To Our Valued Clients
In the recent economic stimulus packages announced by the Government since the COVID-19 outbreak, it was proposed that a special deduction be given to landlords offering reduction of rental of business premises of not less than 30% of the rate of monthly rental to tenants who are small and medium enterprises ["SME"] for the period from April 2020 to December 2021. Besides, it was announced that the special deduction be expanded to include similar reduction of rental of business premises rented out to non-SME tenants commencing from January 2021 until December 2021. The special deduction allowed against the rental income from the SME and non-SME tenants shall be equivalent to the amount of reduction of rental of not less than 30% of the rate of monthly rental under the existing tenancy agreement for the respective periods mentioned above.
Following the above, the relevant legislations were gazetted on 8th September 2021 to allow the special deduction granted to landlords who offer the rental reduction to SME and non-SME tenants. To be eligible for the above special deduction, kindly take note of the requirements as outlined below:-
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Tax Deduction for Rental Reduction Offered to SME Tenants Pursuant to the Income Tax (Special Deduction for Reduction of Rental to a SME) Rules 2021 |
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The period of rental that qualifies for the special deduction is from April 2020 to December 2021 |
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To substantiate the claim for special deduction under the above Rules, the landlord must provide:- |
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a tenancy agreement which is stamped under the Stamp Act 1949; |
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a separate statement of income for rental income for the relevant months that fall in the basis period for a year of assessment; |
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a confirmation made by the:- |
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landlord stating the amount of reduction of rental given; and |
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SME stating the receipt of reduction of rental; and |
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a certificate issued by the SME Corporation Malaysia ["SME Corp"] confirming the status of the SME (for the purpose of claiming the special deduction for the period of April 2020 to December 2020) (Note) |
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The tenant must be a resident in Malaysia and used the business premises for the purposes of its business |
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Based on the Frequently Asked Questions ["FAQ"] on Special Deduction for Taxpayers Who Offer Rental Reduction of Business Premises to SME and Non-SME (Amended as at 23rd September 2021), the certificate of confirmation for the status of the SME for the purpose of claiming the special deduction for the period from January 2021 to December 2021 is not required if this has not been issued by the SME Corp. |
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Tax Deduction for Rental Reduction Offered to Non-SME Tenants Pursuant to the Income Tax (Special Deduction for Reduction of Rental to a Tenant Other Than a SME) Rules 2021 |
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The period of rental that qualifies for the special deduction is from January 2021 to December 2021 |
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To substantiate the claim for special deduction under the above Rules, the landlord must provide:- |
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a tenancy agreement which is stamped under the Stamp Act 1949; |
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a separate statement of income for rental income for the relevant months that fall in the basis period for a year of assessment; |
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a confirmation made by the:- |
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landlord stating the amount of reduction of rental given; and |
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tenant stating the receipt of reduction of rental |
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The tenant must be a resident in Malaysia and used the business premises for the purposes of its business |
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For the purposes of the above Rules, "business premises" means premises used by a tenant only for the purposes of its business and includes a bazaar lot, stall, vehicle park, storage warehouse or any place used only for the purposes of business.
For further information, kindly refer to the following:-
Please do not hesitate to contact us if you need any clarification on the foregoing.