KUALA LUMPUR, March 24 -- The Malay Economic Action Council (MTEM) has suggested that the government grant a ‘double tax deduction’ incentive to employers who have been paying wages to employees on unpaid leave, especially those in the B40 group.
President Abd Halim Husin said the move would ease the impact of an economic slowdown post-COVID-19 movement control order as small and medium enterprises (SMEs) are among the biggest wage payers in Malaysia’s economy.
He said giving the incentive would show that the concerns of the people in the bottom category are taken into account and could better safeguard their wellbeing.
“Expenses incurred on certain activities can be offset twice against taxable profits.
"There are many examples out there that can be used such as Norway, where the government is willing to pay 75 per cent of the wages of SME employees,” he said in a statement today.
Abd Halim said the government needs to be creative and bold in ensuring the continuity of economic activities to avoid a more severe impact from COVID-19.
He said MTEM is also suggesting exemptions from the Sales and Services Tax as well as taxes related to tourism and other industries that have lost their sources of income.
He said although the move would reduce the government’s tax collection, MTEM feels that it is important as it would promote the market’s liquidity while at the same time reducing the pressure on businesses especially SMEs.
“A tourism tax exemption is important to promote the tourism industry that has been badly affected by COVID-19,” he said, adding the suggested exemption period is from April to December this year.
He said MTEM is also suggesting that the government speed up the disbursement of funds to approved or almost approved SMEs as well as ease approvals for business financing applications.
Abd Halim said entrepreneurs in the startup and micro or nano categories need the funding more than big, well-established corporations.
“Banks and other financing institutions are urged to provide more soft loans to entrepreneurs to promote liquidity as well as financing to redevelop businesses that have been badly impacted by COVID-19.
“We suggest an interest rate of three to four per cent and a financing repayment period of five to 10 years to help them recover and recontribute to the country’s economic growth,” he added.
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