PERMAI Assistance Package Tax Highlights

Earlier this week, the Prime Minister of Malaysia announced another economic stimulus package called the “Perlindungan Ekonomi & Rakyat Malaysia (“PERMAI”) Assistance Package”. This would be the 4th stimulus package announced by the government to cushion and stimulate the economy amidst rising concerns of the COVID-19 pandemic. 

The PERMAI Assistance Package is anchored in 3 main objectives: combating the COVID-19 outbreak, safeguarding the welfare of the people and supporting business continuity. In precis addition to the extension of the Temporary Measures for Reducing the Impact of COVID-19 Act 2020, the PERMAI Assistance Package provided several interim relief measures to alleviate the impact of the newly announced Movement Control Order. 

This post set out herein the key highlights from the PERMAI Assistance Package.

1/ Cash assistance

A one-off provision of RM500 to healthcare frontliners and RM300 to other frontliners will be paid in the first quarter of the year. The Prime minister stated that the special monthly allowance of RM600 to healthcare frontliners and RM200 to other frontliners will be given until the end of the COVID-19 pandemic. 

Additionally, a one-off financial assistance of RM500 to tourist guides and drivers of taxis, school buses, tour buses, rental cars and e-hailing vehicles. 

2/ Tax relief for COVID-19 screening (personal)

As stated in the Budget 2021, the tax relief for full health screening has increased twofold, from RM500 to RM1,000. The government announced that this relief includes COVID-19 screening as well.

3/ Moratorium on loans and installment reduction

The government announced that throughout this Movement Control Order 2.0, moratorium facilities such as the extension of the moratorium, restructure of loan payments and reduction of loan repayment installments will continue.

4/ Special tax relief for technology products 

Last year, the government announced a special personal income tax relief for the purchase of mobile phones, computers and tablets to ease the industry in adapting to the Work From Home arrangement. In this PERMAI Assistance Package, the government announced the extension of the special tax relief of up to RM2,5000 for the purchase of mobile phones, computers, and tablets until the end of 2021.

5/ Expenses incurred for COVID-19 testing

Under the PENJANA scheme, it was announced that tax deduction will be given for expenses incurred for COVID-19 testing. Under PERMAI, employers who bear the cost of COVID-19 screening for its employees are entitled to claim a double deduction for the payment screening costs made during the year 2021.

6/ Sales tax exemption

To boost the automotive sector, the government had announced a sales tax exemption for locally assembled and imported passenger vehicles until 31 December 2020 under the PENJANA package. This exemption will continue until 30 June 2021 to stimulate and drive momentum in the automotive sector.

7/ Revised Wage Subsidy Programme

A revised Wage Subsidy Programme called the Wage Subsidy Programme 3.0 is introduced and applies to all employers operating in areas affected by the Movement Control Order, irrespective of the industrial sector operating. For one month, employers will receive a wage subsidy of RM600 for each employee earning less than RM4,000. The number of employees for the wage subsidy limit is also increased from 200 to 500. 

8/ Special deduction for reduction of rental on business premises

During the implementation of the 1st Movement Control Order last year, the government gave a special tax deduction to a company that reduces the rental rate on business premises rented to Small and Medium Enterprises (“SME”) by at least 30% between the period 1 April 2020 to 31 March 2021. It is announced that this special deduction will be extended until 30 June 2021 and applies to rental reduction for non-SME as well.

9/ Exemption on excise duties and sales tax 

The government announced a reduction in the number of years qualified for exemption from excise duty and sales tax from seven years to five years for the transfer, disposal and private use of taxis. 

Conclusion

The introduction of the PERMAI Assistance Package aims to revitalise the economy and boost consumption. With a budget of RM3 billion for the COVID-19 Vaccination Programme, it is hoped that this will instill momentum for businesses to navigate towards economic recovery.