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KUALA LUMPUR: The Federation of Manufacturers of Malaysia (FMM) has proposed that the government consider exemptions from income tax due to the impact caused by the Covid-19 outbreak.
On Monday’s FMM Budget 2021 wish list, FMM President Tan Sri Soh Thian Lai said that since taxable income has been greatly reduced, the loss of tax revenue to the government may be comparatively minimal.
“For companies, the tax exemption will allow them to recover and strengthen their internal finances to rebuild their businesses.
“With tax breaks, employees, as consumers, will have higher disposable income for consumption and the demand for goods and services,” he said.
According to Soh, both corporate and personal income taxes should be eliminated for a stronger impact, as well as a multiplier effect from consumer to business and workers in the virtuous circle of supply and demand.
Meanwhile, FMM also called on the government to extend the moratorium on loans and financing until the end of the year or until March 2021 to ease the cash flows of companies amid the third wave of the Covid-19 outbreak.
Although Bank Negara Malaysia has actively approached small and medium-sized enterprises (SMEs) to approach their banks to reschedule and / or restructure their loans or financing, an extended moratorium remains the preferred and most effective assistance, Soh said.
“This is especially true since the start of the third wave of the pandemic has increased uncertainty and market risks,” he said.
Apart from that, Soh said that the tax relief and assistance given to SMEs should be accessible to mid-level companies (MTC) for at least two years to aid in their recovery.
“There should be flexibility in the definition of company size based on sales volume to help all companies that have suffered significant downturns, so that they fall within the scope of the national definition of SMEs,” he said.
According to the Malaysian Foreign Trade Development Corporation (MATRADE) Mid-Tier Enterprise Development Program, MTCs are enterprises 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.
On the Salary Subsidy Program (WSP) under the National Economic Recovery Plan (PENJANA), Soh said that the FMM has proposed that the government eliminate the criterion of the 200-employee limit and the RM4,000 salary cap, and further expand plus the program to include half the level companies by a restriction of perhaps no more than 800 workers.
“We also hope that the WSP can be expanded to help businesses affected by the third wave of the pandemic,” he said.
Other items on the FMM wish list included continued support for technology adoption and digitization, as well as the reinstatement of the goods and services tax (GST) at three percent, with a threshold of RM500,000 and a transition period. six months.
The FMM also urged the government to conclude the Regional Comprehensive Partnership Agreement (RCEP) and implement the Free Trade Agreements (FTA) that have been signed, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), in order to provide market access for Malaysian exporters. – Bernama
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