KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has proposed that the government consider imposing income tax waivers for individuals and companies affected by the Covid-19 outbreak.
FMM president Tan Sri Soh Thian Lai said, since taxable income has been greatly reduced, the loss in tax revenue to the government may be comparatively minimal should waivers be introduced.
"For businesses, the tax waiver will allow them to recoup and strengthen their internal finances to rebuild their businesses. With tax exemptions, the employees, as consumers, will have higher disposable income," he said.
Soh said both corporate and personal income taxes have to be waived for a stronger impact, adding that this will lead to a multiplier effect for all levels, from consumer to business and to workers, in the cycle of supply and demand.
FMM also called on the government to extend the loan moratorium and financing until the end of the year, or to March 2021, to relieve business cash flows amidst the third wave of the Covid-19 outbreak.
Soh said even though Bank Negara Malaysia has been actively reaching out to small and medium enterprises (SMEs) to approach their banks to reschedule or restructure their loans or financing, an extended moratorium was still the preferred and more effective assistance.
"This is especially so since the onset of the third wave of the pandemic has raised market uncertainties and risks," he said.
Apart from that, Soh said tax relief and assistance accorded to SMEs should be accessible to mid-tier companies (MTCs) for at least two years to help in their recovery.
"There should be flexibility in the definition of company size based on sales turnover to assist all companies which have suffered significant declines, so that they fall within the ambit of the national SME definition," he said.
According to the Malaysia External Trade Development Corporation (Matrade) Mid-Tier Companies Development Programme, MTCs are companies with annual revenues between RM50 million and RM500 million in the manufacturing sector, and between RM20 million and RM500 million in other sectors, he added.
He said FMM also proposed that the 200 employees and RM4,000 salary cap on the Wage Subsidy Programme (WSP) under the National Economic Recovery Plan (Penjana) be lifted and further expanded to include MTCs by a restriction of perhaps not more than 800 workers.
"We also hope the WSP could be extended to assist companies impacted by the third wave of the pandemic," he said.
Other items on the FMM wishlist include continuous support for technology and digitisation adoption, as well as the reinstatement of the goods and services tax (GST) at three per cent, with a threshold of RM500,000 and a transition period of six months.
FMM also urged the government to conclude the Regional Comprehensive Partnership Agreement (RCEP) and implement the Free Trade Agreements (FTAs) which have been signed, such as the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), in order to provide market access for Malaysian exporters, said Soh.
Other suggestions listed include support for technology and digitisation adoption, reinstating Goods and Services Tax (GST) at three per cent with a threshold of RM500,000 and transition period of six months; and reviewing the definition of minimum wage as take-home pay.
"Minimum wage should be basic wage and all fixed cash payments and allowances defined as wages under Section 2 of Employment Act 1955. The government should impose moratorium on the minimum wage for the next two years as companies revive their businesses," he said.