MIA: Reduction In SME Tax Rate Will Motivate Businesses

KUALA LUMPUR, Oct 25 (Bernama) -- The reduction in effective income tax rate for small and medium enterprises (SMEs) announced in the 2017 Budget will motivate businesses to increase their chargeable income. Malaysian Institute of Accountants (MIA) President Datuk Mohammad Faiz Azmi, however, opined that the lower tax rate should be applied to the entire chargeable income to enhance the competitiveness of Malaysia as a business hub in the ASEAN region. In a statement Tuesday, he said the Malaysian corporate income tax rate is still overall not as attractive, as other ASEAN countries. The MIA suggested that Small and Medium Accounting Practices (SMPs), that play an important role in advising and nurturing SMEs, to also be eligible for some incentives and special deductions. "Similar to other SMEs’ set-up, they also face challenges in terms of human capital, market access, legal and the regulatory environment, due to the constraints of their firm size. "Hence, the MIA hopes the SMPs will not be left out," Faiz said. Among the incentives for SMEs during the 2017 Budget announcement was a reduction in the tax rate from 19 to 18 per cent for chargeable income up to US$119,823 (RM500,000). In addition, there is also a new scheme for companies, specifically for the years of assessment 2017 and 2018. It offers a reduction in tax rate to be applied to the increase in chargeable income compared to the previous year of assessment. (US$1 = RM4.17) -- BERNAMA