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Updated Frequently Asked Questions on special deduction on rental discounts given to tenants
As highlighted in an earlier tax alert, the following Rules were gazetted on 8 September 2021 to legislate the proposal for a special deduction for property owners who provide at least 30% rental discounts to tenants (see Tax Alert No. 19/2021):
- Income Tax (Special Deduction for Reduction of Rental to a Small and Medium Enterprise) Rules 2021 [P.U.(A) 353/2021]
- Income Tax (Special Deduction for Reduction of Rental to a Tenant other than a Small and Medium Enterprise) Rules 2021 [P.U.(A) 354/2021]
Following the above, the IRB has published an updated version of the Frequently Asked questions (FAQs) document in Bahasa Malaysia, titled “Potongan Khas Kepada Pembayar Cukai Yang Memberi Pengurangan Sewa Premis Perniagaan Kepada Perusahaan Kecil Dan Sederhana (PKS) Dan Bukan PKS Di Bawah P.U.(A) 353/2021 Dan 354/2021”, dated 23 September 2021.
The key changes are outlined below.
- In line with P.U.(A) 353/2021, the updated FAQs stipulate that a small and medium enterprise (SME) is defined as a Malaysian-resident and certified as an SME by SME Corporation Malaysia (SME Corp)
- The FAQs have been updated to reiterate that the certificate issued by SME Corp confirming the status of a tenant as an SME is required only for the period between April 2020 and 31 December 2020. The certificate must be obtained by 31 December 2021.
- The following worksheets for the special deduction have also been provided in the updated FAQs:
- HK-C16B: Companies, co-operatives, limited liability partnerships (LLPs) and business trusts
- HK-4E: Other than companies, co-operatives, LLPs and business trusts