|Factory||Sales less than RM300,000 or total full time staff not more than 5 people||Sales from RM300,000 until RM15 million or full time staff between 5 to 75 people.||Sales from RM15 juta until RM 50 million or total of full time staff between 75 to 200 people.|
|Services & Other Sector||Sales from RM300,000 until RM 3 million or total of full time staff between 5 to 30 people.||Sales from RM 3 million until RM 20 million or total of full time staff between 30 to 75 people.|
What is SME
SME is an acronym to Small Medium Enterprise while it is also interpreted as Small and Midsize Businesses in Malay Language. SME can be categorised in two industries:
An example of manufacturing industry are spare part factory or productions of physical goods. The yearly sales should not be more than RM50 million or the full time workers not more than 200 people.
An example of services industry and other sectors are businesses which are others than the manufacturing industries. It consist wide range from legal firms, tourism related business and others. Yearly sales should not be more than RM20 million and full time workers not more than 75 people.
SME refers to genuine business entities as follows:
- Incorporated in Malaysia under the Companies Act 2016 (replacing Companies Act 1965)
- Registered under the Business Registration Act (1956) or Limited Liability Partnership Act (2012)
- Registered under Authorities or District Office in Sabah and Sarawak.
- Registered under Statutory Bodies for Professional Services Supply.
- Public Listed Companies under ACE Market or Malaysia Online Trading Platform for Unlisted Market (MyULM) or SME exchanges unlisted in other countries and the subsidiaries are SME.
- Public Listed Companies at the Main Board or Main Bourse in other countries and the subsidiaries are not SME.
- Subsidiaries of Big Companies, Multinational Companies, Government Related Companies, Incorporates Finance Minister Companies and Government Owned Company will not be considered as SME.
- Other Subsidiaries entities can be considered as PKS if both, Holding and Subsidiaries fulfil the definition of SME.
List of Tax Incentives and Deductions
- IRBM guarantees that it will act in a fair and just manner in its effort of providing taxation services to the people.
- This approach by IRBM is parallel with its principles to function in a professional manner with integrity.
- As follows are the special tax treatment afforded to SME and local start-up business entity either companies with joint venture or not.
- Tax rate of 17% on taxable income up to RM600,000 for a company with paid up capital not more than RM2.5 million and yearly sales value not more than RM50 million.
- SME is eligible to claim special allowances for small assets value not more than RM2,000.
- Deferment of income tax installment payment. CP204 and CP500 starting from 1 Jan 2022 until 30 Jun 2022.
- Approval of amending tax estimates
- Exemption on Stamp Duties for loan agreement on loan facilities approved under the Tabung Bank Negara Malaysia. Please refer P.U. (A) 387/2021.
- Exemption on Stamp Duties on mergers and acquisitions of SME.
- Exemption on Stamp Duties on Micro Credit Loans below RM50,000. Please refer P.U. (A) 446/2011.
- Special deduction for SME. Deduction allowed for an amount equivalent to the amount of rent deduction not less than 30% from the monthly rent rate stipulated in the tenancy agreement of a business premise.
- Start-up SME tax rebate of RM20,000 for each year of assessment for 3 consecutive assessment years (Incorporated and operational from 1 July 2020 until 31 December 2021)
- Apart from that, the latest initiative for Financial Aid by the Ministry of Finance are as follows:-
- Micro credit zero interest loan for the first 6 months, with moratorium will be provided by multiple agencies such as TEKUN, Agrobank dan BSN for SME and micro business.
- For empowering equity crowd funding and peer to peer financing, alternatives financing through matching grants are introduced under Malaysia Co-Investment Fund (MyCIF) and investments by BPMB (Bank Pembangunan Msia Bhd)
- Digitilisation Grant Schemes for SME amounting to RM200 million.