What a year 2021 was, still it was better in some ways than 2020 which was also known as the year that didn’t happen. After grave miscalculations on how vaccines would help the economy recover, Malaysia’s Budget 2022 seems to be focusing on building the country up from the grassroots.
In the Budget there are some interesting incentives for businesses brave enough to take advantage of the opportunities. Let’s jump right in and explore 8 ideas on how to spend company money this year.
The elephant in the room is the special one-off windfall tax or cukai Makmur which the government is looking towards as a means to refill its treasury. It states that any chargeable income of above RM100million in 2022 is subject to 33% income tax which means this is a good year to support your fellow entrepreneurs and build up your asset base.
1. Buy a car… no, make those CARS
With the sales tax exemptions on CKD & CBU passenger cars (100% & 50% respectively) until June 2022, it would be a good time for companies to upgrade the vehicles for their key contributors. If your company hasn’t gone down this route, this might be a good option to reduce that extraordinary income. Plus, with the exemptions on road tax for electric vehicles (EVs) and attractive green vehicle financing, your company would be getting rewarded for doing Planet Earth a favour.
On the fun front, did you know ATVs and mobile homes are also included into the sales tax exemptions? Let us know how we can help you bring in that dream-on-wheels you’ve been eyeing from overseas.
2. Invest in houses/housing
With the removal of the Real Capital Gains Tax (RCGT) from the 6th year onwards, housing in relatively established neighbourhoods should be more affordable now. Given that infrastructure like nearby shops, highways and some form of public transport would have developed over this time, housing in these areas would not just be valuable assets but good housing options for staff/employees.
3. Renovations & building upgrades
Another way for companies to spend their budget this year is renovations and building upgrades. Claimable to up to RM300,000 per company, some of the renovations included in this category are:
Businesses can claim tax deductions up to the aforementioned sum on the costs of renovation to comply with COVID-19 standard operating procedures, including improved ventilation. Bye bye, sick building syndrome!
4. Invest in ESG (Environment - Social - Governance)
5. Let’s science the sh*t out of this
The famous line from “The Martian” brings benefits to companies willing to invest in R&D and technology to bring an edge to their operations in 2022. As the number 5 way to reduce company taxes, the matching grants available to help you spend that extraordinary profit are focused on R&D and investments in engineering, science and technology.
With such an open statement, this even enables companies who are in food & retail to come up with innovations within their industry to be able to make use of the grants. For example, if a retailer was investing in a bio-plastic packaging manufacturing process to replace single-use plastics the retailer would not only be able to write off the cost of the machinery involved in but get a grant for the R&D and digital marketing costs as well.
6. Upgrade your IT infrastructure
The push for WFH isn’t over. In fact, it's now becoming a permanent option for some. The WFH phenomena is now enabling companies to attract talent from across borders, allowing people from other states or countries to work in and around Malaysia without the stress of having to migrate. This hybrid way of working has far-reaching implications for the company. From the internet connection at the office to having to switch employees from desktops to laptops to implementing cyber security, contemplating cloud storage or having more than one network server.
Investing in your IT infrastructure in 2022 is a great idea because these can get written off as asset investments to defray your windfall tax; if your company profits don’t quite fall into that category, you can still write off these off your tax while leveraging on the digital grants available from MDEC and the banks.
7. Build up your market presence
8. Reinvestment allowance
Where there is chaos, there is opportunity. While the pandemic saw many businesses flounder, several rose out of the ashes to great, profitable heights. And of course, Big Brother caught scent of this and introduced the windfall tax.
There’s some good news for Malaysian companies in operation below 3 years which have fallen into this net, and it comes in the form of the reinvestment allowance. According to PWC,
Got more ideas on how companies can wisely spend their budget this year? Feel free to share them below!