We refer to our Tax Whiz dated 18 January 2021 on the PERMAI Package.
Following the special announcement on the PERMAI Package, our Finance Minister, Dato' Seri Tengku Zafrul bin Tengku Abdul Aziz, has further announced during a media briefing that, employers funding the cost of Covid-19 screening for their employees in year 2021 are eligible for a double deduction. We have included this update in the table below (see item 6).
18 January 2021
On 18 January 2021, our honorable Prime Minister, Tan Sri Dato' Muhyiddin Yassin, unveiled the PERMAI Package worth RM15 billion. The PERMAI Package aims to improve on the existing on-going initiatives and also to accelerate the implementation of related initiatives.
The business initiatives include:
- The enhanced Wage Subsidy whereby employers operating in the Movement Control Order ("MCO") states will receive a wage subsidy of RM600 for each of their employees earning less than RM4,000 for a period of one month. This is coupled with an increase in the number of eligible employees per employer from 200 to 500 employees;
- The extension of the effective period of inability to perform contractual obligations under the Temporary Measures for Reducing the Impact of COVID-19 Act 2020 to 31 March 2021;
- Exemption of Human Resources Development Fund levy for companies that are unable to operate during the MCO and Conditional MCO periods; and
- Continuing electricity bill discounts for 6 business sectors, comprising hotel operators, theme parks, convention centres, shopping malls, local airline offices as well as travel and tour agencies.
Apart from the above non-tax measures, we also summarise below the highlights of the proposed key tax measures for your attention.
No. |
Current / Proposed Tax Incentives / Exemptions |
Extension of Coverage / Period / Effective Period under the PERMAI Package |
1. |
Special tax deduction for rental deduction of at least 30% on business premises rented to Small and Medium Enterprises ("SMEs") from April 2020 to March 2021 (subject to gazette of the relevant Rules). |
Extended to cover business premises rented to non-SMEs and to 30 June 2021 |
2. |
Special tax relief of up to RM2,500 for purchase of personal computer, smartphone or tablet incurred from 1 June 2020 to 31 December 2020. |
Extended to 31 December 2021 |
3. |
Tax relief of up to RM8,000 is given for medical expenses incurred for the treatment of serious diseases for taxpayer, spouse and children and the cost of fertility treatment (including full medical check-up of RM1,000 and prescribed vaccination of RM1,000). |
Tax relief for full medical check-up extended to cover Covid-19 screening |
4. |
Sales Tax exemption for purchase of passenger cars:-
from 15 June 2020 to 31 December 2020, subject to conditions. |
Extended to 30 June 2021 [previously announced via the Media Release issued by the Ministry of Finance ("MOF") on 29 December 2020] |
5. |
The condition of ownership to qualify for exemptions from Excise Duty and Sales Tax for the purpose of transfer, disposal and for private use of taxis is reduced from 7 years to 5 years. |
From 1 January 2021 to 31 December 2021 |
| 6 | Tax deduction on expenses incurred for Covid-19 testing (as announced under PENJANA). | Double deduction will be given to employers who fund the cost of Covid-19 screening for their employees in year 2021. We expect that conditions will be set to enable taxpayers to enjoy the double deduction and these will be subject to the gazette of the relevant Rules (it is unclear at the moment whether the invoice or receipt needs to be in the employer's name or whether a simple reimbursement of the staff's COVID-19 screening cost will qualify). |
The Government has also taken the opportunity to highlight the incentives introduced in the previous packages particularly for donors who have been participating in initiatives to curb the spread of the COVID-19 pandemic. Incentives are given in the form of tax deductions on contributions and donations in cash or in-kind, as a recognition and appreciation of the noble efforts made. Donors are eligible for a tax deduction at their gross business income or aggregate income level, subject to meeting the prescribed conditions. Click here for our earlier Tax Whiz for more information.
The relevant speech can be accessed via the above link.
Should you have any questions or require further clarification, please do not hesitate to contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organisation.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Tai Lai Kok
Executive Director
Head of Tax
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