FMM proposes corporate, individual income tax waivers for 2020, 2021 to reduce Covid-19 impact
The Federation of Malaysian Manufacturers (FMM) has proposed for the government to consider income tax waivers due to the impact caused by the Covid-19 outbreak.
In the FMM Budget 2021 wish list, FMM president Tan Sri Soh Thian Lai said since taxable income has been greatly reduced, the loss in tax revenue to the government may be comparatively minimal. “For businesses, the tax waiver will allow them to recoup and strengthen their internal finances to rebuild their businesses. “With tax exemptions, employees, as consumers, will have higher disposable income for consumption and demand for goods and services,” he said. Soh added that both corporate and personal income taxes have to be waived for a stronger impact, as well as a multiplier effect from consumer to business and to workers in the virtuous cycle of supply and demand.
FMM also called on the government to extend the loan moratorium and financing until year-end or to March 2021 to relieve business cash flows amidst the third wave of the Covid-19 outbreak. Although Bank Negara Malaysia has been actively reaching out to small and medium enterprises (SMEs) to approach their banks to reschedule and/or restructure their loans or financing, an extended moratorium is still the preferred and more effective assistance, said Soh. “This is especially so since the onset of the third wave of the pandemic has raised market uncertainties and risks,” he said.
Apart from that, Soh said tax relief and assistance accorded to SMEs should be accessible to mid-tier companies (MTCs) for at least two years to help in their recovery. “There should be flexibility in the definition of company size based on sales turnover to assist all companies which have suffered significant declines, so that they fall within the ambit of the national SME definition,” he said.
According to the Malaysia External Trade Development Corporation (Matrade) Mid-Tier Companies Development Programme, MTCs are companies with annual revenues between RM50 million and RM500 million in the manufacturing sector, and between RM20 million and RM500 million in other sectors, he added.