Tax Incentive on Implementing or Enhancing the Existing Flexible Work Arrangements (“FWAs”)

In October 2021, the Income Tax (Deduction for the Costs of Implementation of Flexible Work Arrangements) Rules 2021 have been gazetted to provide a double deduction on qualifying expenses incurred by a qualifying person in implementing FWAs or in enhancing existing FWAs.  FWAs are flexible arrangements for the place of work, scheduling of working hours or the number of hours worked.

The Rules are deemed to have effect from year of assessment (“YA”) 2020.  An application has to be made to Talent Corporation Malaysia Berhad (“TalentCorp”) from 1 July 2020 to 31 December 2022 to enjoy the said tax incentive.  The verified expenses qualify for a tax deduction for 3 consecutive YAs commencing from the YA in the basis period of which the certification is obtained, but are capped at RM500,000 per YA. 

Further to the gazetting of the above Rules, TalentCorp has issued some frequently asked questions and application guidelines, together with the application form and declaration form, to provide further guidance and clarification on the type of expenses qualifying under the Rules as well as the application process.

The relevant materials can be accessed via the above links.