On 3 April 2020, the Inland Revenue Board of Malaysia (“IRB”) issued a set of revised FAQs.
 
We set out here updates on our earlier e-alert issued on 3 April 2020.
 
The Prihatin Rakyat Economic Stimulus Package (“Prihatin”)
 
The relevant initiatives under Prihatin as announced by the Government are now encapsulated in the revised FAQs.
 
Of significance is that the revised FAQs have clarified that the qualifying criteria of the SMEs entitled to the stimulus provided are SMEs who have a paid-up capital of not more than RM2.5 million and a gross business income of not more than RM50 million, as per requirements under Section 2(9) of the Income Tax Act 1967 (“ITA”).
 
The requirement that the SMEs must not be controlled by, or control, directly or indirectly, another company, with a paid-up capital of more than RM2.5 million (as contained in the ITA) however has not been included in the updated FAQs as a qualifying criteria.
 
Unlike the Prihatin package announcement there is also no requirement stated in the FAQs that the SMEs must be in the relevant industries which are affected by the Covid-19 pandemic. As observed in our earlier alert, no parameters were laid down by the IRB regarding the relevant industries and how an SME is to be regarded as “affected”. Given the uncertainty, we reiterate that it would appear that so long as the SMEs are able to prove to some degree that they are in the industries which were adversely affected by the Covid-19 pandemic, they are eligible for the deferment and revisions offered by the Prihatin.
 
As also observed in our earlier e-alert, there is no mention of a waiver of the penalty under Section 107C(10) of the ITA in the FAQ. It would be a more meaningful stimulus package if taxpayers can be given the assurance that they will not be penalised for earning more income than they had anticipated during the post-Movement Control Order period as the full economic effects of this pandemic is difficult to predict.
 
The need to file a Form N to qualify for the extension of time to appeal to the SCIT
 
There appears to be a slight backtracking on the automatic extension to file appeals to the Special Commissioners of Income Tax (“SCIT”) to 30 April 2020.
 
FAQ No. C3 of the updated FAQs now states that taxpayers are still required to file Form N which is an application for an extension of time to file the appeal, giving the implementation of Movement of Control Order as a reason for the delay in appealing. 
 
The reason for this move is unclear. It would seem that this is an administrative step and that the extension of time until 30 April 2020 will thereafter be granted. However, it is nevertheless an important point as a failure by the taxpayer to file the Form N (which is a manual process) appears to have the effect of disqualifying the taxpayer from enjoying the extension of time.
 
Re-opening of the Stamp Office
 
It has been announced that the Stamp Office will be reopened from 8.00 a.m. to 12.00 noon on Mondays to Fridays (and 8.00 a.m. to 12.00 noon from Sundays to Thursdays in Kedah, Kelantan, Terengganu and Johor). The rationale for reopening the Stamp Office appears to be to cater to individuals and public who do not have a STAMPS user ID.
 
However, this initiative to re-open the Stamp Office does not necessarily resolve the problem of stamping as the premises of many non-essential services remain closed and movement of their employees remain highly restricted.
 
If you have any queries, please contact Preetha Pillai (psp@skrine.com) or Desmond Liew (desmond.liew@skrine.com).