Employers who hire retrenched workers will enjoy double tax deduction on the amount of remuneration paid, said Finance minister Datuk Seri Najib Razak. While tabling the second stimulus package in Parliament today, Najib proposes that employers who employ workers retrenched from July 1 2008 be given double tax deduction on the amount of remuneration paid.
“The amount of remuneration eligible for this deduction shall not exceed RM10,000 per month and is limited up to 12 months remuneration per employee,” he said.
He said the incentive is applicable to workers employed from March 10 this year to Dec 31, 2010.
In citing an example, Najib said: “An employer hire a retrenched worker at an annual salary of RM24,000. Normally, tax deduction to the employer is RM24,000 from taxable profit.
“However, with this measure, the company is allowed to deduct RM48,000 from profit, that is, double the salary.
“This represents an additional tax reduction for the company of RM6,000 or 25 per cent from RM24,000.”
Najib, who is also the deputy prime minister, said to reduce the burden and increase disposal income of retrenched workers, the government proposes that existing tax exemption of RM6,000 given on retrenchment benefits be increased to RM10,000 for each completed years of service.
He also said banking institutions have agreed that retrenched workers defer the repayment of their housing loans for one year.
Source : The New Straits Times