Further deduction for COVID-19 screening costs borne by employers

Further deduction for Coronavirus Disease 2019 (COVID-19) screening costs borne by employers

As highlighted in earlier tax alerts, the Finance Minister of Malaysia, Tengku Dato’ Sri Zafrul Tengku Abdul Aziz had announced that employers who bore the COVID-19 screening costs for their employees from 1 January to 31 December 2021, will be eligible for a further deduction (see Tax Alert No. 4/2021 and Special Tax Alert No. 2/2021).

To legislate the above, the Income Tax (Deduction for Expenses in relation to the Cost of Detection Test of Coronavirus Disease 2019 (COVID-19) for Employees) Rules 2021 [P.U.(A) 404] were gazetted on 20 October 2021.

The Rules provide that in ascertaining a Malaysian-resident employer’s adjusted income from his business for a year of assessment (YA), there shall be allowed a further deduction (i.e., deduction in addition to any deduction allowable under Section 33 of the Income Tax Act 1967) for the cost of COVID-19 detection tests for his employees between 1 January 2021 and 31 December 2021. In order to qualify for the additional deduction, the employer has to produce a receipt and certification issued by a medical practitioner registered with the Malaysian Medical Council or outside Malaysia, indicating that the COVID-19 detection test had been provided to his employees.

The Rules are effective from the YA 2021.