Ultimate Guide to E-invoicing in Malaysia

Ultimate Guide to E-invoicing in Malaysia

Ultimate Guide to E-invoicing in Malaysia

In the digital era, e-invoicing is transforming business processes, boosting efficiency, and ensuring regulatory compliance. Malaysia’s adoption of this digital shift highlights the importance for businesses to understand the details of e-invoicing.

What Is E-invoicing and Why Is It Important?

E-invoicing enables the digital exchange of invoices between suppliers and buyers, eliminating paper-based processes. It makes transactions smoother, reduces errors, enhances transparency, and promotes cost savings.

Overview of E-invoicing in Malaysia

The Malaysian government’s e-invoicing mandate, powered by PEPPOL, modernises tax administration and promotes seamless electronic invoice exchange. The Malaysian Inland Revenue (LHDN) has confirmed the e-invoicing implementation will start on 1 August, beginning with businesses with annual turnover of more than RM100 million.

The timeline for all businesses is shown in the table below:

Annual Revenue of businessesImplementation Date
Businesses with annual turnover more RM100 million1 August 2024
Businesses with annual turnover of more than RM25 million and up to RM100 million 1 January 2025
All businesses 1 July 2025

Businesses can also voluntarily participate in the implementation at an earlier date, regardless of annual revenue.

E-invoicing in Malaysia

Benefits of E-invoicing

E-invoicing provides numerous benefits for businesses and governments:

  • Improved efficiency and cost savings
  • Enhanced accuracy and transparency in financial transactions
  • Simplified invoice processing and payment cycles
  • Reduced environmental impact through paperless transactions
  • Strengthened regulatory compliance and audit trails

Understanding E-invoicing Regulations in Malaysia

Malaysian Inland Revenue Board (IRB)
The IRB oversees e-invoicing initiatives and ensures compliance with tax laws through collaboration with government agencies and stakeholders.
Businesses and individuals must adhere to regulatory requirements by generating, transmitting, and archiving e-invoices.
E-invoice Service Providers
These providers facilitate seamless e-invoice transmission and integration with accounting systems while complying with standards.

Choosing the Right E-invoicing Solution: Portal (MyInvois) vs. API

MyInvois allows for manual creation of e-invoices or bulk upload of e-invoices in a predefined template via the web portal, while API allows for the automated generation of e-invoices in XML/JSON format. MyInvois is suitable for businesses with low to moderate volumes, while APIs offer scalability for high volumes.

Some factors to consider when deciding between MyInvois and API are:

  • Transaction volume
  • Technical capability and readiness
  • Cost of integration
  • Customisation needs

Integration with Existing Accounting and ERP Systems

APIs provide real-time synchronisation and centralised management for efficient data exchange and interoperability to ensure seamless integration with current systems.

Choosing an E-invoice Service Provider

Select a reputable provider with a proven track record, robust infrastructure, and compliance. Consider reliability, security, support, and scalability when choosing an e-invoice service provider.

Understanding E-invoicing Regulations in Malaysia

Preparing for a Smooth Transition

Transitioning to e-invoicing requires careful planning and preparation to ensure success. Businesses must consider these key factors to make the transition smooth and maximise the benefits of digital invoicing.

    Check your technology infrastructure’s compatibility with e-invoicing solutions. Identify areas for improvement to incorporate digital invoicing effectively.
    Assess the resources you have, like staff, money, and time, needed for e-invoicing projects. Use them wisely to handle challenges during setup and to keep things running smoothly.
    Review current invoicing processes to identify inefficiencies. Optimise the process by improving how things flow and using the best methods for e-invoicing.

    Training Employees on E-invoicing

    Effective communication is vital during the e-invoicing transition. Engage with suppliers and customers to address concerns, promote adoption, and ensure successful implementation.

    Training Employees on E-invoicing

    Best Practices for Success

    Streamlining Workflows
    Automate tasks, reduce processing times, and optimise workflows for efficiency.
    Ensuring Data Integrity
    Implement validation mechanisms, regularly audit data, and maintain accuracy.
    Archiving Requirements
    Adhere to regulatory standards, ensure secure storage, and enable easy retrieval.
    Managing Compliance
    Stay updated on regulations, establish controls, and conduct audits for compliance.
    Leveraging E-invoicing
    Utilise insights for cash flow management, explore tax incentives, and automate tax compliance.

    Future of E-invoicing in Malaysia

    As Malaysia advances digitally, the future of e-invoicing promises significant opportunities for businesses and tax administration.

    Upcoming Changes and Developments

    Stay informed about evolving e-invoicing regulations and technology. Anticipate changes in compliance requirements, industry standards, and government initiatives.

    Impact on Businesses and Tax System

    E-invoicing will revolutionise business processes, fostering efficiency, transparency, and savings. With e-invoicing, businesses will be able to make improve operations, enhance collaboration, and exchange real-time data with tax authorities.

    Opportunities and Challenges

    E-invoicing offers workflow optimisation, improved cash flow, and revenue growth. Address challenges such as technology integration, data security, and compliance through strategic planning and collaboration with trusted e-invoicing partners.

    Unlocking the Benefits of E-invoicing

    With the e-invoicing mandate by the Malaysian government, businesses can unlock the following benefits :

    Effortless Compliance
    Adhere seamlessly to e-Invoicing mandates and PEPPOL standards.
    Error-Free Automation
    Automate invoice creation, validation, delivery, and archiving to eliminate errors.
    Seamless Integration
    Integrate smoothly with existing ERP and business applications.
    Enhanced Visibility & Control
    Gain real-time insights into invoice status and ensure timely payments.
    Cost Savings & Efficiency
    Digitise and automate invoicing to save time and resources.
    Secure & Compliant
    Utilise PEPPOL’s secure framework and ensure compliance with data security.
    Mylnvois Integration
    Connect seamlessly with IRBM’s Mylnvois system for API-based e-invoice transmission.

    How Can BoardRoom Help You?

    BoardRoom offers the following services to get your business ready for e-invoicing:

    In-depth gap assessment analysis and gap closure strategy

    • Gap assessment analysis will cover invoice format revision, requirement of self-billing e-invoice, transactions with buyers (B2B & B2C), assessment of legal documents, contracts and employment contracts.
    • Gap closure strategy will be formulated to ensure smooth transition to e-invoicing and provide detailed recommendations and action plans.

    Project management services

    • Besides analysis and planning, implementation and technical support, BoardRoom also provides post-implementation evaluation to propose improvements for on-going enhancements.

    E-invoicing Workshops

    • Training on overview of e-invoicing, e-invoice initiative and tax implication, accounting and human resource matters, and awareness, compliance & implementation Strategy  

    Monthly retainer and Ad-hoc consultancy service

    • BoardRoom can be engaged to provide consultancy service on e-invoicing on a monthly retainer or ad-hoc arrangement.


    Contact BoardRoom for an effortless transition to e-invoicing and maximise your benefits.

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    How to navigate transfer pricing in Malaysia: a guide for companies

    How to navigate transfer pricing in Malaysia a guide for companies

    How to navigate transfer pricing in Malaysia: a guide for companies

    For companies operating across multiple geographies in Asia, regulatory compliance stands as a strategic cornerstone for companies pursuing successful and sustainable growth. Therefore, keeping up to date with the local regulations in each region you operate is important. This includes learning about the transfer pricing rules as they apply to intercompany transactions.

    In this article, we consult Cheong Woon Chee, Head of Tax Services for BoardRoom Malaysia, for an overview of transfer pricing in Malaysia, recent updates to reporting requirements and what businesses can do to ensure strong compliance.

    What transfer pricing is

    Transfer pricing is the setting of prices for the transfer of goods, services and intellectual property between associated parties.

    In Malaysia, associated parties include entities within a multinational enterprise group, such as subsidiary companies and branches.

    “These are parties who control one another or are under the common control of another party, either directly or indirectly,” Woon Chee says. Transfers between these entities are referred to as related party transactions.

    “Transfer pricing exists because every country has a different tax rate,” Woon Chee explains. “For example, in Malaysia, our corporate tax rate is 24%, but in Singapore it’s 17%. Considering this huge difference, companies can use transfer pricing to save on tax.”

    In addition, transfer pricing can support transparent transactions between related parties. However, a potential drawback of this transparency is that it may cause conflict internally.

    “If the price is higher or lower than the market price, one of the entities may feel their interests are being sacrificed and deem it unjustifiable,” Woon Chee says.

    Transfer Pricing in Malaysia

    An overview of transfer pricing guidelines in Malaysia

    Transfer pricing is strictly regulated by the Inland Revenue Board of Malaysia (IRBM). Companies must abide by the Malaysian Transfer Pricing Guidelines, which provide detailed standards and rules on how businesses should handle transfer pricing in accordance with Section 140A of the Income Tax Act 1967 and the Transfer Pricing Rules 2023.

    The arm’s length principle

    Central to these regulations is the arm’s length principle, which dictates that transactions between related entities should be priced as if they were conducted between independent parties.

    “Ideally, the transfer price should not be very different from the market price,” Woon Chee says. “So companies must do benchmarking to understand whether the mark-up they apply as part of their transfer pricing is at the median range for their industry.

    “If your pricing is too high or low, you will need to justify this when you make the transfer to your related party.”

    Transfer pricing documentation

    Transfer pricing documentation requirements

    Malaysian regulations require taxpayers to prepare and keep transfer pricing documentation if their company:

    • makes over RM 25 million in gross income, and the total amount of related party transactions exceeds RM 15 million; or
    • provides financial assistance exceeding RM 50 million (this does not apply to transactions involving financial institutions).

    “This documentation is simply a report to show how the transfer price was determined and justify why these prices are comparable to the price that would be applied to a third party in a similar situation,” Woon Chee says. “It enables the IRBM to ensure that the transactions between related parties were priced at arm’s length.”

    The documents must be detailed and contemporaneous, meaning they should be prepared at the same time as transfer pricing policies are developed or implemented.

    New transfer pricing rules introduced in May 2023 require companies to complete their contemporaneous documentation before their tax return for the year of assessment is due.

    “In Malaysia, the timeline to file your corporate tax return is seven months after you close your financial year end,” Woon Chee says.

    Companies that fall below the threshold are held to less scrutiny and can prepare a limited (simplified) version of transfer pricing documentation instead.

    The following table shows the different types of information required for detailed and simplified transfer pricing documentation:

    Analysis RequiredFull TPDSimplified TPD
    Organisation structure
    Nature of the business or industry and market conditions
    Controlled transaction
    Pricing policies
    Assumption, strategies and information regarding factors that influence the setting of pricing policies
    Comparability, functional and risk analysis
    Selection of the transfer pricing metho
    Application of the transfer pricing method
    Financial information

    Why compliance is vital

    Taxpayers in Malaysia must supply their transfer pricing documentation upon request by the IRBM. You will only have 14 days to do so. Fail to provide your documents in time, and you may be subject to a fine between RM 20,000 and RM 100,000, or imprisonment of up to six months.

    Common compliance challenges

    If you are a company with multiple entities in the APAC region and looking to establish a local business in Malaysia, navigating transfer pricing regulations can be challenging. However, prioritising compliance is essential to avoid financial penalisation, potential imprisonment and reputational harm.

    Without professional support, businesses often struggle with:

      Understanding their obligations
      Malaysia’s regulatory system is complex and constantly evolving, so it can be difficult to understand which rules and requirements apply to your company throughout its lifecycle.
      Maintaining robust documentation
      Preparing exhaustive transfer pricing documentation can be time-consuming and usually requires at least one month to complete.
      Conducting accurate benchmarking
      Conducting quality benchmarking ahead of transactions is not a simple process. A wealth of accurate, relevant data must be gathered before meaningful comparisons can be drawn.
      Resource constraints
      Many growing businesses lack the resources to establish robust transfer pricing practices and update them regularly.

      According to Woon Chee, the most effective way businesses can overcome the challenges of transfer pricing in Malaysia is by partnering with a knowledgeable corporate services provider.

      “Businesses often don’t have time to monitor all the developments in Malaysia’s rapidly changing tax regulations,” she says. “So it can be helpful to have an expert always on hand to advise on these updates.”

      Premium providers not only have extensive knowledge of local regulations but also maintain open communication with local authorities and industry bodies. This means, armed with their extensive knowledge, they serve as invaluable navigators, assisting your business to adeptly steer through the complex landscape of compliance and governance.

      Another benefit of having a skilled external team support your compliance is that it frees up your executive staff to focus on what really matters to your business.

      “Those running the business have more time to focus on revenue-generating operations,” Woon Chee says. “Why not leave it to the experts so that you can save time and also manage your risk?”

      Tailored support with transfer pricing in Malaysia

      Tailored support with transfer pricing in Malaysia

      BoardRoom provides a full suite of customised business solutions to help your company flourish in the Asia-Pacific region. Our highly sought-after service offerings include Corporate Secretarial, Company Incorporation, Accounting & Bookkeeping and Payroll, among others. With in-depth knowledge of the local tax and regulatory landscapes and a host of resources such as webinars on tax and Budget updates, our specialist Tax Advisory & Filing team can provide quality, customised support to enhance your financial planning and compliance.

      Let us manage transfer pricing compliance for you so you can concentrate on taking your business to new heights.

      Contact BoardRoom for more information:

      Woon Chee MY TAX

      Cheong Woon Chee

      Head of Tax Services for BoardRoom Malaysia

      E: [email protected]

      T: +60-3-7890 4800

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      Malaysia Budget 2024 – Tax Highlights

      MY 2024 Budget Report Banner

      Malaysia Budget 2024 – Tax Highlights

      Malaysia’s 2024 Budget introduced several tax reforms which will impact local businesses and disposable income of general Malaysians.

      On 13 October 2023, Malaysia’s Prime Minister and Finance Minister, YAB Dato’ Seri Anwar bin Ibrahim, presented the Budget 2024 focusing on three pivotal areas:

      • optimising governance for enhanced service agility
      • economic restructuring to foster growth, and
      • elevating the standards of living for Malaysian citizens.

      The expansionary budget is designed to address contemporary challenges and enhance the quality of life for Malaysians.

      To fortify the government’s fiscal responsibilities, reduce the deficit to 4.3%, and augment revenue to RM307.6 billion, the budget incorporates significant structural changes to the tax system, including:

      • E-invoicing for taxpayers with an annual turnover above RM100 million (starting 1 August 2024)
      • Capital Gains Tax (CGT) arising from the disposal of unlisted shares in local companies (starting 1 March 2024)
      • Global Minimum Tax (GMT) applicable to large multinational enterprises (MNEs) with global revenue of at least EUR 750 million (starting in the year 2025)
      • Service Tax will be raised to 8% for all services except food, beverage, and telecommunication services
      • Luxury Goods Tax ranging from 5% to 10%


      Download our Budget 2024 Report today to find out more. If you have any questions, please reach out to your respective BoardRoom client managers or email us at [email protected].

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      Understanding ESOS and tax implications in Malaysia

      Understanding ESOS and tax implications in Malaysia

      Understanding ESOS and tax implications in Malaysia

      Employee share option schemes (ESOS) have become increasingly popular among companies in Malaysia as a way to retain top talent and boost productivity. They offer employees the option to purchase company shares at a discounted price, which can result in a significant financial gain if the company performs well.

      In this article, we will discuss the fundamentals of ESOS and why they are a valuable tool for employers. We will also examine the tax implications of ESOS in Malaysia; the regulatory bodies and laws governing ESOS taxation; and best practices for companies and C-suite leaders to achieve compliance and minimise tax liabilities.

      What are ESOS?

      ESOS are a form of employee compensation that allows employees to purchase company shares at a discounted price. These schemes are designed to incentivise employees to work productively and contribute meaningfully to the company’s success, as their financial gain is tied to the company share price movement. The higher the increase in share price, the larger the financial gain to the employees.

      ESOS typically have a vesting period, meaning that employees must wait a certain amount of time before they can purchase shares. This period is intended to encourage employees to remain with the company longer and to align their interests with those of the company.

      ESOS versus Employee Stock Ownership Plan (ESOP)

      An ESOS (Employee Stock Option Scheme) and an ESOP (Employee Stock Ownership Plan) are both employee benefit programs that involve providing employees with a stake or ownership in the company.

      However, there are some differences between the two:

      • Nature of ownership
      • Purpose
      • Structure and funding
      • Control and governance

      Plan types such as restricted share plans and performance share plans all have different objectives but can all be categorised under long-term incentive plans.

      Employee Benefits

      Tax implications of ESOS in Malaysia

      One of the most critical factors companies must consider when implementing ESOS is the tax implications for the business and their employees.

      Failure to comply with tax regulations can result in significant financial penalties and reputational damage. Therefore, it is crucial that companies fully understand the tax requirements of ESOS in Malaysia and take steps to ensure compliance.

      ESOS tax implications for employers and employees

      ESOS can have different tax implications for both employers and employees.

      For Malaysian employers, ESOS are usually considered a non-deductible expense for a company. Employers are required to report the value of the options granted to employees as an expense on their financial statements under Malaysian Financial Reporting Standard (MFRS) 2. The employer would also be required to deduct income tax from the amount of gain realised by the employee on the exercise of the option.

      Employees who exercise their options to purchase shares are subject to income tax on the difference between the market value of the shares at the time of exercise and the option exercise price paid. The individual income tax rate in Malaysia varies depending on the chargeable income of the individual, with rates ranging from 0–30%.

      Calculating ESOS tax liabilities

      Companies must accurately calculate the tax liability associated with share options for both the employer and employee to ensure compliance.

      Under MFRS 102, companies are required to recognise the fair value of the share-based payment as an expense in their financial statements. The fair value of the share-based payment is determined at the grant date, taking into account the exercise price, the term of the option, the current price of the underlying share and the expected volatility of the share price.

      Once the fair value of the share-based payment has been calculated, it is recognised as an expense over the vesting period.

      Tax Liabilities

      How to ensure ESOS compliance

      In Malaysia, the regulation of ESOS is overseen by several government bodies, including the Securities Commission Malaysia and the Inland Revenue Board of Malaysia (IRBM).

      Under Malaysian law, ESOS tax treatment varies depending on whether the option is granted to a local or foreign employee. Local employees are subject to Malaysian tax on the gain from exercising the option. In contrast, foreign employees are taxed only on the portion of the gain attributable to work done in Malaysia.

      Penalties for non-compliance with ESOS taxation regulations can be severe. Companies that fail to comply with ESOS regulations may face fines, penalties and legal action from the authorities.

      Best practices for C-suite leaders

      C-suite executives can support ESOS compliance while minimising tax liabilities by implementing the following best practices in their organisation:

      • Engage with tax experts who can provide guidance on the tax implications of ESOS and assist in accurately calculating tax liabilities for your business and your employees.
      • Ensure compliance with all regulations and laws governing ESOS taxation in Malaysia.
      • Develop a comprehensive understanding of the accounting for share options under MFRS 102. This accounting involves measuring the fair value of the options, recognising an expense in the income statement and recognising a liability in the balance sheet.
      • Keep accurate records of all ESOS transactions and ensure that all employees are adequately informed and educated about the tax implications of their share options.
      Best Practices

      Common pitfalls to avoid

      Despite the importance of compliance and accurate tax calculation, there are some common pitfalls that companies and C-suite leaders can encounter when it comes to ESOS taxation, including:

      • failure to accurately calculate the tax liability associated with share options, which can result in underpayment or overpayment of taxes;
      • incorrectly accounting for share options under FRS 102, which can lead to misstated financial statements and regulatory compliance issues; and
      • failure to meet ESOS reporting obligations.

      Woon Chee says it is not enough to ensure your company pays its ESOS taxes on time; it is also important to be aware of and fulfil the reporting requirements that follow. For example, she notes that “upon launching the ESOS, the employer has to notify the IRBM within 30 days after the expiry date of the period of acceptance of the offer.”

      How to avoid pitfalls

      To avoid these mistakes, it is crucial for companies to engage with an expert ESOS provider who:

      Offers a comprehensive platform for ESOS management that gives your employees and HR professionals full visibility of the details and status of each scheme
      Possesses a deep knowledge of local tax laws within the jurisdictions your organisation operates, a wealth of ESOS management and relevant professional qualifications
      Specialises in an integrated suite of corporate services alongside ESOS management, including taxation, accounting and payroll (so that all the expertise you need is easily, quickly accessible via one point of contact)

      Woon Chee urges businesses not to underestimate the power of an innovative ESOS management platform.

      “A good ESOS platform shows you all the details of every ESOS, so it’s easy for you to keep track of them and will largely reduce your tax liability,” she says.

      It also takes the guesswork out of tax calculations so you can have confidence in your regulatory compliance.

      Unlock the power of ESOS

      ESOS is a powerful tool for retaining talent and boosting productivity, but C-suite leaders need to have a comprehensive understanding of the tax implications and regulatory requirements for ESOS in Malaysia.

      By engaging with tax experts, staying up to date with regulatory requirements and following best practices for compliance and accurate tax calculation, companies can minimise tax liabilities and ensure that their ESOS programs successfully achieve their intended goals.

      At BoardRoom, we offer expert accounting and tax advisory services across the Asia-Pacific region. By engaging our tax professionals, you receive access to specialist guidance and support to ensure compliance with all regulatory requirements and minimise tax liabilities related to ESOS.

      Additionally, we can connect you with trusted consultants to support you with plan design, prior to implementing, so that your schemes are tailored to your needs.

      Please contact us to find out how our world-class ESOS services can benefit your business.

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      Malaysia Budget 2023

      Malaysia 2023 Budget Key Tax Highlights Membangun Malaysia MADANI (Re-tabled on 24 February 2023)

      Malaysia Budget 2023

      Malaysia’s 2023 Budget, which was re-tabled on 24 February under the new Unity Government, totaled RM388 billion. Almost 75% of its budget has been allocated to Operating Expenditure, signaling the Government’s commitment to drive its reform agenda and revitalise Malaysia’s economy.

      Several tax incentives were announced as part of the Government’s strategy to drive an inclusive and sustainable economy. To find out how the tax measures announced will implicate your tax planning, download our Malaysia 2023 Budget Report today.

      If you have any questions relating to the information contained in this report or require tax advisory services, please email our tax advisors at [email protected].

      Malaysia Budget 2023 Main Highlights Preview Updated

      Should you have any questions regarding the information provided in the report, please do not hesitate to reach out to your respective BoardRoom client managers or email us at [email protected].

      Best regards,

      BoardRoom Team

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      What is SST? Your guide to sales and service tax in Malaysia

      SST Banner

      What is SST? Your guide to sales and service tax in Malaysia

      If you are planning to expand your business into Malaysia, you are likely asking the question, What is SST?

      SST refers to the Malaysian sales and service tax, where a sales tax is imposed at the manufacturer level, and a service tax is paid by consumers who are using taxable services.

      Tax regulations are relatively fluid in Malaysia compared to neighbouring regions, which can make compliance challenging to maintain. This is why many growing businesses partner with a corporate services team who can help them navigate multi-country taxes as they evolve.

      Read on as BoardRoom’s Tax Director for Malaysia, Cheong Woon Chee, provides an overview of how SST works, and what you can do as a taxable person to ensure compliance.

      Did SST replace GST?

      In 2018, the Malaysian Government reintroduced sales and service tax to replace the goods and services tax (GST), which reformed the local tax system.

      “Many people actually believed that GST had increased the living cost since it was implemented,” Woon Chee says. “Therefore, the main objective of this abolishment was to put more purchasing power in the hands of the Malaysian people – especially the lower- to middle-income earners – which would result in a much higher disposable income.”

      How SST works in Malaysia: definition and rates

      SST is an indirect tax made up of the following components.

      Sales tax

      The sales tax component of SST is imposed on products manufactured and produced locally and on taxable goods imported into Malaysia. It is charged to consumers based on the purchase price of certain goods and services.

      The sales tax is only imposed at one stage of the supply chain (at the time of the goods’ sale or disposal).

      The sales tax rate in Malaysia ranges from 5%, 10% or another specified rate, depending on the type of goods.

      Your business is required to pay SST if your total sales value of taxable goods has exceeded RM 500,000 in the past 12 months.

      Service tax

      The service tax is a consumption tax imposed on taxable services provided in Malaysia by a registered business.

      The rate for service tax is 6% in Malaysia.

      Your business is required to pay SST if your total value of taxable services within 12 months exceeds the prescribed threshold, which is usually RM 500,000. Some services have a different threshold (for example, the threshold for operators of restaurants and cafes is RM 1.5 million).


      How to register for SST

      If your business’s annual income has exceeded the respective thresholds for sales or service tax, you need to register for SST on the MySST website. A tax professional can assist you with this process.

      Is there anything or anyone exempt from SST in Malaysia?

      In Malaysia, services that are imported or exported are exempt from service tax, as are goods manufactured for export.

      Other exempted goods include:

      Bicycles, including certain parts, and accessories
      Books, newspapers, magazines, and journals
      Live animals, meat, seafood, and eggs
      Insecticides and disinfectant
      Coffee and tea
      Pharmaceutical products
      Wood pulp

      Manufacturers of non-taxable goods are exempt from SST, as are certain government bodies and educational institutions.

      You can view complete lists of exempted goods, services and persons on the MySST website.

      Exemption rules can be complicated, and the ramifications for tax evasion are severe. This is why it is a good idea to consult a tax professional who can help determine whether SST applies to your business.

      Is SST different from company tax?

      Another common question among businesses branching into Malaysia is, What is the company tax rate?

      When it comes to understanding how to pay tax in Malaysia, business leaders should first learn the difference between SST and company tax.

      While SST is imposed by the Royal Malaysian Customs Department, corporate tax is imposed by the Inland Revenue Board.

      “Corporate tax is governed under the Income Tax Act 1967, which applies to all companies registered in Malaysia for chargeable income derived from Malaysia, including profits, dividends, interest, rentals, royalties, premiums, and other income,” Woon Chee explains.

      Currently, the general rate for corporate income tax in Malaysia is 24%.

      SST different

      What is required of businesses to comply with SST?

      All companies doing business in Malaysia – no matter their size – should do the following to ensure compliance with SST:

      Find out if you are liable for SST by checking the prescribed thresholds for goods and/or services
      Determine if your business is eligible for exemption from SST (and apply for an exemption if eligible)

      If your business is liable for SST, ensure that you:

      Register for SST on the MySST website (check first whether you are already registered)
      Charge service tax on your taxable service (if applicable)
      Issue invoices in the national language or in English
      File returns every two months
      Make payments on time
      Keep accurate records

      Ensuring SST compliance can be an arduous process, which is why many businesses in Malaysia choose to engage a skilled corporate services provider for ongoing support.

      What you may not know about Malaysian taxation

      As a business leader, it is important that you stay aware of local taxation developments and discourse. With this knowledge, you will be able to make smarter decisions when it comes to company strategy and forward planning.

      Some of the latest tax facts you should know include:

      • In its first year of implementation, Malaysia’s digital services tax brought in more than RM 400 million for the government. With the uptake of digital tools and streaming services on the rise, this indirect tax is likely to provide a significant revenue stream for the government in the years to come.
      • A tax exemption for SST on cars ended on 30 June 2022 after an extension was provided as part of the Malaysia Budget 2022. The exemption was introduced in 2020 to help automotive companies survive the impacts of the COVID-19 pandemic and also stimulate local economic growth.
      • Malaysia’s tax regulations are in a near-constant state of flux. Malaysia’s 2023 budget is set to be retabled, meaning businesses must be ready to adapt to potential new tax requirements in the near future.
      • Many companies find outsourced accounting and tax services benefit their business by ensuring they meet regulatory requirements, particularly as they grow and evolve.

      Maintain SST compliance in Malaysia with the help of a tax professional

      Navigating Malaysia’s tax landscape can be a complex and time-consuming exercise, especially for new businesses. In contrast to neighbouring countries, tax regulations and rates in Malaysia change so often that the tax research you performed at the start of your expansion journey may no longer be relevant just six months later, such as with the reintroduction of SST.

      To ensure smooth and successful business growth, and to answer any of your questions about sales and service tax or otherwise, contact a local tax professional who can help ensure your Malaysian venture is fully compliant from the start.

      Contact us to find out more.

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      Never Underestimate the Importance of Employee Engagement in a Hybrid Working Malaysia

      Stock photo of laptop on a wooden table. The screen is split into four with employees engaging in work discussions remotely

      Never Underestimate the Importance of Employee Engagement in a Hybrid Working Malaysia

      In the wake of the global shift brought about by the COVID-19 pandemic, the dynamics of the workforce have evolved significantly. Understanding the changing landscape, particularly in Malaysia, is crucial for businesses striving to foster employee engagement in this post-COVID era.

      The “Great Resignation” phenomenon, as highlighted by Microsoft’s 2022 Work Trend Index, remains a noteworthy factor. It emphasises the need for businesses to adapt and prioritise employee engagement, as 41% of the global workforce is likely to consider leaving their current employer within the next year, with workers looking for better conditions, more engaged teams and a greater sense of purpose.

      At the same time, the cost of hiring is rising. The latest research has found the average cost of recruiting has doubled in some parts of the world. And it takes at least a week longer to recruit someone than it did 12 months ago.

      In many cases, it has become harder – and more expensive – to find and hire new people than it is to retain your current employees.

      With these figures in mind, the importance of employee engagement in a hybrid working Malaysia simply cannot be underestimated.

      The hybrid working Malaysia engagement juggle

      Remote and hybrid work has become the preferred way of working in Malaysia, with 77% of workers indicating they want flexible remote work options to stay. In response, 62% of business leaders are considering restructuring their offices to suit a hybrid working Malaysian team.

      Employers are under pressure to provide an exceptional experience for their people, wherever they may be: in the office, at home, or working from the local cafe. Achieving this is becoming increasingly hard when people are not physically together or even working the same 9 to 5 schedule.

      Photo taken from above a sitting woman who has a laptop in her lap. She is talking to a split screen of four other employees about encouraging employee participation.

      5 ways to encourage employee engagement in the hybrid world of work

      When we’re not physically together, many leaders are left wondering how to increase employee engagement.

      Here are five ways how to increase employee engagement to keep employees connected and engaged wherever they may be.

      1. Bridge the physical and digital worlds with technology

      Having reliable technology in place to enable collaboration and efficient work processes is fundamental to creating an efficient and frictionless employee experience. The last thing you want is for your people to be dealing with frustrating technology issues when they could be making progress on real work. 

      Automating repetitive tasks and introducing self-service portals empower people to take control of simple tasks, like booking their own leave, accessing payslips and updating contact details. By optimising the user experience with easy-to-use applications, simplified central logins and cloud-based systems, your employees will be able to immediately access and update their data from anywhere, at any time.

      Consider streamlining your core functions like payroll, finance and HR to free up your people to focus on collaboration and employee engagement strategies.  

      And, of course, having platforms in place to enable collaboration is crucial. Make sure you are set up for what Google refers to as “collaboration equity“. That is, ensuring everyone can contribute and communicate equally, regardless of location, role, experience level, language, or device preference.

      2. Prioritise wellness

      Photo taken from behind a man sitting at table with his laptop. The screen is black with white bold writing that states perks and bonuses

      While hybrid working undoubtedly has its benefits, it also comes with some downsides.

      We’re seeing a blurring of boundaries between work and life, a weakening of social bonds with colleagues and a greater push for productivity from employers. And this is causing high levels of burnout, which has an impact on not only employees but businesses as well.

      Analyst firm Gallup estimates employee burnout costs USD $322 billion in turnover and lost productivity globally.

      The good news is that companies that prioritise employee wellbeing are being rewarded with more productive and engaged employees.

      Companies that adopted key wellness initiatives such as stress management initiatives, adapted workplace design and financial education saw employee loyalty improve by 79%.

      3. Acknowledge and Show Employee Appreciation

      Publicly celebrating accomplishments might involve regular team shout-outs in virtual meetings, spotlighting achievements in company newsletters, or hosting virtual events to honour milestones. Establishing a culture of peer-to-peer recognition could involve platforms or channels where team members can acknowledge and commend each other’s efforts.

      For instance, a dedicated Slack channel for shout-outs or a monthly newsletter highlighting peer recognition contributes to a positive and appreciative work environment. These measures collectively foster engagement, which is particularly crucial for those managing the dynamics of hybrid roles.

      4. Promote Employee Development and Growth

      To promote continuous learning and growth, organisations can offer diverse training opportunities. This might include workshops on effective virtual collaboration, seminars on time management in a hybrid setting, or access to specialised online courses related to industry trends. Encouraging professional development could involve supporting employees in obtaining relevant certifications or sponsoring attendance at virtual conferences. Utilising feedback surveys and performance metrics allows organisations to gather insights on the effectiveness of these initiatives.

      For instance, a post-training survey could assess the perceived impact on job performance and satisfaction. Organisations can then tailor future programs based on this valuable feedback, ensuring that employee development remains aligned with their evolving needs and aspirations.

      5. Reward your team

      Being paid on time is vital. And people’s experience with pay directly impacts how they feel about working with an organisation.

      If people have continual issues with your current systems — for example, difficulty accessing payslips or being unable to update important details — you might want to look into how to fix this problem. Having a system in place to make sure your people get paid accurately and on time will ensure they are motivated and engaged. And that’s whether you choose to implement a payroll solution or outsource your payroll to professionals.

      Optimising your software applications to benefit your employees and simplify their day-to-day operations, will ultimately give them more control and empowerment in their role.

      Mechanics aside, how much you pay people also matters.

      The cost of living is rising steadily, and employers need to keep pace with rising costs of food, petrol and living expenses to make sure their people are taken care of.

      If you have limited funds to pay bonuses or increase salaries, an alternative is offering employees a stake in the company in the form of shares or stock options.

      Offering equity in the company means employees start seeing the business in a different light. Rather than simply clocking in and out and completing tasks, they begin to think of how to move the business forward in a meaningful way and increase revenue.

      Equity can come in many forms, but leading companies in Malaysia are adopting employee stock option plans (ESOP).

      What is an employee stock option plan?

      An employee stock option plan (ESOP) gives employees the opportunity to purchase company shares at a future date for an agreed price. An ESOP differs from an employee share award plan in that it gives employees the option to buy shares instead of simply enabling them to purchase those shares outright.

      Because ESOPs give employees financial benefits when the company performs well, they are more likely to be invested in the long-term success of the company.

      There are many benefits of offering an ESOP for both employees and business leaders.

      ESOPs help employees:

      • feel valued and rewarded because they are being compensated for their efforts
      • improve their financial position through dividend payments and profit from selling shares
      • gain a sense of part ownership in the company they work for, which means they are more likely to be satisfied and less likely to join their peers in “The Great Resignation”.

      And for companies, ESOPs enable them to:

      • reward high-performing employees without impacting cash flow
      • attract higher-quality talent
      • enhance retention and loyalty
      • enjoy sustained growth and increased company performance.
      Illustrated image of small blue figurines positioned in a circle on a white background. In the middle of the circle in the word share. A digital finger is also pointing to the word.

      How ESOPs work

      Setting up an ESOP can be a complex procedure. In Malaysia, there are specific rules and regulations as well as , so it’s important to get help from experienced professionals who understand the local landscape.

      There are several administrative processes required to effectively implement and maintain an ESOP, including:

      • offer management
      • vesting management
      • participant information record-keeping
      • participant liaison regarding plan mechanisms
      • leave management
      • regulatory reporting.

      Other important considerations to think about are:

      • How long it takes for an individual’s share to be supplied to them over the course of their employment.
      • How long an employee needs to stay before the ESOP ‘kicks in’. Also known as the “cliff” or “lock-in” time, it’s important to consider how much equity to give early employees in case they leave with your shares in hand without adding significant value to your organisation.

      Of course, an ESOP is not the only option for offering employees equity in your company.

      Other options include:

      • performance share plan (PSP)
      • restricted share plan (RSP)
      • share appreciation rights plan (SARP)
      • phantom share plan.

      To figure out which is right for your company, you’ll need the help of trusted professionals to examine different setups and scenarios before going ahead.

      Cut the complexity with a global strategy

      Incentivising your employees with ESOPs is an effective way to boost engagement and productivity. But it is not without its complexities, especially if your presence stretches across the Asia-Pacific or globally.

      And with the trend of remote and hybrid working looking set to continue, who knows how far and wide your people could reach?

      Each country will have different regulations and options for offering ESOPs, so it’s important to partner with someone who understands the intricacies of local regulations to ensure you are compliant.

      Just as there are many benefits of consolidating multinational taxes with one agency, there are benefits to consolidating your employee stock options across multiple jurisdictions.

      These include:

      • Mitigating risk: having a team of professionals that understands not only Malaysia’s laws but those across the entire Asia-Pacific region can help your business mitigate risk when it comes to offering equity.
      • Improving employee experience: streamline your correspondence with a share management platform that provides timely and clear communication in multiple currencies and languages across the region. This ensures everyone on the team, globally, has the same level of access, understanding and experience of the information at hand.
      • Reducing administrative burden: implement efficient, automated processes and a single point of contact to ensure you receive clear and consistent communication across your locations.

      At BoardRoom, we offer Employee Stock Options Plans (ESOP) Services for your business. We use leading technologies and a panel of experts to guide you through implementing and administering your ESOP. Our team of experienced professionals have in-depth knowledge of the local Malaysian regulations, as well as regional and international experience. 

      Wherever your employees work, we’ll be able to support the implementation and ongoing administration of your employee stock option plan to ensure they remain engaged and loyal for the long term. 

      Speak to our team of experts today to get started on implementing an ESOP in your company.

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      The advantages of consolidating multi-country taxes with one provider

      The advantages of consolidating multi-country taxes with one provider

      The advantages of consolidating multi-country taxes with one provider

      Handling tax and accounting in-house is not easy for any business. Errors in these processes can have severe consequences, so they need to be executed with exceptional accuracy and skill. Multinational companies in the Asia-Pacific region face the additional challenge of navigating the complex rules and regulations of each jurisdiction they operate in.

      Deloitte’s 2021 Asia Pacific Tax Complexity Survey revealed 80% of respondents felt the region’s tax regimes have become more complicated since 2018.

      If given the choice, many tax and accounting executives would engage an international company taxation and tax planning advisor in Malaysia, Singapore, Hong Kong or China to handle all their accounts locally. But this gold standard isn’t the reality for most businesses, especially when they are new to expansion.

      Often, businesses will engage an additional tax firm to handle local regulatory requirements each time they expand to a new region. It is an understandable approach – specialist firms are able to offer in-depth knowledge of local tax laws. The issue is that collaborating with multiple firms can present its own challenges.

      Many tax executives in multi-country companies end up struggling with:

      • Tax treaties and implications: difficulty understanding statutory and regulatory compliance resulting in penalty and delay.
      • Communication issues: language and cultural variations can make fostering collaboration between separate tax service providers challenging.
      • Staff retention: the great resignation is happening, so there are more new hires to onboard and train.
      • Technology issues: technological systems and communication modes vary from country to country, which can cause issues during cross-border dealings.

      Do these challenges sound familiar? If so, the solution may lie in consolidating your taxes with an international business tax advisory service in Malaysia, Singapore, Hong Kong or China. Wherever your business is centralised, a third-party advisor will be able to help administer your tax functions across the Asia-Pacific region via a single point of contact.

      This article explores the advantages of consolidating your taxes with one firm and provides tips on selecting a suitable provider for your company.

      The value of local knowledge

      Governments across the Asia-Pacific region frequently set new laws and regulations, which means businesses must keep up with local tax environments as they evolve. This is particularly important when it comes to cross-border tax implications and treaties.

      Outsourcing your taxes to a highly trained team will make it easier to navigate local requirements and manage your cross-border dealings successfully.

      Malaysia’s tax system is particularly complex. Consider the Sales and Service Tax (SST), for example, which has replaced Malaysia’s GST. The SST has a fixed rate of 6% for service tax, and a variable rate between 5-10% for sales tax. Understanding your company’s requirements and having an expert advisor at hand can make all the difference when maintaining tax compliance.

      When reporting season arrives, you can expect to leverage any and all tax benefits and incentives available to you when you have outsourced your accounting and compliance services to the same team that is handling your taxes. It can be easy to overlook tax breaks and exemptions if you do not have local expertise.

      If your organisation operates in Malaysia only, you may be able to manage your taxes internally. But, for peace of mind that your multi-country business is operating with efficiency and integrity, you need to select a knowledgeable tax partner in Malaysia that has strong relationships in neighbouring countries.

      Simplify communication

      Before engaging a tax advisor, ask them whether you will be assigned a dedicated contact person or need to interact with people in different countries. The second scenario should be avoided, as you would face all the same challenges that in-house tax management brings and gain little benefit.

      An ideal arrangement would have you communicating with a connected network of tax professionals via one point of contact. In this situation, you benefit from a wealth of tax experience without the difficulties of coordinating internal personnel.

      The benefits of partnering and consolidating with a premium service provider can also offer great financial rewards.


      Tax incentives and benefits will be optimised across your company while mistakes, miscommunication and delays are reduced. Implementing a single point of contact also makes it easier to keep consistency across your business and align your company goals.

      When managing tax in multiple jurisdictions, it is also important to be aware of subtle differences in culture. A wide variety of cultures, customs, religions and languages exists throughout the Asia-Pacific region. To do business successfully and ensure productivity, it is crucial to work with a local contact who is part of a global team rather than spending time and effort on competing international opinions.

      For help with tailoring your business approach for individual countries, seek a specialist international tax advisor in Malaysia, Singapore, Hong Kong or China.

      Tax compliance is crucial

      Tax operations are drawing increased scrutiny from authorities as regulations become more stringent. No business wants to be targeted for a tax compliance audit. And as budgets and staff numbers reduce, finance and accounting personnel are forced to accomplish more with less.

      A global workforce transition poses another challenge for companies. Employees are increasingly looking for new positions that offer better pay or work-life balance – meaning teams and resources are often overstretched.

      That said, legal requirements cannot go unmet. Your business must make every effort to comply with Malaysia’s stringent tax laws by making accurate and timely tax payments. Businesses that fail to do so may face serious legal repercussions.

      Non-compliance can be due to something minor, such as missing a detail in legislation or incorrectly calculating money owed.

      If you are a multi-country firm with international business partners, ensuring compliance with evolving legislation can be particularly tricky.


      By engaging a specialist firm that understands the tax laws in Malaysia, Singapore, Hong Kong, China and across the Asia-Pacific region, your teams will have more time to concentrate on business growth and profitability. You will have the support you need to comply with tax legislation as it evolves and ensure accurate tax reporting.

      And should compliance problems occur, your advisor will be able to attend to them promptly.

      The most reliable business tax advisory services perform a thorough analysis of company structure before providing advice on long-term tax management. This empowers your staff to be able to identify and apply for tax benefits into the future.

      Choosing the right tax partner

      Cost and time savings are two of the main advantages of outsourcing your tax management. Your efficiency will go up, which in turn boosts profitability.

      While cost considerations are important, avoid opting for the cheapest service when it comes to business tax advisory. Reputation is key to ensuring a reliable service.

      Ask your potential tax partner these questions:

        How many clients do you service?
        How many years have you been in business?
        What is your business history?
        Do you have past accomplishments and results you can share?
        How many countries do you operate in?
        Can you service my company as it expands?
        What has your staff turnover rate been like?
        Do employees stay for a long time?

        A high-quality business tax advisory service provider will be able to answer these questions with confidence and pride. By partnering with them, you can rest assured your tax functions are managed in a professional, correct and timely manner.

        Top-tier firms like BoardRoom also guarantee:

        • Minimal errors: BoardRoom has been servicing Asia-Pacific businesses for over 50 years and is known for precision.
        • Attentive service: our low staff turnover rates mean we always have professionals on hand to meet your needs quickly and accurately.
        • Highly trained personnel: BoardRoom’s specialist team stays across local legislation as it evolves.

        Aim high, look beyond

        Organising today’s tax management is vital, but any executive knows that future planning is just as crucial for business success.

        If you are already a multi-country organisation with offices within the Asia-Pacific region, you may be thinking about further expansion. As you grow, you will have more legislative and cultural challenges to deal with.

        This is why global capabilities are a must when it comes to choosing a skilled tax advisory firm.

        For instance, BoardRoom partners with Andersen Global, a network of legal and tax experts based in 315 locations around the world. This means we possess outstanding knowledge of cross-border business taxation matters.

        Essentially, outsourcing your taxes to a global firm ensures you have all the specialist legal advice you need to expand into new countries and find success within them.

        Consider all outsourcing possibilities

        When selecting a tax partner, it is a good idea to ask whether they can provide additional corporate advisory and management services.

        Successful business growth requires the proficient handling of business functions related to tax compliance, such as company incorporation and corporate secretarial services.

        Engaging an advisory firm that provides a full suite of company services will support a simpler expansion process. You will save money and time, meaning you can direct more resources into your business’s primary objectives.

        Efficiency tends to become more crucial the larger your company becomes.


        When you find a reliable tax services partner, you might wonder what further business functions they can manage, such as:

        It makes sense to outsource multiple functions to a full-service provider because they will already have intimate knowledge of your business’s operations, structure and working methods. They will be able to support your company in a range of areas with minimal fuss.

        Streamline your processes through consolidation

        The advantages of consolidating multiple functions with one tax services provider are significant – especially when you take into account the cost and time involved in coordinating separate firms across the region. And if your partner is well-versed in the local tax breaks and incentives to which your business is entitled, you will enjoy substantial annual savings.

        But beyond cost savings, quality tax outsourcing will help streamline your operations on a company-wide scale.

        The complexity of tax management continues to grow. The solution may lie in engaging a reliable tax partner who can support your expansion throughout the Asia-Pacific region and ensure compliance with evolving rules and regulations.

        If you want to find out more about consolidating your business’s tax administration with one firm, chat with our tax specialists today.

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        Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

        Malaysia Budget 2022

        Malaysia Budget 2022 – Tax highlights including extensions on current incentives and new reliefs

        On 29th October 2021, Malaysia’s 2022 Budget, themed “Keluarga Malaysia, Makmur Sejahtera”, was tabled by Finance Minister Tengku Datuk Seri Utama Zafrul bin Tengku Abdul with a wide range of tax incentives offered to both individuals and corporates. The expansionary budget is aimed to act as a catalyst to boost economic recovery and close the gap on the country’s fiscal deficit.

        If you have any questions relating to any of the information contained in this report or need tax consultancy services, please email our tax advisors via [email protected] or call us at +60 3 7890 4500.

        Individual Tax Relief

        Individual Tax Relief

        New Corporate Tax Incentive

        New Corporate Tax Incentive

        New Sales & Service Tax Exemptions

        Sales and Service Tax Exemptions

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        Mitigating Costs in an Economic Downturn


        Mitigating Costs in an Economic Downturn

        The onset of the COVID-19 pandemic along with efforts to contain it has plunged much of the global economy into a recession. In April, the International Monetary Fund’s World Economic Outlook (WEO) projects global growth to shrink by 3 per cent. However, its October publication amended the projection to 4.9 per cent. The impact of the pandemic will continue into 2021, where the WEO projects global growth to be at 5.4 per cent, which is 6.5 per cent lower than the pre-COVID-19 projections of January 2020.

        Mitigating costs in an economic downturn-Growth projection

        Looking forward, we can expect the recession to leave lasting scars despite the extraordinary efforts of governments worldwide to alleviate the situation through fiscal and monetary policy support.

        During these unprecedented times, companies need to take affirmative action to mitigate risk amidst the economic downturn. Crafting recession strategies to retain or expand your customer base, learning to embark on affordable yet effective marketing or even taking this opportunity to review and better optimise business operations are all practical solutions businesses can explore. However, the immediate strategy for most companies would be to adopt cost-cutting measures.

        In this article, we will share some of the most popular and effective measures companies can take to mitigate costs during an economic downturn.

        Look to outsource

        Outsourcing is when a company engages a third-party service provider to handle or manage a business function externally instead of choosing to manage the particular service in-house.

        Of the numerous functions that exist in a company, payroll is perhaps the one that will offer the most significant benefit when outsourced during an economic downturn. By outsourcing payroll, your company can effectively improve its focus and expand its accessible talent pool, which are all essential to helping the company navigate through an economic recession. But most notably (and most beneficial during an economic downturn), outsourcing can reduce and control a company’s operating cost.

        While the actual cost-savings of outsourcing HR and payroll services may vary between businesses, the most common areas where they could come from are:

        • Reduced payroll employees or headcounts
        • Elimination or change of existing payroll management software (often to something like a cloud-based payroll system that offers automation solution)
        • HR and payroll system updates
        • Employee training
        • Hefty penalties that are incurred when payroll mistakes happen

        Outside of payroll, some of the most popular services that companies often outsource to mitigate and manage costs are accounting, administrative services (corporate secretary) and human resources.

        Look to your accountants

        During an economic downturn, it becomes imperative that you have experienced accountants to help you financially navigate through this challenging landscape. Beyond their capacity for keeping financial records, accountants can interpret them and provide you with a clear and succinct evaluation of the company’s current performance and financial position that could positively influence the outcome of any business decision during a recession.

        Given their unique position and objectivity, a critical and core function of accountants on mitigating costs during an economic downturn is to uncover opportunities to eliminate unnecessary expenses and save costs. In areas where it is not possible to cut costs completely, your accountant can strategically advise on how payments can be deferred to maintain a healthy cash flow during difficult periods.

        In addition to cutting cost, seasoned accountants can also analyse your business trends and provide effective forecasting. Such input is critical to helping you understand the changing performance of your business and assist with realigning projections, which can help you assess the viability of your current business plan and provide insights for new alternatives should the need arise.

        Look at tax relief and economic stimulus packages

        In an economic downturn, it is essential to monitor tax policy changes that can aid in providing financial relief for the company and improve cashflow. During such times, it is common for banks to begin cutting their interest rates while the government actively works to put forward spending and tax packages as well as offer administrative relief by extending tax-filing deadlines. Governments across the world might even introduce tax credits and tax cuts for companies that have experienced a significant drop in revenue.

        Additionally, most governments would also roll out stimulus packages as part of their plan to spur their respective economies. However, it is worthwhile to note that in the long term, these governments intend to recoup the funds that were used to finance the stimulus packages and their plans could impact the bottom line of many businesses later. A likely course of action would be adjustments made to policies and tax rates, including but not limited to Corporate Taxes and the Sales and Service Tax (SST). Therefore, we strongly advise that businesses continually revise their tax plan in response to any possible policy changes to achieve greater savings and maximising any tax benefits.

        As you embark on any tax planning efforts and find yourself lacking in experience or resources to do so adequately, it is a good idea to engage a professional. In doing so, you can ensure that your tax plan is continuously revised to strategically leverage every tax benefit, maximise tax deductions, and comply with the local tax regulation and statutory requirements.

        Look at better managing your working capital

        An economic downturn presents several working capital challenges for businesses across industries. To stay operational, companies must look for new ways to finance their working capital. According to the Hackett Group’s 2020 Working Capital Survey, organisations have focused on the availability of corporate debt as a source of working capital for too long. While this may be a common practice, it increases the company’s exposure to unavoidable risks, such as changing customer demands and disruption to the supply chain. During an economic downturn, these potential risks to your working capital could prove detrimental to the survival of the company.

        Companies need to manage their working capital during an economic downturn effectively to mitigate cost through individual strategies that address their levels of debtors, creditors, procurement and inventory, and receivables process.

        Mitigating cost and managing working capital in an economic downturn

        Look at BoardRoom to help you through this crisis

        During an economic downturn, when faced with numerous challenges, companies will naturally seek to hunker down and begin cost-cutting strategies. Such strategies are necessary, but it is also vital to note that even in crisis, there are opportunities. Companies will have to practice greater diligence and adapt to the changing landscape quickly through the adoption of forward-looking, growth-oriented plans that prepare the company for when the economy improves.

        BoardRoom can help you through any recession period and prepare your business for the inevitable upturn. As a market leader in providing accounting, payroll and corporate services, our in-house team of dedicated experts can help to provide effective cost strategies regardless of your business size or needs. Our in-depth understanding and experience of economic trends will empower your business to discover and explore new opportunities.

        Are you looking for a trusted partner and advisor as you weather this difficult time? We are here for you with your tax services needs. Contact our BoardRoom outsourcing experts here!

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