GEORGE TOWN: Income tax reduction for small and medium-sized enterprises (SMEs) is a plus but could be higher, says National Secretary of the Malaysian Small and Medium Enterprises Association (Samenta), Yeoh Seng Hooi (photo).
“It’s a plus when there’s a reduction. However, the quantum of 100,000 RM is too small.
“We had appealed up to RM500,000 or RM1million,” he said.
The 2023 budget announcement of the SME income tax reduction from 17% to 15% on the first RM100,000 earned is expected to benefit 150,000 SME taxpayers.
Yeoh said the personal income tax cut of two percentage points for people in the RM50,000 to RM100,000 income group and cash transfers to B40 will hopefully offset the higher financial costs for servicing loans due to increases in the Overnight Policy Rate (OPR). “Hopefully their disposable income will be less impacted and consumer spending will be supported. This bodes well for SMEs,” he added.
He said the guarantee limit of up to RM9bil through the Business Financing Guarantee Company would allow SMEs to have easier access to finance.
“This is particularly important for those who do not have safeguards in line with the changing business model of the digital or service sectors,” he said.
Yeoh also noted that the RM1bil grant worth RM1,000 for each beneficiary in registered micro-SMEs might not be meaningful for small and medium enterprises but would definitely benefit the micros.
Although he believes more could be done, Yeoh said the budget has been targeted in the right areas. “It is important to look at the different types of SMEs as some are still in recovery mode, such as tourism and food and beverage.
“These SMEs will likely need some support to lighten the burden of rebuilding their businesses.
“For those who have been less affected and are still doing well, they can take advantage of the momentum of this budget.
“With the higher cost of living due to inflation, this is holding back people’s purchasing ability, so the reduction in income tax and other incentives for the B40 group will help the sector of retail to continue to see some growth,” he added.