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. What are they? Keep reading to learn more!

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

Here are four tax reliefs available for Malaysian SMEs in 2023/2024:

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 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%.

There are many tax reliefs for SMEs in 2023/2024. 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.