On 5 June 2020, the Prime Minister of Malaysia announced a Short-Term Economic Recovery Plan (ERP) in response to COVID-19. The relief plan contains the following tax measures.
- New tax holiday incentive for foreign manufacturers that relocate their operations to Malaysia which includes (i) 0% tax rate for 10 years for company in manufacturing sector with new investment in fixed assets between RM300 million and RM500 million and (ii) 0% tax rate for 15 years for company in manufacturing sector with new investment in fixed assets exceeding RM500 million. (iii) 100% investment tax allowance for 5 years for existing company in Malaysia relocating its overseas manufacturing facilities into Malaysia with investment in fixed assets exceeding RM300 million. The tax holiday incentive will be available for applications made from 1 July 2020 to 31 December 2021
- Income tax rebate up to RM20,000 per year for first 3 years of assessment for SME incorporated and commenced operation between 1 July 2020 and 31 December 2021
- The existing service tax exemption for hotels has been extended to 30 June 2021, and a new exemption for tourism tax from 1 July 2020 to 30 June 2021 has been introduced.
- A 100% export duty exemption from 1 July 2020 to 31 December 2020 is granted to support the commodity sector including crude palm oil, crude palm kernel oil and Refined bleached deodorized palm kernel oil
- Full sales tax exemption on locally assembled cars; 50% on imported cars effective from Mid-June to 31 December
- cost of renovation and refurbishment of business premises of up to RM300,000 will be given a tax deduction.
