As a business owner, you already understand that every Ringgit counts. One way to save money for your company is by taking advantage of tax relief for SMEs. Tax reliefs are incentives that allow businesses to reduce the amount of taxes they pay. Several tax reliefs are available in Malaysia for small and medium-sized enterprises (SMEs) to help them grow and thrive as part of the 2024 budget. We’ve highlighted the key reliefs and deductions for SMEs from Budget 2024 that are relevant to YA2024. What are they? Keep reading to learn more!

You can also read our article on Budget 2025 with key highlights for Malaysian SMEs in preparation for the year ahead and YA2025 tax season.

SME Tax Relief: List of Tax Incentives and Deductions in Malaysia

Here are the tax reliefs available for Malaysian SMEs in YA2024:

1. Start-Up SME Tax Rebate

The government offers a tax rebate to help newly incorporated SMEs get off the ground. The Start-Up SME Tax Rebate provides a 20% tax rebate on the first RM20,000 of chargeable income for the first three consecutive years of assessment, available for SMEs incorporated on or after 1 January 2022. This tax rebate is an excellent way for new SMEs to invest in their business and save money on taxes. It also encourages entrepreneurship by reducing the financial burden of starting a new business.

2. SME Special Deduction

The SME Special Deduction is another tax relief available to Malaysian SMEs. This deduction allows SMEs to claim a special deduction of 30% of the qualifying expenditures incurred to automate business operations.

Qualifying expenditures include the cost of purchasing or leasing machinery or equipment and the cost of software and hardware used for automating business processes. This tax relief is available for SMEs incorporated on or after 1 January 2022 and whose business activities are related to manufacturing, agriculture, and services.

By automating business processes, SMEs can increase productivity, reduce costs, and improve customer service. The SME Special Deduction encourages SMEs to invest in technology and stay competitive.

3. Tax Relief for EV Charging Facilities

As the world moves towards a greener future, Malaysia is encouraging the adoption of electric vehicles (EVs) by offering tax relief for EV charging facilities. SMEs that install EV charging facilities at their premises can claim a tax deduction of up to RM2,500 for installing, renting, and purchasing charging stations until YA 2027. SMEs can attract environmentally conscious customers and employees by providing EV charging facilities and contributing to a sustainable future.

4. Investment Tax Allowance

The Investment Tax Allowance (ITA) is a tax relief that allows SMEs to claim a deduction of up to 60% of qualifying capital expenditures incurred to expand their business. The statutory income that may be exempted using the investment allowance is generally limited to 70% per year but may be up to 100% if approved.

For existing companies in Malaysia relocating overseas facilities into Malaysia with capital investment above RM300 million, a 100% Investment Tax Allowance (ITA) for five years is provided. The allowance is offset against 100% of statutory income for each assessment year.

Tax Deductions for SMEs: How They Differ from Tax Reliefs

Tax deductions differ from tax reliefs in that they reduce the amount of taxable income rather than directly lowering the tax payable.

Below are some key tax deductions available for SMEs:

1. Mandatory E-Invoicing Deduction

E-invoicing will be mandatory for taxpayers with annual income exceeding RM100 million starting 1 August 2024, with phased implementation for others by 1 July 2025. SMEs can claim a special deduction of RM50,000 per YA from YA 2024 to YA 2027 for expenses related to e-invoicing implementation.

2. Capital Allowance for Small Value Assets

SMEs can claim a 100% capital allowance on small value assets costing RM2,000 or less per item, with no cap on the total claim per YA. This incentive encourages investment in necessary equipment and technology.

How Tax Incentives Help SMEs Stay Competitive

By offering tax incentives for businesses, it helps SMEs grow sustainably, adopt new technologies, and compete regionally. Whether through rebates, deductions, or allowances, these incentives allow small businesses to reinvest savings into operations, expansion, and innovation. 

Tax Rate for Companies in Malaysia

It’s also important to note the tax rate applicable to enterprises in Malaysia. The tax rate for businesses with paid-up capital less than RM2.5 million and total gross business income not exceeding RM50 million is as follows for Year Assessment 2023:

  • On first RM150,000: 15%;
  • RM150,001 to RM600,000: 17%;
  • RM600,001 and more until the stipulated upper limit: 24%.

Maximising SME Tax Relief

There are many tax reliefs for SMEs for YA2024. The Start-Up SME Tax Rebate, SME Special Deduction, Tax Relief for EV Charging Facilities, and Investment Tax Allowance are all designed to help SMEs grow and thrive. As a business owner, taking advantage of these tax reliefs is crucial to saving money, investing in your business, and staying competitive.

To ensure you are eligible for the benefits mentioned, don’t hesitate to consult a tax expert as you file your documents! Want to find out about personal income tax relief? Read our article on the updated list of what you should claim from your personal income tax.

For a smoother submission process, you can also read our complete guide on how to file income tax in Malaysia with MyTax to help make your filing easier and more efficient.