YYC Newsletter 25/6/2020 
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A special tax deduction was introduced in the earlier Economic Stimulus Package for landlords who reduce at least 30% rental on business premises rented to SME tenants, for period of April 2020 to June 2020.
This special deduction has now been extended to 30th September 2020 as announced in the Short-Term Economic Recovery Plan (PENJANA).

The following are the related Frequently Asked Questions:

1. Who is eligible?
2. What is the eligible period?
3. Minimum rental reduction
4. Rent reduced at different rates each month
5. Amount of special deduction
6. Definition of SMEs
7. Who is not considered as SME?
8. Premise rented to related company
9. What is meant by business premise?
10. Rental not applicable for special deduction
11. Rental received in advance
12. Supporting documents
13. Illustration

• All taxpayers (individual/ cooperative/ other business/ non business entities) who rent out business premises to qualified SMEs tenants;
  
• The rented premises must be used by the SME tenant for business purpose;
  
• Landlord must be taxpayer who is receiving rental income under Subsection 4 (a) and 4 (d) of Income Tax Act 1967.

From April 2020 until 30 September 2020.

The rental reduction must be at least 30% from the current monthly rental rate.

Yes, as long as the reduction rates are not less than 30% in each of the eligible months. 
If in any of these eligible months, the rental reduction is less than 30%, then the company is not eligible to claim the special deduction for that particular month/months.

The amount of special deduction is equivalent to the amount of monthly rental reduction offered by landlord to eligible SMEs tenants.

• The definition of SME for this purpose follows the National SME definition.
  For more information, please click here to refer to the SME Definition Guideline
• SMEs that are eligible for this special tax deduction are registered SMEs and have obtained SME Status Certificate from SME Corp. Malaysia
  
• Any queries regarding eligibility or registration as an SME can be directed to SME Corp at SME Corp Malaysia at 1300-30-6000 or email to info@smecorp.gov.my
  

• Public listed entities on the main board
• Subsidiaries of:
  ✔ Publicly listed companies on the main board
  ✔ Multinational corporations (MNCs)
  ✔ Government linked companies (GLCs)
  ✔ Syarikat Menteri Kewangan Diperbadankan (MKDs)
  ✔ State owned enterprises

The company (landlord) is eligible for this special deduction if the related company (tenant) qualifies as SME. 

• All premises used for business purpose (i.e office/workshop/ childcare/ warehouse/ rented lot/ bazaar/ booth /stall).
• Residential house used for both residential and business is NOT qualified for this special deduction.

No. This special deduction is only applicable to rental of business premises used for business purpose only.

Yes. Landlord who has received rental payment in advance is still allow to offer rental reduction as long as all conditions are fulfilled.

Taxpayer (landlord) who claims this special deduction is required to keep the following documents:

i. Stamped tenancy agreement;

ii. Rental income statement;

iii. SME Status Certificate issued by SME Corp.*;
*Information regarding registration of SME can be referred at https://smereg.smecorp.gov.my

iv. Tenant’s information, rental information and rental reduction methods**
**To be provided in working sheet (HK) of Company Return Form, please refer to the example attached as below:

Click here to download the above sample working sheet

A Sdn Bhd rents a shop lot to B which is an eligible SME for RM5,000 a month (RM60,000 yearly).
A Sdn Bhd has agreed to offer rental reduction to B for the month of April 2020 to September 2020, of RM2,500 a month.

Source:
Rental Reduction for Business Premise by Inland Revenue Board of Malaysia (updated on 15 June 2020)

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