On 10 April 2020, during a special address, Malaysia’s Prime Minister Tan Sri Muhyiddin Yassin announced that the government of Malaysia (“Government”) will be extending the nationwide Movement Control Order (“MCO Order”) pursuant to the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1987. The extension will be effective from 15 April 2020 until 28 April 2020.
As of 10 April 2020, there have been a total of 4228 confirmed COVID-19 cases in Malaysia. The imposition of the extended MCO Order is to give time for healthcare workers to combat the COVID-19 pandemic, in addition to preventing the recurrence of infection. This is also in line with the World Health Organisation’s advice and recommendation for all countries to continue their quarantine measures to flatten the curve.
The key highlights of the extended MCO Order include continued school closures with home-based and online learning, and the opening of several economic sectors in stages.
The Ministry of Trade and Industry (“MITI“) also announced, via a press release on 10 April 2020, that the following economic sectors will be allowed limited operations, subject to stringent terms and conditions:
(a) Automotive industry (limited to export of completely built-up units, parts and accessories, after-sales and maintenance services);
(b) Machinery and equipment industry;
(c) Aerospace industry;
(d) Certain specified construction projects and construction-related services;
(e) Science, professional and technical services, including research and development (R&D), but limited to legal services, oil and gas services, R&D activities relating to COVID-19, and testing laboratories for sectors permitted to operate;
(f) Social health services, including registered traditional and complementary medicine (TCM) practitioners;
(g) Wholesale and retail hardware shops, electrical and electronic shops and optometrists;
(h) Basic hairdressing services (hair cutting only);
(i) Laundrettes (full-service only, excluding self-service launderettes).
Companies wishing to resume operations in the above sectors during this next phase of the MCO are required to apply online directly to MITI, beginning from 9:00 am on Monday, 13 April 2020.
In light of the economic impact of COVID-19, the Government has introduced a few measures since 27 February 2020 with the aim of stabilising and reinvigorating economic growth.
The main measures are summarised below:
The PRE2020 was introduced on 27 February 2020 and it focuses on three main strategies, which aim to accelerate the economic activities through utilising strategic domestic resources:
Strategy I: Mitigating impact of COVID-19
Strategy I contains 18 measures and they include:
|Restructuring and rescheduling of loans||Special Relief Facility (“SRF”) for COVID-19||Bank Simpanan Nasional (“BSN”) micro credit facility|
|Deferment and revision of income tax estimation||Service tax exemption for hotels||Tax deduction on Personal Protective Equipment (“PPE”) provided to employees|
|Further deduction to hotel operators for training expenses||Exemption from Human Resources Development Fund (“HRDF”) levy||Electricity discount of 15% and Malaysia Airport Holdings Berhad (“MAHB”) rebate|
|Review on condition for purchase of duty-free goods for persons entering Malaysia||Special income tax relief on domestic travel||Stimulating demand for tourism through discount vouchers and tourism promotion|
|Government use of hotels||Employment Insurance System (“EIS”)||Skills training fund|
|One-off cash incentive of RM600 for taxi drivers, bus drivers and tour guides||Special allowance for civil servants directly involved in COVID-19||Ministry of Health (“MOH”) – COVID-19 hospital equipment allocation|
Strategy II: Spurring rakyat centric economic growth
Strategy II contains five measures and they include reduction of employees provident fund (“EPF”) employee contribution, enhancements to Bantuan Sara Hidup (“BSH”) (living costs assistance), increased allocation for agriculture and food (“Agrofood”) facility, carrying out small-scale projects nationwide and facilitating procurement processes.
Strategy III: Promoting quality investments
Strategy III contains nine measures and they include:
|Accelerating public investment||Establish SME automation and digitalisation facility (“ADF”)||Securities Commission (“SC”) co-investment fund of RM500 million|
|SC and Bursa Malaysia will waive listing fees for companies seeking listing on Leading Entrepreneur Accelerator Platform (“LEAP”) Market, or Access, Certainty, Efficiency (“ACE”) Market||Accelerated capital allowance for machinery and equipment including Information, Communication and Technology (“ICT”) equipment||Special tax deduction on costs of renovation and refurbishment|
|Import duty and sales tax exemption on equipment and machinery for port operators||Value added activities carried out in licensed manufacturing warehouse (“LMW”) and free industrial zone (“FIZ”)||Double deduction for establishment of regional office by international shipping companies|
Extra PRE2020 Measures were published by the Prime Minister’s office on 16 March 2020 pursuant to an Economic Action Council (“EAC”) meeting, which decided to proceed with the implementation of all projects announced under Budget 2020. This includes the East Coast Rail Link (ECRL), MRT2 and National Fiberisation & Connectivity Plan, as well as fiscal and business-friendly policies. The measures include financial aid for workers forced to take unpaid leave, electricity bill discount, BSH payment and for small-scale projects to proceed.
The Government announced the Prihatin Package with a value of RM250 billion on 27 March 2020. Within this allocated amount, RM128 billion will be used to protect the welfare of the people, RM100 billion to support businesses including SMEs, RM2 billion will be used to strengthen the country’s economy, and the remaining RM20billion has been allocated to the previous PRE2020.
On 6 April 2020, the Government announced Prihatin Plus, which provides additional measures to the Prihatin Package, and is valued at RM10 billion. The main aim of Prihatin Plus was to ease the financial burden of SMEs.
A unit, LAKSANA, has been established under the Ministry of Finance (“MOF”) which will monitor and report the progress of implementation of all initiatives to the MOF and the Prime Minister.
A portal (https://imsme.com.my/portal/en/) has also been established to support the execution of the Prihatin initiatives. This portal is managed by the Credit Guarantee Corporation in collaboration with Bank Negara Malaysia. SMEs have an option to apply for loans through the IMSME portal, which also provides financial advisory services for SMEs through myKNP services.
Other reliefs have been announced by regulatory authorities. This includes the Securities Commission’s deferment of regulatory submissions, waiver of annual licensing fees and margin financing flexibilities for capital market participants, among others. Bank Negara Malaysia also announced a number of measures on deferment and restructuring of loans and financing facilities. In addition, Bursa Malaysia announced relief measures which include rebates on annual listing fees, extension of time to submit regularisation plan for PN17/GN3 and 8.03A Listed Issuers, an automatic 1-month extension to submit financial statements and greater flexibility for brokers to manage margin accounts.
On 23 March 2020, the Government also announced that EPF contributors up to the age of 55 can apply for the i-Lestari withdrawal facility beginning 1 April 2020. A maximum amount of RM500 can be withdrawn monthly for a period of 12 months.
Further, on 26 March 2020, the Inland Revenue Board (“IRB”) announced that the due date for data submission as well as Monthly Tax Deduction (MTD)/CP38 Payment for March 2020 remuneration will be extended to 30 April 2020. The IRB also announced that it is offering tax deductions for donations to the following:
For donations that are in the form of equipment or items for containing the spread of the COVID-19 outbreak, donors would need to obtain a receipt with an official stamp from the recipient as per the format issued by the MOF. Accepted documents includes original approval letter by the MOF, official receipt or letter of acceptance from the recipient body, and letter of acknowledgement of service value or project cost value from the relevant government agencies.
For cash donations to the MOH and National Disaster Management COVID-19 fund, accepted documents are official government receipts (Kew.38), cash transfer slip via ATM, cheque deposit machine slip, deposit slip through bank counter, online payment slip, transfer slip via Interbank Giro (IBG Transfer), Real Time Electronic Transfer Fund and Securities Systems (RENTAS) receipt and telegraphic (TT) receipt with advice of credit.
Cash donations to approved institutions or organisations require official receipts of the institutions or organisations that have been recognised by the IRB.
Taxpayers are advised to keep transaction records, receipts and documents for reference when filing the Income Tax Return Form (BNCP) for the year of assessment 2020 and for review by IRB.
This alert is for general information only and is not a substitute for legal advice.