If you intend to establish a new business, please register before the end of the year. New founded companies between July 1, 2022, and December 31, 2022, are eligible for a three-year tax credit of up to RM60,000!
You heard correctly. If there was ever a moment to start a business, this is it.
And if you are facing issues while starting a new company in Malaysia, check out this guide on how to register a company in Malaysia.
What exactly is this Tax Rebate?
This corporation tax relief is part of the Malaysian government’s PENJANA (Short-term Economic Recovery Plan) program, launched during the COVID-19 epidemic.
This tax break for newly formed corporations was designed to stimulate Malaysia’s economy by encouraging entrepreneurs to launch their firms. As a result, this tax break is aimed exclusively at newly founded SMEs (Small and Medium Enterprises) established between July 1, 2020, and December 31, 2022.
Is my Business Eligible for this Tax Credit?
While we want to declare that every Company or LLP is qualified for this tax rebate, some conditions must be met. These are the requirements:
- Your company must be incorporated under the Companies Act of 2016 or the Limited Liability Partnerships Act of 2012.
- Your paid-up capitalization must be less than RM 2.5 million, and your annual revenue must be less than RM 50 million.
- The newly constituted corporation must be located in a different place or on a different premise than its affiliated firm.
- The new entity’s factory, services, or equipment must be purchased new and not leased from any related firm.
- The personnel of the newly constituted corporate entity must be distinct from those of any related firms.
- Companies or partners that have changed to LLPs or vice versa will be ineligible for the tax break (sorry!).
Important Information about the Tax Rebate
If you fulfill all the qualifications to qualify for this tax rebate, it’s time to read the small print to fully grasp the breadth and restrictions of the Malaysian government’s offer.
- You will not receive the total RM60,000 corporate tax rebate all at once!
- Instead, you would get a maximum of RM20,000 in tax rebates every year for the next three years.
- The tax rebate depends on the firm’s operational and capital expenses.
- Capital expenditure is a company’s long-term expense (for example, the purchase of new machinery), whereas operational expenses are its everyday expenses (ex., salaries and premise rental).
- For example, if a firm only invests RM16,000 on operational and capital expenses, it can only claim an RM16,000 rebate.
- You won’t be able to bring the unclaimed sum forward.
Continuing with the previous example, if your capital and operational costs total RM16,000, you would only be eligible for an RM16,000 tax rebate, with the remaining RM4,000 being nullified and unable to be passed forward to the following year.
As a result, it is prudent to plan for each year.
Begin your Business before the End of 2022
Ready to launch your business with an RM60,000 head start?
With such little time before the deadline, gathering the necessary documentation for submission and the other processes that follow after applications are approved may seem impossible.
It’s just a question of practice. Our crew has handled dozens of such registrations and has the procedure down pat.
If you need speed and accuracy, YHTan is one of the best in the business!
Begin your business with us immediately, and you will have a new company in your hands within a few days, giving you more than enough time to receive the tax rebate.
Do you have any questions? Don’t hesitate to contact us any time.