Malaysia: ESP Summary

published on 27 April 2020 | reading time approx. 2 minutes

In order to address the impact of the Covid-19 outbreak on businesses and individuals, the Malaysian government has announced 3 Economic Stimulus Packages (“ESP”). These ESPs introduce measures aimed at preserving the welfare of Malaysians, supporting businesses, whilst at the same time promoting investments.

  

A summary of the key measures are outlined below.

Preserving the welfare of Malaysians

• Employees can elect to reduce their minimum Employers Contribution Fund (“EPF”) contribution from 11 to 7 per cent from 1 April 2020 to 31 December 2020.
• Individuals participating in the Private Retirement Scheme (“PRS”) will be allowed to make a withdrawal of up to MYR 1,500 from 1 April 2020 to 31 December 2020 from sub-account B. No withholding tax will be imposed on the withdrawn amount. (Under normal rules withholding tax of 8 per cent will be imposed for early withdrawals)
• Cash payout and monthly allowance to various groups of individuals affected by the outbreak.
  • MYR 600 monthly allowance to healthcare workers from 1 April 2020 until the end of the outbreak.
  • MYR 200 monthly allowance to military, police, customs, civil defence, and RELA members directly involved in enforcing the Movement Control Order (“MCO”) from 1 April 2020 until the end of the outbreak.
  • MYR 800–MYR 1,600 cash payout in April and May 2020 under the National Caring Aid (Bantuan Prihatin Nasional) will be given to individuals in the B40 and M40 groups.
  • MYR 600 cash payout to taxi drivers, tourist bus drivers, tourist guides, and registered trishaw drivers.
  • MYR 200 cash payout to students at higher education institutions to be disbursed in May 2020.
  • MYR 500 cash payout for public servants below grade 56 and retirees.
  • MYR 500 cash payout for e-hailing drivers.
• Electrictity bill discounts ranging from 15 to 50 per cent for all sectors for a period of 6 months from April 2020 to September 2020.
• Free internet for all users from 1 April 2020 until the end of the MCO period.

Supporting businesses

• Deferment on tax instalment payments.
  • Tourism sector – 6 months deferment from 1 April 2020 to 30 September 2020
  • All other Small and Medium Enterprises (“SME”) – 3 months deferment from 1 April 2020 to 30 June 2020
• Companies are allowed to revise their tax estimated in the 3rd month if the 3rd month falls in 2020
• Stamp duty exemption on loan agreements arising from loan restructuring and rescheduling between borrowers and financial institution executed from 1 March 2020 to 31 December 2020, provided the original loan agreement was stamped.
• Income earned by banking institutions from interest or profit on loans or financing activities under the moratorium would be taxable only when the interest of profit is received after the moratorium period.
• Expenditure incurred by companies in providing employees with disposable personal, protective equipment (“PPE”) will be deductible under Section 33(1) of the Income Tax Act; and expenditure incurred in providing employees with non-disposable PPE will be eligible for capital allowance.
• Employers will be allowed to defer, restructure, or reschedule the remittance of the employers contribution of their monthly statutory EPF contributions.
• Employers experiencing a drop in revenue of at least 50 per cent since 1 January 2020 will receive a subsidy of MYR 600 – MYR 1,200 per month per employee (depending on the number of employees) for employees earning not more than MYR 4,000 per month.
• Waiver of discount on rent
  • To retail SMEs for premises owned by Government Linked Corporations (“GLCs”)
  • Private sector owned buildings and business premises rented to SMEs will be given an additional tax deduction equivalent to the amount of reduction in rent that is given to tenants for the months of April 2020 to June 2020 if there is a 30 per cent reduction in rent during this period.