Here’s A Breakdown Of All 19 PENJANA Tax Reliefs & Funds For Startups And SMEs

Here’s A Breakdown Of All 19 PENJANA Tax Reliefs & Funds For Startups And SMEs

Sade Dayangku
about 20 hours ago
Vulcan Post

The RM35 billion Economic Recovery Plan (PENJANA) that was recently announced by Prime Minister Tan Sri Muhyiddin Yassin included a variety of initiatives to stimulate Malaysia’s overall economy.

Out of those, Malaysian Digital Economy Corporation (MDEC) then identified and compiled 19 initiatives that were specifically relevant to local startups and SMEs.

These are the ways in which PENJANA can assist the startup ecosystem.

1) Remission Of Penalties

Objective: To ease financial stress on businesses through remissions of penalties related to late tax payments.

What It Is: 50% remission of penalty for late payment of sales tax and service tax due.

Payable From: July 1, 2020 – September 30, 2020.

Beneficiary: All businesses.

2) Extension Of Accelerated Capital Allowance (ACA) For Machinery & ICT Equipment

Objective: To ease financial stress on businesses through remissions of penalties related to late tax payments.

What It Is: ACA will be given for qualifying capital expenses incurred on machinery and equipment, including Information and Communications Technology (ICT) equipment.

It is claimable within a 2-year period at the following rates:

  • Initial allowance: 20%
  • Annual allowance: 40%

For Expenditures Incurred: March 1, 2020 – December 31, 2020.

Beneficiary: All businesses.

3) Special Tax Deduction On Costs Of Renovation & Refurbishment

Objective: To ease financial stress on businesses through remissions of penalties related to late tax payments.

What It Is: Tax deduction for cost of renovation & refurbishment of business premises of up to RM300,000.

This doesn’t apply to expenditure which has been given an allowance under Schedule 2 or Schedule 3 of the Income Tax Act 1967 (ITA).

For Expenditures Incurred: March 1, 2020 – December 31, 2020.

Beneficiary: All businesses.

4) Tax Deduction On Reduction Or Waiver Of Rental

Objective: To ease financial stress on businesses through remissions of penalties related to late tax payments.

What It Is: Tax deduction for landlords who reduce/waive at least 30% of gross rental on premises rented by SMEs tenants and used for the purpose of their business.

For The Duration Of: April 2020 – September 30, 2020.

Beneficiary: All businesses.

5) Tax Relief For COVID-19 Related Expenses

Objective: To encourage businesses to adapt to new norms and adhere to SOPs through tax relief.

What It Is: Tax deduction or capital allowance for COVID-19 prevention, which includes:

  • The cost of personal protective equipment (PPE)
  • COVID-19 screening test
  • Thermal scanners

Timeline: Immediately.

Beneficiary: All businesses.

6) Further Tax Deduction For Employers Who Implement Flexible Work Arrangements (FWAs) Or Enhance Existing FWAs

Objective: To encourage work-from-home (WFH) arrangements by providing support to both employers and employees.

What It Is: Further tax deduction for employers who implement Flexible Work Arrangements (FWAs) or undertake enhancement of their existing FWAs.

Effective From: July 1, 2020.

Beneficiary: All employees who are working from home.

7) Individual Income Tax Exemption To Employees Who Receive Devices From Employers

Objective: To encourage work-from-home (WFH) arrangements by providing support to both employers and employees.

What It Is: An individual income tax exemption of up to RM5,000 to an employee who receives a handphone, notebook, and tablet from their employer.

Effective From: July 1, 2020.

Beneficiary: All employees who are working from home.

8) Special Individual Income Tax Relief On Purchases Of Devices

Objective: To encourage work-from-home (WFH) arrangements by providing support to both employers and employees.

What It Is: A special individual income tax relief of up to RM2,500 on the purchase of handphones, notebooks, and tablets.

Effective From: June 1, 2020.

Beneficiary: All employees who are working from home.

9) SOCSO Coverage For Workers Involved In Accidents While WFH

Objective: To encourage work-from-home (WFH) arrangements by providing support to both employers and employees.

What It Is: With the increasing number of Malaysians working from home, SOCSO will provide coverage for workers involved in accidents while working at home under the Employment Injury Scheme.

Effective From: June 2020.

Beneficiary: All employees who are working from home.

10) Incentives To Spur Setup Of New Businesses

Objective: To encourage the establishment of new businesses and transactions such as mergers and acquisitions.

What It Is: Financial relief will be provided in the form of:

  • Up to RM20,000 per year income tax rebate for the first 3 years of assessment for newly established SMEs between July 1, 2020 to December 31, 2021.
  • Stamp duty exemption for SMEs on any instruments executed for Mergers and Acquisitions (M&As) completed between the period of July 1, 2020 to June 30, 2021.

Effective From: July 2020.

Beneficiary: New businesses and SMEs involved in M&A.

11) PENJANA SME Financing (PSF) – Low Financing Interest Rate Of 3.5%

Objective: To assist SMEs adversely impacted by COVID-19 in order to sustain business operations.

What It Is: The banking sector will offer an additional RM2 billion of funding to SMEs impacted by COVID-19 at a concessionary interest rate of 3.5%, with a maximum loan size of RM500,000 per SME.

Effective From: Mid-June 2020.

Beneficiary: Businesses in the critically affected sectors.

12) Gig Economy Social Protection & Skilling

Objective: To promote the gig economy and provide a social safety net system for the gig economy and informal sector workforce.

What It Is: The government will facilitate policies to support the growth of the gig economy and the welfare of its workers through:

  • A matching grant of up to RM50 million for gig economy platforms who contribute to their gig workers towards PERKESO’s employment injury scheme of up to RM162 and EPF’s i-Saraan contribution of up to RM250 yearly.
  • RM25 million for MDEC’s Global Online Workforce (GLOW) programme which will train Malaysians to earn income from serving international clients while WFH online.

Effective From: August 2020.

Beneficiary: 30,000 gig economy employees.

13) PENJANA Microfinancing – Low Financing Interest Rate Of 3.5%

Objective: To support micro enterprises through funding programmes.

What It Is: Dedicated funding support for micro enterprises via:

  • A new funding programme for SMEs and micro enterprises at an interest rate of 3.5%
  • Aggregated approved financing that’s capped at RM50,000 per enterprise RM50 million allocated for women entrepreneurs

Effective From: June 2020.

Beneficiary: Micro enterprises and SMEs.

14) Bumiputera Relief Financing

Objective: To ensure sustainability of bumiputera entrepreneurs through financial support.

What It Is: Perbadanan Usahawan Nasional Berhad (PUNB) will provide RM200 million’s worth of dedicated financial assistance for bumiputera owned businesses in the form of:

  • Working capital
  • Operational expenditure
  • System automation
  • Equipment and expenditure to implement social distancing practices (e.g.: PPEs)
  • Financing of RM100,000 to RM1 million for up to 5 years at a 3.5% p.a. interest rate, with a moratorium of up to 6 months from disbursement

Through MARA, the government will allocate:

  • RM300 million working capital loans to assist affected bumiputera entrepreneurs including training colleges
  • A maximum loan amount of RM1 million with 3.5% p.a. interest rate

Effective From: June 2020.

Beneficiary: Bumiputera businesses.

15) Accelerated Payment Terms For GLCs & Large Corporate Supply Chains

Objective: To provide relief cashflow to SMEs who are part of the supply chain of GLCs and large corporates by accelerating payment terms.

What It Is: The government is encouraging GLCs and large corporates to accelerate their vendors’ payment terms. Companies that have committed to participating in this initiative include:

  • Axiata and TM, who have reduced payment terms for selected vendors from 45 days to 14 days
  • TNB now has a 7-day payment process
  • PETRONAS launched the Vendor Financing Programme in collaboration with 9 banks, to facilitate vendor verification and reduce approval time

Effective From: Mid-June 2020 – September 30, 2020.

Beneficiary: Companies in supply chains of selected GLCs and large corporates.

16) Extension Of Wage Subsidy Programme

Objective: To promote employee retention and reduce layoffs by extending the wage subsidy programme.

What It Is: The wage subsidy programme will be extended for a further 3 months with a subsidy of RM600 per employee for all eligible employers.

Further enhancements to the programme include:

  • Allowing employers receiving wage subsidy to implement reduced work week (e.g.: 4-day work week with a reduced pay of 20%)
  • Allowing employers to receive wage subsidy for employees on unpaid leave, subject to employees receiving the subsidy directly (though it’s only applicable to the tourism sector and businesses that were prohibited from operating during the CMCO)

Effective From: Mid-June 2020 – September 2020.

Beneficiary: 2.7 million workers under employers who meet these requirements.

17) MyAssist SME One-Stop Shop

Objective: To provide guidance and facilitate the recovery process for micro enterprises and SMEs.

What It Is: An online one-stop business advisory platform for micro enterprises and SMEs to enhance the outreach of the existing physical SME hub.

The services offered include guidance for:

  • Funding facility
  • Trade facilitation
  • Branding and promotion
  • Technology support
  • Legal matters

Effective From: June 2020.

Beneficiary: Micro enterprises and SMEs.

18) Dana PENJANA Nasional – Accelerating Digitalisation Of Malaysian Businesses

Objective: To support the digitalisation of Malaysian businesses by channeling funding from international investors into the local venture capital space.

What It Is: A RM1.2 billion (RM600 million from domestic source) fund setup to provide funding and capital to Malaysian venture capital funds and Malaysian startups focused on digitalising businesses.

The fund will be used to foster innovation and domestic venture capital, and invested into the following:

  • Seed stage / Co-creation funds
  • Series A/B funds
  • Growth stage tech funds
  • Venture debt funds
  • Opportunistic funds (e.g.: eSports, healthcare)

International investors and venture capital funds that have expressed interest include SK Group, Hanhwa Asset Management, KB Investment Co. Ltd, Provident Growth, 500 Startups, and The Hive.

Effective From: July 2020.

Beneficiary: Startups and local private sector venture capital funds.

19) National Technology & Innovation Sandbox

Objective: To encourage innovation and creativity that can propel the digitalisation of service delivery.

What It Is: Spearheaded by the Ministry of Science, Technology and Innovation (MOSTI), RM100 million has been set aside to develop this innovation sandbox for:

  • Piloting new technology solutions
  • Providing relaxation of regulations in order to test new technology solutions (e.g.: drone delivery, autonomous vehicles)

Effective From: June 2020.

Beneficiary: Startups.


To see the full list of initiatives under PENJANA, you can take a look at this comprehensive PDF booklet by the Ministry of Finance (MOF) that’s 53 pages long.

At this point in time, the exact requirements for a startup or SME to qualify for each of these initiatives is still unclear, and the booklet also doesn’t outline those specific details.

However, a few FAQs for selected initiatives including the wage subsidy programme and gig economy programme can be found here.