Allow SMEs to defer paying income tax till December, urge accountants

The Malaysian Institute of Certified Public Accountants and Malaysian Rating Corporation Bhd say with the MCO, many SMEs are facing bankruptcy as their revenue dries up and overhead expenses accumulate.

KUALA LUMPUR: The government should consider allowing small and medium-sized enterprises (SMEs) to defer income tax instalment payments up to December rather than just for a three-month period ending in June.

In a joint statement, the Malaysian Institute of Certified Public Accountants (MICPA) and Malaysian Rating Corporation Bhd (MARC) said with the movement control order, many SMEs are facing bankruptcy as their cash flow and revenue dry up and overhead expenses accumulate.

“We think the government could consider extending the deferment until December 2020.

“This is because we expect the impact of supply chain disruptions to be felt for quite some time after the outbreak ends,” they said in a statement titled “Mitigating the Impact of Covid-19: Learning Points”.

Under the Prihatin Rakyat Economic Stimulus Package, unveiled on March 27, the government allows all SMEs to postpone income tax instalment payments for a three-month period beginning April 1.

This measure is in addition to the tax instalment payment postponement given to affected businesses in the tourism sector for six months, starting also from that date.

They also said it is crucial for financial institutions, namely commercial banks and development financial institutions, to step forward at this critical moment in the country’s economic history.

“It is important that they continue to inject fresh funds into the economy and support economic activities by lending to viable businesses.

“Otherwise, we could end up with thousands of business failures which will have dire implications on the financial system, economy and labour market.

“The surge in business failures could also trigger social problems on a large scale,” the two organisations added. - FMT