PETALING JAYA: Prime Minister Datuk Seri Anwar Ibrahim’s announcement that micro, small and medium enterprises in Malaysia will be exempted from income tax for sales up to RM1.5 million has been described as “very important news and one of the most positive policies for MSMEs for many years”.
In stating this to SunBiz, Williams Business Consultancy Sdn Bhd founder and director Prof Geoffrey Williams said, “I had recommended it last month as one of the key reforms for incoming minister Steven Sim so this is a great initiative for his portfolio”.
The move is aimed at easing cost pressures on smaller firms and providing cash flow to support operations, wages and growth initiatives.
Commenting on the RM1.5 million threshold, Williams said: “The RM1.5 million threshold is very meaningful and will help almost all micro-enterprises and small businesses. It will have very little impact on revenue because companies in this category pay very little tax anyway. However, it will provide much-needed cash flows which will help with wages and financial costs and it will provide more scope for investment.
The exemption will allow MSMEs to redirect funds towards key business priorities. “It will free up money which can be redirected to higher wages, investment and innovation and it cuts tax administration costs and tax avoidance,” he noted.
Universiti Teknologi Malaysia Professor Dr Nanthakumar Loganathan said the exemption would boost MSME productivity and profits in the short term.
“SME/MSMEs is the biggest economic activity contributors in Malaysia. With tax exemption, there will be more happy creating more outcomes and create more job opportunity for the Malaysian.”
Nanthakumar highlighted Malaysia’s strong MSME presence in the region. “You can refer to the statistics from Department of Statistics, Malaysia on the value of GDP contributed by MSMEs and SMEs in Malaysia. Even in Asia, Malaysia is one of the counties having huge numbers of MSMEs and SMEs.”
He said that while the exemption provides immediate relief, additional support is needed to sustain growth and encourage innovation, particularly among young entrepreneurs.
“Give more funds to young entrepreneurs involved with MSMEs. Basically, the government has already introduced a few items but I think now the government needs to target youngsters with digital-based MSMEs and SMEs and help them to be more productive.”
Not only grants, Nanthakumar said, but training based on current digitalised business matters. “More trainings and fast fund for youth and youngsters mainly for young entrepreneurs. We can see few of them shine, but Malaysia need more. From low end business towards international marketing MSMEs.”
Nanthakumar pointed out that young entrepreneurs and digital-based MSMEs could particularly benefit from complementary measures.
Both economists emphasised that the RM1.5 million tax exemption, while targeted, is part of a broader push to strengthen Malaysia’s MSME sector and enhance productivity, job creation and competitiveness in the regional market.
