Updates on Tax Matters

We would like to share with you the following updates:-

(A) Frequently Asked Questions (FAQ) on Tax Matters

The Inland Revenue Board (IRB) has updated its Frequently Asked Questions (FAQ) on Tax Matters [click here] on 21 April 2020 on contributions or donations to the COVID-19 Fund. Please refer to Section G. Contribution / Donation for further details on contributions / donations under paragraph 34(6)(h) and subsection 44(6) of the Income Tax Act (ITA), 1967.

Section G sets out the eligibility criteria and the ceiling on tax deductions related to contribution in cash/in-kind/medical equipment made by taxpayers associated with COVID-19.


(B) Frequently Asked Questions (FAQ) on the revision of tax estimate in the third-month instalments in the year 2020 and deferment of instalment payment for companies in the tourism industry as well as Small and Medium Enterprises (SMEs)

Further to the earlier announcement under Economic Stimulus Package, the (FAQ) <click here, available in Bahasa Malaysia only>  was issued to provide further clarifications and we would like to highlight the following pertinent points from the FAQ:-

Revision of tax estimate in the third-month instalment in the year 2020
 

• The above revision of the tax estimate shall not be subject to the 85%rule for the estimate of tax payable based on the immediate preceding year of assessment.
   
• The 10% tax increase under subsection 107C(10) of ITA, 1967 will continue to apply where the tax payable exceeds the revised estimate of tax payable by an amount of more than 30% of the actual tax payable for the year.

• The application for the above revision need not await IRB approval provided the information in the application submitted to the IRB is complete and meets the stipulated conditions.

• Companies that are eligible for deferment of CP204 payment (i.e. companies in the tourism industry and SMEs) can also revise their tax estimates in the third-month instalment falling in the year 2020.

Deferment of instalment payments for companies under the tourism industry as well as SMEs
 

• The deferment of CP204 payments applies to all companies in the tourism industry and SMEs with instalment payments due during the deferment period (i.e. 1 April 2020 to 30 June 2020 for SMEs /  1 April 2020 to 30 September 2020 for companies in the tourism industry).

• The above FAQ also provides a list of  Malaysian Standard Industrial Classification (MSIC) codes of the companies in the tourism industry which are eligible for the deferment of instalment payments. Please refer to the FAQ for the full list of the MSIC codes.

Lastly, some examples are also given in the final section of the above FAQ. Please refer to the examples for further information.

New Publication | SME: Navigating Through the Economic Stimulus Package

Business leaders have been putting their heads together to find the best action plan to sustain their business during this COVID-19 pandemic. Multiple initiatives have been announced by the Government to support SMEs in Malaysia. However, how would you know which one suits you best?

In our latest publication, SME: Navigating Through the Economic Stimulus Package, find out how you can benefit from these initiatives and which would best fit to your needs.

Click on the following image to download a copy of our latest publication:

Updates: FAQ Issued by Inland Revenue Board of Malaysia (IRB)

Due to the extension of the Movement Control Order (MCO) to 28 April 2020, the Inland Revenue Board (IRB) has updated their Frequently Asked Questions (FAQ) [click here] which covers the period from 18 March 2020 until 28 April 2020.

Below are the key changes in the updated FAQ (10 April 2020):-

1. All IRB premises nationwide will be closed from 18 March 2020 to 28 April 2020 during the MCO period, except for the stamp duty counters at Branch Stamping Office and Hasil Care Line.

2. Most of the extensions of time granted in the previous FAQ dated 3 April 2020 have been extended to 31 May 2020. Please refer to the above FAQ for more information.

3. Extension of time will be given until 30 June 2020 for the submission of the audited accounts by institutions or organisations approved under section 44(6) of the Income Tax Act (ITA), 1967 (approved charities, not-for-profit organisations,etc).

4. The 2020 Return Form Filing Programme [click here] has also been updated. A grace period of 2 months has also been granted to those taxpayers with accounting period ending 31 December 2019 for the submission of Forms C, C1, PT, TA, TC, TR and TN for YA 2019 (previously the 2 months grace period was granted to taxpayers with accounting period ending 31 July 2019 until 30 November 2019 only).

5. Further to the previous FAQs from IRB on the deferment of payment of tax estimates for Small and Medium Enterprises (SMEs), we understand that a business will qualify for SME status provided its paid-up capital in respect of ordinary shares is RM2.5 million and below at the beginning of the basis period for a year of assessment; and the gross business income from all business sources does not exceed RM50 million. Further clarification on deferment of tax estimates payment are provided as below:-
 

• All types of businesses with SME status are eligible for deferment of CP204 payment for 3 months and it will be given automatically based on IRB’s records.The IRB will determine whether an SME will qualify for the deferment of estimated tax payment based on the YA 2018 tax return submitted.
   
• As for the automatic deferment of tax estimates payment, taxpayers can choose to reject the automatic deferment and continue paying the tax estimates based on the original payment schedule without having to inform the IRB. (*)
   
• The IRB will notify taxpayers who are entitled to the automatic deferment of tax estimates payments by email (which is registered with the IRB). If the taxpayer is entitled to a deferment but has yet to receive the email, the taxpayer will not have to make the payment for the instalment due on 15 April 2020. (*)
   
• Taxpayers can appeal to the IRB if it is found that the company is eligible for deferment of tax estimate payment based on the current situation of the company. A notification email will be issued by the IRB if the appeal is approved. (*)
  
  (*) The above also apply to companies in the tourism industry which are eligible for deferment of tax estimate payments.

6. Tax refunds will be processed as usual.  However, for ongoing audit cases, taxpayers are required to submit the supporting documents as requested within the MCO period for the purposes of tax refund.

Updates on Indirect Tax: Extension of Payment Due Date to Royal Malaysian Customs Department (RMCD)

Further to our Tax Bulletins dated 19 March 2020 and 26 March 2020, we wish to inform that the Royal Malaysian Customs Department (“RMCD”) has issued their announcement (available in Malay language only click here) dated 14 April 2020 on the extension of payment due date for the following due to the extension of Movement Control Order (“MCO”):
 

1. Sales Tax and Service Tax - Form SST-02
2. Imported Service Tax - Form SST-02A
3. Tourism Tax - Form TTx-03
4. Departure Levy - Form DL-02

The table below summarises the due date for submission of return form and payment:
 

We will keep you updated on any further guidelines and announcements to be issued by the Royal Malaysian Customs Department or other relevant authorities, if any.

How can CFOs Help Businesses Prepare for the New Normal

The frontliners are not the only ones fighting against the COVID-19 outbreak, businesses are braving through rough market conditions caused by the pandemic too. In a time like this, business leaders play a crucial role in keeping their businesses afloat. So, how can a CFO help the business to go through a crisis like this?

Click on the following image to download a copy of our publication to find out more:

[Update] FAQ from Inland Revenue Board (IRB)

Further to our tax bulletin dated 27 March 2020, the Inland Revenue Board (IRB) has updated its Frequently Asked Questions (FAQ) [click here] on 3 April 2020. Most of the extensions of time granted in the previous FAQ dated 26 March 2020 remain unchanged.

Below are the key changes in the updated FAQ:-

1. All IRB premises nationwide will be closed from 18 March 2020 to 14 April 2020 during the Movement Control Order (MCO) period, except for stamp duty counters at Branch Stamping Office and Hasil Care Line.

2. Extension of time will be given until 30 April 2020 for the submission of Form Q. However, the taxpayer is still required to file the Form N as provided under Section 100 of the Income Tax Act (ITA), 1967. The taxpayer is also required to state on Form N that the delay is due to the implementation of MCO.

3. Extension of time will be given until 30 April 2020 for submission of the Form CP204B during the period of 18 March 2020 to 14 April 2020.

4. Extension of time is granted until 30 April 2020 for tax estimate payments which are due on or before 15 April 2020.

5. Extension of time is granted until 30 April 2020 for revision in the third month of instalment that falls in April 2020. Please take note that the deadline for the submission of the revised tax estimate in the third-month instalment in 2020 is based on the company's basis period.

6. Following the Prihatin Rakyat Economic Stimulus Package announcement, it is stated in the above FAQ that all types of businesses with Small and Medium Enterprises (SMEs) status are eligible for deferment of CP204 payment for 3 months beginning April 2020 until June 2020. The SMEs do not need to apply for the deferment of CP204 payment as it will be given automatically based on IRB’s records. A business will qualify for SME status provided its paid-up capital in respect of ordinary shares is RM2.5 million and below at the beginning of the basis period for a year of assessment; and the gross business income from all business sources does not exceed RM50 million.

7. It was previously informed that taxpayers under the tourism industry are required to put in a manual application for the deferment of CP204 payment.  This procedure is no longer applicable as the deferment of CP204 payment will be given automatically based on IRB’s records. Companies in the tourism industry (including those with SME status) are eligible for deferment of CP204 payment for 6 months beginning April 2020 until September 2020.

8. CP500 instalment payments for March 2020 and May 2020 can be deferred starting from April 2020 to June 2020. The taxpayer is allowed to revise CP500 on or before 30 June 2020.

9. SMEs are also entitled to deferment of CP500 payments. Deferment of CP500 payment for SMEs will be given automatically based on the payment records with IRB.

10. Deferred payments for CP204 / CP500 have to be settled upon the submission of the income tax return, if there is any balance of tax payable. Furthermore, no tax penalties will be imposed under Section 107C (9) / 107B (3) of the ITA, 1967.

11. Stamp duty counters nationwide will be in operation from 3 April 2020 to cater to individual duty payers. Please refer to the FAQs for further details such as the limited services available and operating hours.

12. Agents or representatives with STAMPS user ID are required to submit the stamping application and make payment online.

[Updated Publication] The New Normal_COVID-19

Update: Kindly note that the information contained in this email supersedes the email sent on 1 April 2020. 

The COVID-19 pandemic escalates so rapidly that it has now reached every major continent across the globe. In an effort to contain the spread of the virus, the Malaysian government has invoked and extended the Movement Control Order until 14 April 2020. Click on the following image to read how COVID-19 has impacted the Malaysian market and what actions should businesses promptly take to combat the outbreak:

Wage Subsidy Program

We have been receiving many enquiries regarding the issue of the PRIHATIN Wage Subsidy Program (hereinafter ‘’WSP’’) and Baker Tilly is keen to provide some insights on the WSP from what we have ascertained from the public releases made available:

What is WSP and Who will Benefit:

• WSP is the Malaysian government’s initiative to aid employers experiencing a decrease in more than 50% of their revenues since January 2020.
• The objective of WSP is to help employers in all sectors (except Government sector workers, foreign workers and expatriates) affected by the economic impact of the COVID-19 outbreak to continue in their operations and to retain their employees.
• Under the WSP, employers will be given a subsidy of RM600 per month for each employee earning a monthly salary of RM4,000 and below for a period of 3 months effective from 1 April 2020.

What are the Conditions of WSP:

• Employer and their employees must be registered with the Employment Insurance System (EIS) under the Social Security Organisation (SOCSO).
• Employer must make a declaration [“Akuan Pengisytiharan Program Subsidi Upah 50 (PSU50)”] (click here for the form) that the company is experiencing a decrease of more than 50% of its revenue by comparing its total sales revenue in January 2020 with those in the subsequent months.
• Employees with a monthly salary of RM4,000 and below and the scheme is limited to 100 employees for each employer (click here for the form).
• Employers must not terminate their employees from employment, instruct their employees to take unpaid leave or cut the salaries of their employees within a period of 3 months from receiving the wage subsidies and a subsequent 3 months period.

How to Apply for the Wage Subsidy:

• Employers are allowed to make the application (via prihatin.perkeso.gov.my) starting from 1 April 2020.
• The application process may take 7 to 14 days for the wage subsidy to be credited directly into the employer’s bank account.

For registration and submission of the forms, please follow the link https://www.perkeso.gov.my/index.php/en/wage-subsidy-programme.

There is also a scheme under the Stimulus Package available for employers who have placed their employees on leave without pay during the COVID-19 crisis, and the scheme details can be found at https://www.perkeso.gov.my/index.php/en/kenyataan-media.

Please note that WSP and the scheme under the Employee Retention Program with PERKESO are mutually exclusive.

We will keep you updated on any further guidelines and announcements to be issued by the relevant authorities, if any.

[Updates on Indirect Tax] Digital Service Tax and Exemptions on Import Duty, Excise Duty and Sales Tax for Hand Sanitiser Manufacturers

The Royal Malaysian Customs Department (RMCD) has on 30 March 2020, released their announcements in regards to Exemptions on Import Duty, Excise Duty and Sales Tax for Hand Sanitiser Manufacturers and Guide on Digital Service Tax, as follows:

1. Announcement dated 30 March 2020 in relation to the Exemptions on Import Duty, Excise Duty and Sales Tax on the following materials purchased by Hand Sanitiser Manufacturers (available in Malay language only click here), with application to be submitted to the RMCD:

• Undenatured ethyl alcohol; and
• Denatured ethyl alcohol.

2. Announcement dated 30 March 2020 (click here) in regards to the official system for service tax on digital service (MySToDS) that goes live from today i.e. 1 April 2020. Foreign Registered Persons are now able to access MySToDS for submission of return form i.e. DST-02, service tax payment and other matters.

3. Guide on Digital Services by Foreign Service Provider dated 30 March 2020 (click here) that provides guidelines on the following:

• Application for registration as a Foreign Registered Person;
• Furnishing of return form i.e. DST-02 for service tax on digital services (SToDS); and
• Service Tax payment

We will keep you updated on any further guidelines and announcements to be issued by the Royal Malaysian Customs Department or other relevant authorities, if any.

New Publication: The New Normal_COVID-19

The COVID-19 pandemic escalates so rapidly that it has now reached every major continent across the globe. In an effort to contain the spread of the virus, the Malaysian government has invoked and extended the Movement Control Order until 14 April 2020. Click on the following image to read how COVID-19 has impacted the Malaysian market and what actions should businesses promptly take to combat the outbreak:

Prihatin Rakyat Economic Stimulus Package Highlights

On 27 March 2020, our Prime Minister, Tan Sri Muhyiddin Yassin, announced the additional Economic Stimulus Package known as the Prihatin Rakyat Stimulus Package to further counter the effects of the extended Movement Control Order due to the COVID-19 outbreak. 

To read more about the highlights of the Prihatin Rakyat Economic Stimulus Package, click on the following image:

Extension of Time (MCO)

Due to the extension of the Movement Control Order (MCO) to 14 April 2020, the Inland Revenue Board (IRB) has updated their Frequently Asked Questions (FAQ) [click here] on 26 March 2020 and the updated FAQ covers the period from 18 March 2020 until 14 April 2020.

We would like to highlight the following significant points from the above FAQ :-

1. All IRB premises (including e-Filing counters) nationwide will be closed from 18 March 2020 to 14 April 2020;

2. Extension of time will be given until 30 April 2020 for submission of the tax audit/investigation documentation during the MCO period;

3. Extension of time will be given until 30 April 2020 if taxpayers are required to provide feedback to the IRB’s letters within the period of 18 March 2020 until 29 April 2020;

4. Donation to the Covid-19 Fund is tax-deductible. Please refer to the IRB’s Press Release dated 26 March 2020 for further information [click here];

5.Taxpayers can refer to the links as provided in the FAQ if they wish to apply for e-Filing PIN number and tax registration number.  Also, e-Filing password can be reset at ezHasil;

6. Extension of time will be given for the submission of certain return forms (please refer to our tax bulletin sent on 18 March 2020), Form CP58 (until 30 April 2020), Form Q (until 30 April 2020), Country-by-Country Reporting (CbCR) (until 15 May 2020) and Forms CP21, CP22, CP22A or CP22B (from 15 April 2020);

7. Extension of time will be given until 30 April 2020 for submission of the Form CP204B during the period of 18 March 2020 to 29 April 2020.

8. Extension of time is granted up to 30 April 2020 for Forms CP204 payments which falls during the MCO period as well as CP204A revisions (i.e. 6th and 9th month) which should be submitted by 31 March 2020;

9. The first instalment payment of the CP500 notice of instalment payment due on 31 March 2020 is extended to 30 April 2020;

10. Application and submission of tax estimate revision (CP204A) in the 3rd month and the deferment  of instalment payment as announced under the Economic Stimulus Package is extended to 30 April 2020;

11. Payment of withholding tax with due dates falling during the period 18 March 2020 to 14 April 2020 can be made beginning from 15 April 2020 until 30 April 2020 with no late payment penalty imposed. Taxpayers may make payment through telegraphic transfer (TT);

12. For the submission of RPGT return forms and RPGT payments with due dates falling during the period 18 March 2020 to 30 April 2020, the deadline for filing and payment is 30 April 2020;

13. The final section (i.e. Section F) in the FAQ provides further clarification in relation to Stamp Duty.