Get TWICE the deduction for staff accommodation!

Published: Fri, 08/05/22

TAX INCENTIVE FOR SAFE@WORK PROGRAMME

Provision of Employees’ Accommodation

The impacts arising out of the Covid-19 pandemic are far-reaching and extensive. It has no doubt created a lot of hassles for manufacturers that have a dense population of employees in the same workplace day in and day out. Staff morale was also affected as workers feel that they had to come to work at great peril to their health. On top of being concerned with employees’ health, employers also have to bear the losses that arise out of decreased production and stick to strict Covid-19 protocols.

In response to this, the government introduced a tax incentive to encourage manufacturing companies and manufacturing-related service companies to implement the Safe@Work Programme to ensure that they are able to operate during a Covid-19. Tax incentive in the form of a double tax deduction capped at RM50,000 shall be given to each company that registers with MITI beginning from 1 April 2021.

The above tax incentive has been legislated under Income Tax (Deduction for Expenditure on Provision of Employees’ Accommodation) Rules 2021 (P.U. (A) 470). The following are the key points of this provision:

• What: Double tax deduction for the expenses incurred on rental of a premise for purpose of employees’ accommodation.

• When: With effect from Year of Assessment (YA) 2021 for rental expenses incurred from 1 January 2021 until 31 December 2022.

• Who: A resident company that is incorporated under Company Act 2016 [Act 777]; carrying out the business of manufacturing or manufacturing-related services; and obtained approval of compliance under the Safe@Work Programme from MITI.

• Limit: The total amount of rental expenses allowed for tax deduction shall NOT exceed RM50,000 for each company.

• Supporting document:

(1) Certificate for Accommodation as provided under section 24D of the Employees’ Minimum Standards of Housing, Accommodations and Amenities Act 1990; and

(2) Approval letter from MITI for compliance under Safe@Work Programme.

• Accommodation for director?

Accommodation for a director is not eligible for this tax incentive.

What exactly is the full scope of employer’s responsibility under the Safe@Work Programme? What is the process of registration at the Covid-19 Intelligent Management System (CIMS)?

Do you wish to know more? Find out whether you are eligible for this tax deduction on taxPOD.

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No.32 & 34, Lorong Thambi 2, Jalan Brunei
Kuala Lumpur Wilayah Persekutuan 55100
MALAYSIA

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