JOHOR BARU: The one-percentage-point reduction in income tax for micro, small and medium enterprises (MSMEs) will allow them to reinvest the savings in their businesses, says Datuk William Leong.
The Small and Medium Enterprises Association of Malaysia president described the move as timely, saying it would help businesses cope with economic uncertainty and shrinking profit margins.
“We are especially relieved to see that the government is addressing the twin issues of economic uncertainty and compressed margins among our SMEs by announcing a 1% income tax reduction for MSMEs.
“Reducing the preferential corporate tax rate to 14% on the first RM150,000 of taxable income and 16% for the RM150,001 to RM600,000 bracket will return up to RM6,000 to over 300,000 SMEs.
“This provides businesses with immediate liquidity for reinvestment,” he said in a statement.
When tabling Budget 2027, Prime Minister Datuk Seri Anwar Ibrahim said the tax rate on the first RM150,000 of chargeable income would be reduced to 14%, while the rate on chargeable income between RM150,001 and RM600,000 would be lowered to 16%.
Anwar said the tax cut was in response to concerns raised by MSMEs over rising operating costs.
The move would provide tax savings of up to RM6,000 for 300,000 MSMEs, he said.
The tax reduction is in addition to RM6.6bil in microfinancing for MSMEs announced by Anwar, to be channelled through several financial institutions and government agencies, including Amanah Ikhtiar Malaysia, Bank Simpanan Nasional, Tekun Nasional and Indian entrepreneur financing schemes.
On the minimum wage increase to RM2,000 from RM1,700 in June next year, Leong said the exemption for businesses with annual earnings below RM50mil would provide some breathing space for smaller businesses.
“This breathing space allows smaller firms to build productivity and automate before absorbing higher minimum wage,” he said.
Johor MSMEs Association adviser Teh Kee Sin said the increase in the loan and financing guarantee package for MSMEs to RM57bil from RM50bil would help small businesses cope with challenges amid global economic uncertainty.
