MALAYSIA'S ECONOMIC STIMULUS PACKAGES - Combatting the impact of COVID-19
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Combatting the impact of COVID-19:
MALAYSIA’S
ECONOMIC
STIMULUS
PACKAGES
The content of this article is of a general nature and does not constitute legal or other
advice or the provision of legal or other professional services, and shall not be relied upon
as such. Readers should take legal advice before applying it to specific issues or
transactions. Kindly do not hesitate to contact Sudharsanan Thillainathan, Head of our
Tax Practice Group, at sudhar@stsp.my, if you have any queries.1
TABLE OF CONTENTS
INTRODUCTION........................................................................................................................................... 2
WHAT YOU NEED TO KNOW? .............................................................................................................. 2
A. Individuals ....................................................................................................................................... 3
Civil Servants and Public Sector Employees ................................................................................... 3
Private Sector Employees ..................................................................................................................... 3
University Students ................................................................................................................................ 4
Insurance and Takaful Policy Holders ............................................................................................. 4
Retirees...................................................................................................................................................... 5
Patients ...................................................................................................................................................... 5
PTPTN and PTPK Loan Borrowers ................................................................................................. 5
Vulnerable Groups................................................................................................................................. 6
E-hailing Drivers .................................................................................................................................... 6
Domestic Travellers ............................................................................................................................... 6
B. Families and Households .............................................................................................................. 7
C. Employers ........................................................................................................................................ 8
D. Small and Medium Enterprises (SMEs)................................................................................... 9
E. Healthcare Sector Allocations and Benefits ......................................................................... 12
F. Tourism Sector Allocations and Benefits .............................................................................. 12
G. Commercial, Corporate, Industrial, Agricultural Sectors etc ......................................... 13
H. Telecommunications and Multimedia Sector....................................................................... 15
I. Additional Allocations and Benefits ....................................................................................... 15
HOW TO APPLY? ...................................................................................................................................... 17
How to Apply for Bantuan Prihatin Nasional? ................................................................................ 17
How To Apply For Wage Subsidy Programme? ............................................................................. 19
IMPORTANT DEADLINES..................................................................................................................... 202
MALAYSIA’S ECONOMIC STIMULUS PACKAGE
INTRODUCTION
The Malaysian Government has announced the following economic stimulus
packages to mitigate the impact of COVID-19 outbreak and the mandatory Movement
Control Order (MCO) implemented on 18 March 2020:-
i) the Economic Stimulus Package 2020 announced by Yang Amat
Berhormat Tun Dr. Mahathir bin Mohamad on 27 February 2020;
ii) the Prihatin Rakyat Economic Stimulus Package announced by Yang Amat
Berhormat Tan Sri Dato’ (Dr) Haji Muhyiddin bin Haji Muhammad Yassin
on 27 March 2020; and
iii) the Additional PRIHATIN SME Economic Stimulus Package announced
by Yang Amat Berhormat Tan Sri Dato’ (Dr) Haji Muhyiddin bin Haji
Muhammad Yassin on 6 April 2020.
WHAT YOU NEED TO KNOW?
The Malaysian’s Economic Stimulus Packages are driven by three objectives:
first, to protect the people; second, to support businesses; and third, to strengthen the
economy. They are targeted at all social classes as we quote our Prime Minister, “no
one will be left behind”.3
A. Individuals
Civil Servants and Public Sector Employees
i) Special allowance of RM200 per month to military, policy, customs, civil
defence and RELA members who are directly involved in enforcing the
MCO effective 1 April 2020 until the end of COVID-19 outbreak;
ii) RM500 to civil servants of grade 56 and below:-
➔ Payment of RM500 will be made in April 2020;
iii) Special allowance of RM600 per month to healthcare staffs effective 1
April 2020 until the end of COVID-19 outbreak;
iv) Employees’ EPF contribution reduced to 7% with effect from 1 April 2020
to 31 December 2020:-
➔ Employees have an option to maintain their EPF contribution at 11%;
and
v) Members of EPF are allowed to withdraw a maximum of RM500 from
Account 2 on a monthly basis for a period of 12 months effective April
2020.
Private Sector Employees
i) RM800 to single individuals aged 21 and above, with income less than
RM2,000 per month:-
➔ Payment of RM500 will be made in April 2020; and4
➔ Payment of RM300 will be made in May 2020;
ii) RM500 to single individuals aged 21 and above, with income between
RM2,000 and RM4,000 per month:-
➔ Payment of RM250 will be made in April 2020; and
➔ Payment of RM250 will be made in May 2020; and
iii) Employees’ EPF contribution reduced to 7% with effect from 1 April 2020
to 31 December 2020; and
iv) Members of EPF are allowed to withdraw a maximum of RM500 from
Account 2 on a monthly basis for a period of 12 months effective April
2020.
Students
i) RM200 to students at various levels of tertiary education, including STPM,
matriculation and community colleges, polytechnics, diploma as well as
public and private higher learning institutions:-
➔ Payment of RM200 will be made by the end of April 2020.
Insurance and Takaful Policy Holders
i) Special fund of RM8 million to cover COVID-19 screening fees;
➔ Up to RM300 per policy holder and takaful medical certificate to
undergo COVID-19 screening at private hospitals or laboratories, as
instructed by MOH; and5
ii) Family Takaful and insurance companies will offer a 3-month suspension
on premiums by contributors whose source of income is affected by the
pandemic.
Retirees
i) Pre-retirement withdrawals from Account B up to RM1,500 per member
of the Private Retirement Scheme without any tax penalties between April
and December 2020; and
ii) RM500 to government pensioners:-
➔ Payment of RM500 will be made in April 2020.
Patients
i) Patients hospitalised under mySalam, including those infected with
COVID-19, are allowed to claim income replacement fee of RM50 per day
for a maximum of 14 days; and
ii) B40 patients who are quarantined as Patients under Investigation (PUI) are
allowed to claim income replacement fee of RM50 per day for a maximum
of 14 days.
PTPTN and PTPK Loan Borrowers
i) Deferment of PTPTN loan repayment for all borrowers for 6 months from
1 April 2020 to 30 September 2020; and
ii) Deferment of PTPK loan repayment for all borrowers for 6 months from 1
April 2020 to 30 September 2020.6
Vulnerable Groups
i) RM25 million to provide food assistance, healthcare and shelter to
vulnerables such as the elderly and children in shelters, the disabled, the
homeless and orang asli.
E-hailing Drivers
i) RM500 to e-hailing drivers.
Domestic Travellers
i) Special personal income tax relief of up to RM1,000 to resident individuals
for domestic travelling expenses incurred between 1 March 2020 to 31
August 2020:-
➔ Expenses eligible for tax relief are:-
o Accommodation fees on a tourist accommodation premises
registered with the Ministry of Tourism, Arts and Culture
Malaysia; and
o Entrance fees to tourist attractions;
➔ Effective for year of assessment 2020 only; and
ii) Digital vouchers of up to RM100 per person for domestic travelling.7
B. Families and Households
i) RM1,600 to households with income less than RM4,000 per month:-
➔ Payment of RM1,000 will be made in April 2020; and
➔ Payment of RM600 will be made in May 2020;
ii) RM1,000 to households earning between RM4,000 and RM8,000 per
month:-
➔ Payment of RM500 will be made in April 2020; and
➔ Payment of RM500 will be made in May 2020;
iii) 6-month rental exemption for B40 group who are living in the Project
Perumahan Rakyat (PPR) and Perumahan Awam;
iv) 6-month moratorium for rent payment for rent-to-own (RTO) units
effective April 2020;
v) 6-month moratorium for rent payment for Public Housing;
vi) 6-month tiered-discount for electricity bills with rates ranging between 15%
and 50% according to electricity usage with a maximum limit of 600kWh
per month effective April 2020:-
➔ 50% discount for electricity consumption below 200kWh;
➔ 25% discount for electricity consumption between 201 – 300 kWh;
➔ 15% discount for electricity consumption between 301 – 600 kWh;
and
➔ 2% discount for electricity consumption between 600kWh and above.8
C. Employers
i) Wage Subsidy Programme to assist employers in Small and Medium
Enterprises (SMEs) in retaining employees:-
Total Number of Employees of the Subsidy per Maximum Number of
Company month (Up Eligible Employees
to 3 months)
More than 200 employees RM600 200
76 to 200 employees RM800 -
75 or fewer employees RM1,200 -
➔ Wage subsidy for 3 months effective 1 April 2020 or from the date of
application;
➔ Only available for employees with salary less than RM4,000 per
month;
➔ Employers with more than 75 employees must demonstrate that their
businesses have a reduction in income of at least 50%; and
➔ Employees must continue to be retained and must not suffer pay cuts
or be required to take unpaid leave for at least 6 months;
ii) Payment of salaries by the Malaysian Government to workers involved in
service contracts such as cleaning and supplying food in schools, public
higher learning and training institutions, as well as other government
agencies, including statutory bodies;
iii) Extension of Government’s contracts with service contractors by one
month;9
iv) Employer Advisory Services (EAS) programme will be implemented by
Kumpulan Wang Simpanan Pekerja (KWSP) effective 15 April 2020:-
➔ Includes options for deferral of payments, restructuring and
rescheduling of employer contributions;
v) Foreign worker levy will be reduced by 25% for work permits that expire
between 1 April 2020 to 31 December 2020;
vi) Deadline to submit statutory documents to SSM is extended automatically
by 30 days from the end date of the MCO; and
vii) Deadline to submit financial statement is extended such that the deadline
is three months from the end date of the MCO.
D. Small and Medium Enterprises (SMEs)
i) Increasing funds to the Special Relief Facility (SRF) for SMEs by RM3
billion, thus bringing the total to RM5 billion:-
➔ Reduction of interest rate for Special Relief Facility from 3.75% to
3.5%;
ii) Increasing the size of the All Economic Sector Facility Fund by RM 1
billion, thus bringing the total to RM6.8 billion to enhance access to
financing for SMEs;
iii) Providing RM2.1 billion to fund the “Prihatin Special Grant”:-
➔ Special grant of RM3,000 to each qualifying micro SME; and10
➔ All micro SMEs are required to register with the Inland Revenue
Board to be eligible for this special grant;
iv) Providing additional funds of RM500 million under the Micro Credit
Scheme, to a total of RM700 million for soft loans:-
➔ Administered by Bank Simpanan Nasional at a 0% interest rate;
➔ Loan eligibility requirements relaxed to a minimum of 6-month
operation;
➔ Maximum financial amount increased to RM75,000 for each
entrepreneur;
v) Micro Credit Scheme extended to TEKUN Nasional, with a maximum
loan limit of RM10,000 per company, at a 0% interest rate:-
➔ Applicants can only choose between Micro Credit Scheme for soft
loans OR Micro Credit Scheme for TEKUN Nasional;
vi) SMEs with business records of less than 4 years can leverage the BizMula-
I and BizWanita-I schemes for financing up to RM300,000 under Credit
Guarantee Malaysia Berhad (CGC):-
➔ SMEs may refer to IMSME.com.my to apply for loans and schemes
proposed under the ESPs;
vii) Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide RM5 billion
worth of guarantees and increase guarantee coverage from 70% to 80% for
SMEs;
viii) Exempt payment for Human Resources Development Fund (HRDF) levy
for all sectors for a period of 6 months effective April 2020;11
ix) Automatic deferment of CP204 tax instalment payments for a period of 3
months effective 1 April 2020;
x) Automatic deferment of CP500 tax instalment payments for a period of 3
months effective 1 April 2020;
xi) Grants of RM1,000 each to 10,000 local entrepreneurs to promote sale of
their products on ecommerce platforms;
xii) Deduction is given for the renovation and refurbishment expenditure up to
a limit of RM300,000:-
➔ The deduction will not be given if the expenditure is claimed as an
allowance under Schedule 2 or Schedule 3 of the Income Tax Act
1967; and
➔ Effective for expenditure incurred from 1 March 2020 to 31
December 2020;
xiii) Expenditure incurred by companies in providing employees with
disposable personal protective equipment (PPE) such as facemasks is
deductible under section 33(1) of the Income Tax Act; while expenditure
incurred by providing non-disposable PPE to employees can be claimed as
capital allowance;
xiv) 6-month moratorium to loans from TEKUN, MARA and cooperatives and
other government agencies providing financing to SMEs; and
xv) Rental exemptions or discounts to SMEs renting properties owned by
Government-linked companies such as MARA, PETRONAS, PNB, PLUS,
UDA and several other State Government-owned companies.12
E. Healthcare Sector Allocations and Benefits
i) RM500 million to the Ministry of Health; and
ii) RM1 billion to purchase equipment and services to contain COVID-19,
including obtaining medical expertise from private healthcare services.
F. Tourism Sector Allocations and Benefits
i) 15% discount on electricity bills for tourism premises for 6 months
effective April 2020;
ii) Automatic deferment of CP204 tax instalment payments for a period of 3
months effective 1 April 2020;
iii) Exemption from HRDF levies for hotels and travel related companies;
iv) 6% service tax exemption for hotels, effective from March to August 2020;
v) Rebates on rental for premises at the airport as well as landing and parking
charges;
vi) Double deduction on expenses incurred on approved tourism-related
training;
vii) Relaxation of existing government guidelines limiting use of hotels;
viii) Revision of tax estimate for 2020 with respect to monthly tax instalment
payments without imposition of penalty:-13
➔ Application for revision of tax estimate has to be made online to the
Inland Revenue Board of Malaysia; and
➔ Effective for applications made from 1 March 2020;
ix) Hotel and other accommodation operators will be given exemption from
charging service tax on their accommodation and related services provided
for a period of 6 months from 1 March 2020 until 31 August 2020;
x) Double deduction on training expenditure incurred by qualifying hotel and
tour operating businesses for courses approved by the Ministry of Tourism,
Arts and Culture; and
xi) Expenditure incurred by companies in providing employees with
disposable personal protective equipment (PPE) such as facemasks is
deductible under section 33(1) of the Income Tax Act; while expenditure
incurred by providing non-disposable PPE to employees can be claimed as
capital allowance.
G. Commercial, Corporate, Industrial, Agricultural Sectors etc
i) 2% discount on electricity bills for 6 months effective April 2020;
ii) Allowed to revise the tax estimates in the third, sixth and ninth instalments
during the basic accounting period;
iii) Banking institutions urged to offer a 6-month moratorium, conversion of
credit card balance to term loans and restructuring of corporate loans;14
iv) Bank’s income from interest or profit from loans or financial involved with
moratorium will only be taxable when the income is received after the
moratorium period;
v) RM50 billion guarantee scheme to corporate sectors with a guarantee of up
to 80% of loan amount for the purpose of financing working capital with
the following requirements:-
➔ Managed and subject to credit evaluation by Danajamin;
➔ Minimum loan size is RM20 million per business; and
➔ Available for application from 1 May to 31 December 2020 or until
the fund is fully utilised;
vi) Import duty and sales tax exemption on importation or local purchase of
machinery and equipment used in port operations for 3 years commencing
01 April 2020:-
➔ This exemption does not apply to the importation or purchase of spare
parts and consumables including those that are used for maintenance
purposes;
➔ Applications for exemption have to be submitted to the Ministry of
Finance from 1 April 2020 to 31 March 2023;
vii) Waiving of listing fees by SC and Bursa for 1 year, for companies seeking
listing on LEAP, ACE and Main Market (applies to companies with market
capitalisation of < RM500million); and
viii) Expenditure incurred by companies in providing employees with
disposable personal protective equipment (PPE) such as facemasks is
deductible under section 33(1) of the Income Tax Act; while expenditure15
incurred by providing non-disposable PPE to employees can be claimed as
capital allowance.
H. Telecommunications and Multimedia Sector
i) Free internet to all customers effective 1 April 2020 until the end of MCO;
ii) RM400 million invested to widen network coverage and capacity; and
iii) Expenditure incurred by companies in providing employees with
disposable personal protective equipment (PPE) such as facemasks is
deductible under section 33(1) of the Income Tax Act; while expenditure
incurred by providing non-disposable PPE to employees can be claimed as
capital allowance.
I. Additional Allocations and Benefits
i) 6-month lease exemption on all premises owned by agencies and statutory
bodies of the Federal Government such as school canteens, nurseries,
cafeterias, convenience stores etc;
ii) RM 1 billion to Food Security Fund;
iii) RM100 million for the development of infrastructure for food storage and
distribution as well as crop integration programme;
iv) Special funds between RM100,000 and RM200,000 too each viable
Pertubuhan Peladang Kawasan (PPK) and Pertubuhan Nelayan Kawasan
(PNK) to develop short-term agrofood projects that can generate income
within 3 to 6 months;16
v) RM2 billion to improve social facilities such as improving roads,
upgrading dilapidated schools in Sabah and Sarawak, cleaning police
stations etc; and
vi) RM2 billion for small projects such as infrastructure projects in FELDA
and other areas, upgrading dilapidated schools in Sabah Sarawak and
upgrading Perumahan Rakyat Termiskin.17
HOW TO APPLY?
How to Apply for Bantuan Prihatin Nasional?
1. If you are a recipient of Bantuan Sara Hidup
➔ YOU DON’T NEED TO APPLY
➔ You can check your status from 1 April 2020 by going to the following
websites:-
i) Inland Revenue Board of Malaysia (LHDN)
http://www.hasil.gov.my
ii) Bantuan Sara Hidup (BSN) http://bsh.hasil.gov.my
iii) Ministry of Finance http://www.treasury.gov.my
2. If you are a taxpayer and have registered with the Inland Revenue Board of
Malaysia (LHDN)
➔ YOU DON’T NEED TO APPLY
➔ However, please be reminded to update your income tax profile e.g. your
bank account number:-
i) Go to http://www.hasil.gov.my
ii) Select E-kemaskini
iii) Select Profil Diri
iv) Update18
➔ Similarly, you can check your status from 1 April 2020 by going to the
following websites:-
i) Inland Revenue Board of Malaysia (LHDN)
http://www.hasil.gov.my
ii) Bantuan Sara Hidup (BSN) http://bsh.hasil.gov.my
iii) Ministry of Finance http://www.treasury.gov.my
3. If you are none of the above, application will be opened from 1 April 2020. You
can go to any of the following websites to apply:-
i) Inland Revenue Board of Malaysia (LHDN) http://www.hasil.gov.my
ii) Bantuan Sara Hidup (BSN) http://bsh.hasil.gov.my
iii) Ministry of Finance http://www.treasury.gov.my19
How To Apply For Wage Subsidy Programme?
1. If you are:-
i) an employer; and
ii) your employees have income less than RM4,000;
➔ You are eligible to apply for a three-month wage subsidy for your
employees by going to the Perkeso website at
http://prihatin.perkeso.gov.my from 9 April 2020 onwards
➔ Application has to be made on or before 15 September 2020
➔ The following documents are needed for application:-
i) List of employees;
ii) Employer’s bank details (front page of bank statement) and the
Business Registration Number used for the opening of this bank
account;
iii) Copies of the registration with the SSM / ROS / ROB / Authorities
for Professional, Scientific or Technical Services;
iv) PSU50 Declaration Acount; and
v) Supporting documents such as financial statement or sales report
affirmed by the management or any other relevant documents (FOR
MEDIUM AND LARGE ENTERPRISES ONLY).20
IMPORTANT DEADLINES
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