Incentives for SMEs could be more thought out

Industry observers said that while it is good that Budget 2017 focused on the small and medium enterprises (SMEs), the incentives could be more thought out.

An executive director from KPMG Tax Services Sdn Bhd pointed out that the reduction in tax rate between one and four per cent is only granted for two years. It may not reach out to many companies and SMEs given the current economic situation. According to the managing director of Crowe Horwath KL Tax Sdn Bhd, the reduction in rates are not very significant and suggested that a bigger impact would have been made if it was reduced to be in line with other countries such as Thailand (20%) and Singapore (17%).

PricewatershouseCoopers Malaysia tax leader suggested measures such as cash rebates for innovation and R&D that may encourage startups and SMEs to reinvest in the business, and potentially expand internationally.

Source: The Sun Daily, 24 October 2016

Individual tax reliefs could use more bite

According to an executive director from KPMG Tax Services Sdn Bhd, the individual tax reliefs announced in the Budget 2017 or lack thereof, are somewhat inadequate.

The new lifestyle relief of RM2,500 is a combination of the existing reliefs for purchase of reading materials, computer and sports equipment which total up to RM4,300 if one qualifies to claim for all the reliefs. Although this means that the relief for purchase of computer is no longer restricted to once every three years, the amount of eligible relief has been reduced. As the amount is capped, it is suggested that the Government provide it as standard relief, ie without the need to substantiate the claim with invoices/official receipts.

She acknowledges the new tax relief for RM1,000 for enrolling children in registered preschools and nurseries will help working parents, along with the tax relief of RM1,000 for the purchase of breastfeeding equipment.

However, she is of the opinion that it would be more beneficial for the M40 group if the Government had revised the EPF and life insurance premium relief instead.

Source: The Borneo Post, 24 October 2016