SPECIAL focus was given to small and medium enterprises (SMEs) under Budget 2017, with a new tax scheme that will provide a reduction by stages, based on the company’s percentage of increase in income.
PwC senior executive director Lavindran Sandragasu noted that the boost for SMEs was timely, in line with increasing access to overseas markets with agreements such as the Trans-Pacific Partnership Agreement (TPPA).
“I think the budget, in terms of tax incentives, had a focus on SMEs, which is good.
“SMEs are the next growth area for the country, and with the TPPA and the opening up of Asean markets, we really need to support these businesses,” he told StarBiz.
The Prime Minister announced yesterday that the Government had decided to introduce a new scheme for SMEs, for the year of assessment 2017 and 2018, to appreciate the achievements of SMEs which had been successful in increasing their revenue.
The scheme will provide a reduction by stages, based on the percentage of increase in income compared with the previous year of assessment.
The reduction in income tax will be one percentage point for an increase in chargeable income between 5% and below 10%; two percentage points for an increase between 10% and below 15%; three percentage points for an increase between 15% and below 20%; and four percentage points for a 20% increase.
He added that the tax rate on chargeable income up to the first RM500,000 for all SMEs was reduced from 19% to 18% effective from the year of assessment 2017.
Various other forms of assistance for SMEs, such as loans and grants, were also announced.
Datuk Seri Najib Tun Razak noted that 97% of all businesses in the country were from the SME sector.
On another note, Lavindran said the proposed setting up of the Collection Intelligence Arrangement (CIA) under the Finance Ministry would enable the Government to keep track of businesses in a more systematic way.
The CIA initiative involves the Inland Revenue Board, the Royal Malaysian Customs Department and the Companies Commission of Malaysia sharing data to enhance efficiency in tax collection and compliance.
Lavindran said the sharing and integration of data among the departments would allow authorities to go after goods and services tax (GST)-registered businesses, which may not have registered for corporate tax.
“Businesses would have registered for the GST in order to claim their input tax credits, but some may not have been registered for corporate tax,” he noted.