Special Tax Deduction for Rental Reduction on Business Premises Rented to Small and Medium Enterprises and Non-Small and Medium Enterprises

As announced under the PERMAI Package on 18 January 2021, the special tax deduction granted to taxpayers who provide a rental reduction of at least 30% to their Small and Medium Enterprise ("SME") tenants has been extended to 30 June 2021 as well as to cover business premises rented to non-SMEs.

The Malaysian Inland Revenue Board ("MIRB") has issued an updated Frequently Asked Questions ("FAQs") dated 19 February 2021 on its official website to take into account the above proposals. We are pleased to highlight below the notable updates in the FAQs

•  A qualifying person will be eligible for a special tax deduction equivalent to the rental reduction given to SMEs and non-SMEs tenants in the following period:

• For the purpose of claiming the said special tax deduction, SME Status Certificate issued by SME Corporation Malaysia up to 30 June 2021 can be used as verification of the tenants' SME status.
•  The MIRB is still in the midst of updating the Worksheet to be completed for the special tax deduction claim, hence it has not attached the Worksheet to the FAQs. 

In addition, we note that the question on whether a qualifying person can enjoy the special tax deduction if the business premise is rented to a related company has been removed from the latest FAQs. The officer from the MIRB has verbally clarified that this incentive applies as long as the tenant's SME status is supported by the SME Status Certificate. It will not affect the landlord's eligibility to claim this special tax deduction incentive even if the business premise is rented to a related company.

Please note that the implementation of the special tax deduction incentive is subject to the gazette of the relevant Income Tax Rules.

The MIRB's updated FAQ (available in Malay language only) and our earlier Tax Whiz covering a summary of the above incentive can be accessed via the above links.

Should you have any questions or require further clarification, please do not hesitate to contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organisation.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Tai Lai Kok
Executive Director
Head of Tax 

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