KUALA LUMPUR: The government should place greater emphasis on mid-tier companies in the 2025 Budget, alongside its focus on micro, small, and medium enterprises (MSMEs), as these companies are crucial to bolstering the Malaysian economy.
According to Fung Mei Lin, a tax partner at PwC Malaysia, mid-tier companies play a key role in job creation, innovation, and export diversification, all of which are essential to the country's economic foundation.
She acknowledged the government's ongoing efforts to support Malaysian businesses in expanding internationally, including the collaboration between the Malaysian Investment Development Authority (MIDA) and the Ministry of Finance (MoF) to review regional services tax incentives, such as the Principal Hub and Regional Distribution Centre.
"We hope that the updated regional services tax incentive will remain investor-friendly, particularly for Malaysian mid-tier companies," Fung said, adding that these companies need significant investment and time to scale up their international operations.
She also emphasised the need for clearly defined criteria to help mid-tier companies qualify for these tax incentives.
The Malaysia External Trade Development Corporation defines mid-tier companies in the manufacturing sector as those with annual revenues between RM50 million and RM500 million, and in the services and other sectors, between RM20 million and RM500 million. Meanwhile, the Securities Commission Malaysia's five-year plan aims to strengthen the capital market's appeal as a financing source for both MSMEs and mid-tier companies. It estimates that Malaysia has around 8,500 mid-tier firms, contributing 36 per cent of the GDP and 16 per cent of the workforce.
Andrew Lim, head of Maritime Southeast Asia for the Association of Chartered Certified Accountants (ACCA), highlighted the need for a simplified tax system in the 2025 Budget to enhance compliance and support business growth.
He said that small and medium-sized (SME) firms, in particular, would benefit from clearer, more straightforward tax policies.
Lim also stressed the importance of expanding the tax base to include the digital economy to ensure fair contributions from rapidly growing sectors, including multinational tech companies.
He further noted that SMEs, which account for nearly 38 per cent of Malaysia's GDP, received significant support in the 2024 Budget.
He pointed to the RM10 billion SME Digitalisation and Automation Matching Grant, which helped businesses adopt advanced technologies to improve productivity and competitiveness.
However, Lim believes a more streamlined tax system could further aid SMEs by reducing administrative complexity and encouraging compliance.
AutoCount Dotcom Bhd, meanwhile, urged the government to expand digitalisation grants to support SMEs and MSMEs in adopting digital financial management systems, particularly with e-invoicing set to become mandatory in 2025.
It said that many micro-SMEs and small enterprises may struggle to modernise their financial operations.
Extending digitalisation grants will help these businesses acquire the necessary software and technology, ensuring they are prepared for the e-invoicing requirement, it said.