SMEs Set To Benefit From Tax Incentives, Initiatives In Budget 2025 - Academician

KUALA LUMPUR, Nov 5 (Bernama) -- Small and medium enterprises (SMEs) can navigate the evolving tax landscape, optimise their financial performance, and secure a competitive edge in the market by leveraging the measures in Budget 2025 strategically, an academician said.

Taylor’s University Malaysia, School of Accounting and Finance head, Prof Dr Nor Shaipah Abdul Wahab said SMEs should review the expanded sales and service tax by identifying services and non-essential goods that would be affected, adjusting their pricing strategies and updating their accounting systems for compliance.

“Engaging tax advisors can further assist SMEs in assessing potential impacts on cash flow and developing mitigating strategies.

“SMEs should also stay informed about stakeholder feedback sessions to voice concerns and gain clarity on implementation details,” she said in a statement today.

Nor Shaipah also said SMEs can promote workforce inclusivity by identifying suitable roles for women re-entering the workforce and assessing flexible work arrangements.

“Updating human resource policies to support these initiatives and actively recruiting eligible candidates are essential, including collaboration with Talent Corporation Malaysia Bhd for guidance can further streamline the process and maximise the benefits,” she said.

To offset increased wage expenses and ease financial challenges, Nor Shaipah suggested that SMEs should leverage available tax incentives, explore relevant deductions for capacity-building and software procurement, and consult with tax advisors to maximise these incentives while maintaining financial sustainability.

She highlighted that the new tax relief on housing loan interest for first-time homebuyers can help SMEs retain existing employees and attract potential ones by promoting this benefit in recruitment materials and internal communications.

Under the Smart Logistics Complex (SLC) capital allowance tax incentive, she said that SMEs should evaluate their current logistics operations to identify areas where SLC investments could improve efficiency and reduce costs by investing in qualifying capital expenditures like smart warehouses and advanced logistics technologies.

“Applying for the tax allowance through the Malaysian Investment Development Authority (MIDA) for guidance and ensuring all applications are submitted on time can help SMEs maximise the benefits,” she said.

To minimise the impact of a two per cent tax on individual dividend income exceeding RM100,000 from 2025’s assessment, the academician proposed that SMEs should review their dividend distribution policies and consult with tax advisors to understand the implications of this tax.

“Potential mitigation strategies may include adjusting dividend payout schedules, exploring alternative forms of shareholder returns, or reinvesting profits into the business, she said.

On the introduction of double tax deduction for expenditure under the Supply Chain Resilience Initiative, Nor Shaipah said SMEs should identify and document all qualifying expenditures, particularly investments aimed at enhancing local supply chains and collaborating with multinational enterprises.

“Engaging with industry regulatory bodies and staying informed about the initiative’s requirements can help SMEs maximise the benefits,” she said.

-- BERNAMA