Further deduction for COVID-19 screening costs borne by employers

Further deduction for Coronavirus Disease 2019 (COVID-19) screening costs borne by employers

As highlighted in an earlier alert, the Income Tax (Deduction for Expenses in relation to the Cost of Detection Test of Coronavirus Disease 2019 (COVID-19) for Employees) Rules 2021 were gazetted to provide that in ascertaining a Malaysian-resident employer’s adjusted income from his business for a YA, there shall be allowed a further deduction (i.e., a deduction in addition to any deduction allowable under Section 33 of the ITA) for the cost of COVID-19 detection tests for his employees between 1 January 2021 and 31 December 2021 (see Tax Alert No. 22/2021). In order to qualify for the additional deduction, the employer has to produce a receipt and certification issued by a medical practitioner registered with the Malaysian Medical Council or a medical practitioner registered outside Malaysia, indicating that the COVID-19 detection tests had been provided to his employees.

Following the above, the Income Tax (Deduction for Expenses in relation to the Cost of Detection Test of Coronavirus Disease 2019 (COVID-19) for Employees) (Amendment) Rules 2022 [P.U.(A) 291] were gazetted on 9 September 2022 to provide that: 

• The receipt and certification issued by a medical practitioner registered outside Malaysia apply only to expenses incurred outside Malaysia, and
• As an alternative, to qualify for the additional deduction, employers may also produce receipts and COVID-19 detection test results of their employees issued by a health facility listed in the List of Laboratories Conducting RT-PCR Test for COVID-19 to the COVID-19 Management Guidelines in Malaysia No. 5/2020 (refer to Annex 4a) issued by the Ministry of Health Malaysia.

The Amendment Rules are effective from YA 2021.