If you’re in any way planning to start a new company, we strongly recommend you register before the year-end. New companies established between 1 July 2022 to 31 December 2022 are eligible for a 3-year tax rebate of up to RM60,000!
You heard it right. If ever there was a time to register a company, now would be it.
What’s This Tax Rebate and Why Have I Not Heard of it?
This company tax rebate is part of the PENJANA (Short-term Economic Recovery Plan) initiative introduced by the Malaysian government during the COVID-19 pandemic.
This tax rebate for newly incorporated companies was created to boost Malaysia’s economy by encouraging entrepreneurs to start their own businesses. Thus, this tax rebate is targeted specifically towards newly established SMEs (Small and Medium Enterprises) set up between 1 July 2020 and 31 December 2022.
Is My Company Eligible for this Tax Rebate?
While we would love to say that any Company or LLP is eligible for this tax rebate, there are requirements that you need to fulfill. These requirements are:
- Your business entity must be under the Companies Act 2016 or the Limited Liability Partnerships Act 2012.
- Your paid-up capital must be under RM 2.5 million and your annual turnover must not exceed RM 50 million.
- The newly established entity must be located at a different location or premise than its associated company.
- Factory, facilities, or equipment of the new entity must be bought new and not transferred from any associated company.
- The staff of the newly established business entity must be different employees from any associated companies.
- Companies or partnerships that have converted into an LLP or vice versa will not be eligible for the tax rebate (sorry!)
Important Details to Know About the Tax Rebate
If you meet all the requirements to apply for this tax rebate, time to read through the fine print to fully understand the extent and limitations of this benefit provided by the Malaysian government.
1. You won’t get the full RM60,000 company tax rebate in one shot!
Instead, you will be getting a maximum amount of RM20,000 in tax rebates per year over the course of 3 years.
2. The tax rebate is based on company operating and capital expenditures.
Capital Expenditure is a company’s long-term expenses (ex. investment in new machinery) while operating expenses are its daily expenses (ex. salaries and premise rental).
For instance, if a company only spends RM16,000 on both operating and capital expenditures, the company can only claim a rebate of up to RM16,000.
3. You will not be able to carry forward the unclaimed amount.
Continuing the previous example, if your capital expenses and operating expenses are RM16,000, you will be only eligible for a tax rebate of RM16,000 and the remaining RM4,000 will then be voided and unable to be carried forward to the next year.
Thus, it would be wise to plan for every year to fully capitalise on this benefit.
Start Your Company Before End of 2022
Ready to open your company with a RM60,000 head start.
With such a small window of time left before the deadline, it may feel impossible to gather the necessary documents for submission in time, let alone the other steps that come after submissions are approved.
It’s all a matter of experience. Our team has handled hundreds of such registrations, and by now we know the process like the back of our hand.
If speed is what you need, MISHU is who you want by your side!
Start your business with us today and get your hands on a new company within two to three working days, with more than enough time to secure the tax rebate.
Got any questions? Please get in touch, we’d love to help.
Remember, time is of the essence!