The expense incurred by an employer for the COVID-19 detection test for employees in 2021 is considered tax-deductible by the Malaysian Government.
The Income Tax Rules 2021 [P.U.(A) 404/2021] regarding the tax deduction on the expenses incurred on the detection of COVID-19 for employees were gazetted on 20-Oct-2021. These rules are applicable with effect from the assessment year 2021.
Rule 2(1) of these rules suggests that if an employer who is a resident of Malaysia has incurred expenses for the cost of the COVID-19 detection test of his employees (from 1 January 2021 until 31 December 2021), such a cost would be treated as the tax-deductible. It helps to ascertain the adjusted income of such an employer from the earning, which is based on the period for the assessment year.
In order to claim the deduction available via these rules, the employer must provide certification and receipt issued by a medical practitioner showing that the Covid-19 detection test was conducted on the employees of such an employer. Such a practitioner should be registered with the Malaysian Medical Council. A medical practitioner who is registered outside Malaysia is also eligible to issue such a certificate.
These rules also state that the deduction of cost under the Rule 2(1) is provided in addition to already allowed deduction regarding the expenses incurred on the test of Covid-19 Detection under Section-33 (Income Tax Act 1967). This suggests that the employer is allowed to seek a double deduction with reference to the expenses incurred on the cost of the Covid-19 detection test conducted on his employees.