SME Benefits Announced in Budget 2023 

The newly released Budget 2023 showed that the government is sincere in its support for small and medium enterprises (SMEs). SMEs are the lifeblood of the country's economy, and therefore have always been highly valued by the government. As we approach the end of the first quarter of 2023, it is essential to take advantage of the latest budget's incentives, subsidies, loans, and financing support, etc. to make the most comprehensive plans for the remainder of the year. 

Voluntary Disclosure Program

The Voluntary Disclosure Program is back! Individuals who voluntarily disclose their unreported taxes will receive a 100% penalty waiver. Some may worry that the government may use this as an opportunity to conduct further investigations or audits. However, according to past experience, when the programme was implemented in 2018, the government did not do that and the market reacted positively. If you have made a mistake in reporting taxes previously, take advantage of this opportunity to make things right. 

Tax Incentives

1. Small and medium-sized enterprise (SME) owners will enjoy a 2% reduction in tax rates: The government has reduced the income tax rate for SME owners by 2% (from 17% -> 15%). Previously, the first RM600,000 of chargeable income will be subject to tax rate of 17% , but it is now proposed that the first RM150,000 of chargeable income will only be subject to tax rate of 15%, while the remaining taxable income between RM150,001 to RM600,000 will be subject to 17% tax rate; thereafter, the balance will be charged at a fixed rate of 24%. Businesses are expected to save up to RM3,000 in taxes.      
2. Tax deduction of up to RM1.5 million for firms that list on Bursa Malaysia: To help tech-based businesses grow and move to the next level, the government has extended tax deductions of up to RM1.5 million for listing fees for companies on the ACE and LEAP platforms of Bursa Malaysia until the year of assessment 2025. This deduction also extended to MSME companies who listed on the LEAP Market.       

Loans and Financing Support

1.  Financing incentives: The Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide up to RM20 billion in funding to guarantee SME loans, with a high guarantee rate of up to 90% for key sectors such as high-tech, agriculture, and manufacturing. Bank Negara Malaysia, Bank Simpanan Nasional (BSN), and TEKUN National Entrepreneur Group Economic Fund will provide a total of RM1.7 billion in loan funds for micro-enterprises, women and youth entrepreneurs, and small traders. 
2. Digitalisation of businesses: In the current era of technology, digitalisation is inevitable. The government will provide RM100 million to assist SMEs in intelligent automation. Business owners can apply for up to RM5,000 to subscribe to digital applications for sales POS systems, accounting, or inventory management. At the same time, Bank Negara Malaysia will prepare a RM1 billion financing fund to help SMEs automate and digitalise.
3. High-growth local innovative companies: Government-linked companies (GLCs) and government-linked investment companies (GLICs) play an important role in promoting economic growth. Khazanah Nasional and the Employees Provident Fund (EPF) will invest RM1.5 billion in high-growth local innovative companies.
4. Sustainable and automated development: The Development Bank of Malaysia will provide RM6 billion in strategic financing to promote sustainable development and automation.
5. Agricultural financing: Bank Negara Malaysia will provide RM1 billion in loan funds to help SMEs increase agricultural production through the “Agricultural Financing Program”. 

Other Incentives

1. Unchanged electricity rates for SMEs: The government will maintain the electricity rates for local users and SMEs, but will increase the rates for all large companies except for those in the food and agriculture industries.
2. Hiring of graduates and vulnerable groups: The Malaysian Social Security Organisation (SOCSO) will provide a monthly subsidy of RM600 for three months to encourage the private sector to create quality job opportunities for new graduates. Employers who hire vulnerable groups, including people with disabilities, the homeless, and long-term unemployed, will also receive a monthly subsidy of RM600 for three months. 

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