1.3 billion allocation.
14) Govt to allocate RM2 billion under housing credit guarantee scheme to assist those without steady income, such as gig economy workers, to purchase homes.
15) Income tax exemption of up to RM3,000 for nursery and kindergarten fees.
16) Contracts of 10,000 medical, dental and pharmaceutical officers to be extended from two to four years.
Kuala Lumpur – 29 October 2021 – The recent budget announcement holds good potential for SMEs, according to Datin Yap Shin Siang, CEO of YYC Group, a local tax and accounting firm founded in 1974 which is one of the top 10 accountancy firms in Malaysia. As their competency is in serving the SME market, her analysis will focus on the Budget Announcements that most affect SMEs.
Datin Yap noted that the budget is a good way to “accelerate an economic reset and restart the economy”. Yap mentioned: “One of the most important things in a business is cash flow – it’s good that the government has introduced 3 initiatives to ease working capital requirements for SMEs, including Micro Credit Scheme, Business Financing and Alternative Financing, Bank Negara Malaysia Funds and Business Finance Guarantee Scheme. These schemes range from RM10,000 to RM 10 million in financing, and are suitable for micro enterprises to small medium enterprises (SMEs).
Notably, on the income tax front, SMEs have the ability to defer their income tax installments up to 30th June 2022. In addition, all businesses are allowed to make tax estimate amendments for income payable in the 11th month before October 31, 2022; (previously only available in the 6th and 9th months). As for manufacturing companies, the reinvestment allowance has been extended for another 2 years until 2024.
Yap noted: “Companies are given good incentives to renovate their premises, with a tax deduction on costs of renovation and renewal of premises up to RM300,000 until end of the year 2022, with an extension of special deduction for renovation of business facilities to comply with SOP requirements such as ventilation upgrades, customer seating and employee infrastructure. Landlords who give a rental reduction of at least 30% are rewarded with a special tax deduction until June 2022 (extended from January 2022).
There will also be a real property gains tax (RPGT) exemption for any individual Malaysian citizens who hold property for more than 5 years. No RPGT will be imposed from the 6th year onwards, as opposed to the current 5%.
To stimulate business activity, newly incorporated SMEs (incorporated between 1 July 2020 until 31 December 2022) are given an income tax rebate of RM20,000 for every year for the next 3 years. Under the Jamin Kerja initiative, SME business owners who employ those who are not actively working can enjoy an incentive of 20% to 30% of the employee’s monthly salary. Under the PERANTIS scheme, an allowance of up to RM900 per month for 6 months for graduates and school leavers from 18-30 years old on the executive level, for those with a diploma and above will be given.”
Yap also noted: “On the individual front, the additional RM2,500 tax relief for purchase of handphone, notebooks and tablets has been extended for another one year up to year of assessment 2022. There is also further extension of tax relief for domestic travel expense of up to RM1,000 for another year. Lastly, tax relief for fees paid to child care and kindergarten of RM3,000 has been extended for another 2 years. “
Under the Keluarga Malaysia concept, it is good to see the people being allocated for. With all the tax breaks, one may wonder if the government will have enough funds – and thankfully, those companies are making huge profits above more than RM100 million, will have a one-off taxed at 33% instead of the usual 24%.
Yap concludes: “The new realities of Covid 19 and changes in leadership in the nation has left many of us quite drained, but this new budget offers some hope that we will be able to recover quickly as a nation. I urge you to take advantage of the opportunities given to get back to work, upskill, and stimulate the economy. Notably, the government has been listening to the people, and the personal mentions of several successful startup founders during the budget announcement as well as even e-sports personalities that won international tournaments show that they are in tune with current economic developments. All in all, it is a good step towards Malaysia’s recovery, and future prosperity”.
About the author: Datin Yap Shin Siang, CA(M), CPA (AUST), CFP, MBA (U.K), B.COM (MELB)
Group CEO, YYC Group
Yap Shin Siang, or fondly known as Shin, estimates that the firm is already in the top 10 accountancy firms by size and can rival the Big Four locally. She took over the family business, shook off gender biases, and grew a small business into a major player. Being the second generation in the family business, she has grown a team of 50 staff to almost 800 staff today. She has also tripled the business revenue since 2016, and won the attention of OCBC Bank to invest and become a strategic partner.
She has over 20 years of professional experience in public accounting, tax and business advisory. Shin is the author of two business titles and is also a frequent speaker for seminars organised by China Press, Nanyang Siang Pau, Malaysian Institute of Accountants (MIA) and various trade associations such as Malaysia Retail Chain Association (MRCA), Master Builders Association Malaysia (MBAM), The Timber Exporter’s Association of Malaysia (TEAM) and many more. She is frequently interviewed by the media and professional bodies such as China Press, Bernama, The Edge, CPA Australia and etc.
She has also provided oversight on many tax investigations and tax audits with the Inland Revenue Board and Royal Malaysian Customs Department. Shin holds a bachelor’s degree from University of Melbourne, an MBA from University of Nottingham, and is a member of CPA Australia and MIA. Shin’s vision is to make YYC Group the No.1 world-class accounting firm that originated from Malaysia via innovation.
