Malaysia is one of the most promising nations in Asia, which makes it a popular venue for inventors and businesses. Although marred by economic impacts from the pandemic, the Asian Development Bank still predicts a strong 6.0% rebound for the country in 2021 and to stabilize at about 5.7% in 2022. Like many places, 2020 has been tough for Malaysians. But the economic outlook and potential for investment remain positive in the future.

In today’s article, we’ll look at some enduring qualities that the Malaysian financial ecosystem has to offer and why businesses are still considering it as a good place to venture into.

Reasons to start a business in Malaysia 

1. Strong Support System

The Malaysian government has often been friendly and welcoming to foreign investments and businesses. Many policy-makers have a very pro-business stance, implementing policies that improve the business environment for private enterprises. Tax incentives and financial subsidies are also offered to companies with pioneer status. The nation also allows foreigners to establish 100% foreign-owned companies and has an established financial sector.

Government Support During the Pandemic:

To assist businesses and employees through the economic turmoil caused by the pandemic, the government introduced a hiring incentive programme (PenjanaKerjaya) and a wage subsidy programme.

• Hiring Incentive Programme: Monthly cash incentives are given to companies employing new people for 6 months.
• Wage Subsidy Programme: Corporations can receive up to RM1,200 per retained employee each month for 3 months.

In August 2020, it was reported that the programme had helped employ more than 11,000 people and up to 2.4 million jobs have been saved by the wage subsidy programme. Schemes like this show Malaysia’s commitment to helping provide businesses with assistance and stability, increasing confidence in the country.

2. Solid Infrastructure

Malaysia has an excellent infrastructure which is positioned to well-serve the businesses in the country. Excellent air, land, and sea cargo facilities make transporting goods efficient and reliable. The international sea and air connections provide multinational corporations with an accessible route to deliver their goods and services to places all over the world. With good highway networks linking the country to Thailand in the north and Singapore at the tip of the peninsula in the south, connectivity between neighbouring nations also promises excellent international trade opportunities.

The telecommunications infrastructure is one of the best developed in the region, supporting a range of domestic and international communication services. This is excellent for any business that has operations in other locations. Better telecommunications 5G infrastructure is also in planning and development, paving a way for faster internet speeds with higher bandwidths and capacity for the industry to do more.

3. Well-Educated Workforce   

Many expats will find it easy to communicate with locals as English is a common language spoken in Malaysia, along with Bahasa Malaysia, Chinese, Tamil and various dialects. It is fairly common to use English as the medium of communication, especially in the private sector.

Malaysia’s talent pool has been developed and supported by many institutions that open up opportunities for more young people to hold diplomas, degrees and certificates. A growing number of the population are also Master’s degree holders, indicating specialised skills ripe for the workforce. With English mastery, certified qualifications and an admirable work ethic, Malaysia’s workforce continues to become a pulling factor for investors and foreign businesses.

4. The Heart of ASEAN & Southeast Asia

Southeast Asia has seen rapid development in recent years and is one of the main regions fuelling global GDP growth. ASEAN is an intergovernmental organisation promoting cooperation among 10 Southeast Asian countries, and it is also the third-largest trade bloc in the world. Malaysia has been a key member of the organisation since its inception in 1967.

Located at the heart of ASEAN with strong cooperation with other major regional powers like Indonesia, Singapore, and Thailand, Malaysia offers easy access to a USD 400 billion market.

As ASEAN progresses and its members grow more affluent, the consumer spending power of its huge population will grow. Malaysia is strategically positioned to take advantage of this important market locally and internationally, acting as the perfect hub for businesses in the region.

5. Continuous Economic Growth

Malaysia is a country on the move. From a country dependent on agriculture and primary commodities in the sixties, Malaysia has today become an export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries. Bank Negara Malaysia has projected Malaysia’s economy to grow between 5.3% to 6.3% in 2022. Despite some setbacks, Malaysians continue to look forward and progress and keep a positive outlook for the future.

6. Affordable & Enriching Living Standards

Many would look to Malaysia to learn the success stories of living in a heterogeneous multicultural society. As a cultural melting pot, Malaysia offers an enriching experience unlike anywhere else in the world. The cultural diversity creates a vibrant environment, as well as a more inclusive workforce.

Malaysia’s relatively inexpensive cost of living coupled with the energetic lifestyle makes it a great place for foreign professionals to live. Expats will  enjoy a good quality of life with affordable healthcare, tourism, and services.

7. Business-Friendly Policies 

Malaysia has become an attractive manufacturing and export base in the region thanks to many government policies that aim to maintain a business-friendly environment with opportunities for growth and profits. The private sector in Malaysia has continuously worked well with the public sector in achieving the nation’s development objectives.

The Free Trade Zones (FTZ) and Digital Free Trade Zones (DFTZ) are one of the many examples of Malaysia’s eagerness to work with international players. Other examples include permitting foreigners to be allowed 100% shareholdership in certain service and manufacturing industries. Malaysian law has also evolved to provide better protection to investors and intellectual property, empowering decision making and innovation.

Conclusion 

Ledgen Group has helped countless clients to start businesses over the years, whether it’s a venture into Malaysia or other key regions in Asia. We continue to serve our clients by offering a comprehensive solution at every step of their business, from incorporation to regional expansion, in several countries.

Ledgen has now expanded our business across key Asian regions to be the trusted statutory compliance solutions provider in Malaysia, Singapore, and Hong Kong. Kickstart a Malaysian success story with us and start your venture here strong.

Since 2020, everyone has been talking about new norms. Among many accountants and finance personnel in small and medium enterprises (SMEs) and even large companies, there were a lot of restructuring, adapting, and evolving to new working environments and behaviours. Now that we are back in the office and slowly returning to relative normalcy, what happens to these new (now rather old) norms?

So, to shed light on post-pandemic situations, we identified some newer norms all companies should be prepared for, specifically for accountants, bookkeepers and the general finance department. These even newer norms affect how we work as we transition towards digital spaces and make use of better technology.

1. Growth of Cloud-Based Accounting Software

Most SMEs in Asia have traditionally relied on desktop accounting software developed by conventional software providers, such as Microsoft. Today, many desktop-based providers have since upgraded their software to include cloud capabilities. This evolution is in-line with a growing trend of cloud computing that has since dominated workplaces.

Cloud computing is basically using an external remote network of servers to manage, store, and process your data. It eliminates the need for physical storage and servers which often takes up a lot of overhead costs for SMEs. Cloud-based accounting software makes it easier to manage financial data and communicate seamlessly among stakeholders.

Cloud-based accounting software can also synchronise information which allows them to directly connect to banks. Banking transactions will be automatically loaded into the accounting system, making your financial data accurate and updated. This, together with plenty more advantages of cloud accounting software, made it a popular choice among accountants in the new norm of hybrid and remote working.

2. Paperless Record-Keeping

Is your department still keeping and saving thermal receipts and hardcopy supplier invoices, fearful that they might fade and become invalid over time? Physical paper, which takes up space and time to organise and file, might now be a thing of the past.

In reality, accountants are now going paperless with the use of the Optical Character Recognition (OCR), Artificial Intelligence (AI) and Machine Learning (ML) capabilities. They either keep softcopy versions of their invoices and receipts without the need to print them out or input everyday miscellaneous receipts into cloud software.

Other benefits of going paperless, supported by cloud accounting software:

1. Save time and space for filing and managing documentation
2. Easier access and transfer of information across stakeholders
3. Boost security by ensuring the system or software is encrypted
4. Easy to track changes and keep records timely and accurate                                                           

3. Outsourcing to Accounting Service Providers 

According to an observation by Forbes, the pandemic has led to an increase in outsourcing, be it for IT, logistics, or accounting functions. And as businesses would find out, outsourcing has great benefits when partnered with the perfect provider. Outsourcing is thus here to stay in the newer norm.

In addition, accounting and finance operations in many businesses have frequently been seen more as cost-guzzling ventures rather than profit-making. As a result, businesses are more likely to outsource these services as part of cost-cutting initiatives, especially if the accounting service providers can provide seamless support. Apart from cost benefits, choosing outsourced service providers rather than recruiting permanent in-house workers will convert the salary fixed cost element into a variable cost of being billed according to the number of transactions per period whilst lessening employment compliance requirements.

Thus, businesses should consider outsourcing their service providers to reduce in-house overhead, contain staff turnover, and gain better clarity into manpower productivity.

4. Value-Added Accounting Services 

Businesses that outsource accounting functions no longer expect the bare minimum. They demand value-added services beyond regular data entry. Accounting treatment, employer regulatory responsibilities, and tax guidance are all examples of value-added services.

Therefore, you can expect accounting service providers to have the necessary resources and capabilities to support your department, and your business as a whole. Should you decide to outsource, look for a partner with the right business acumen who can provide strategic guidance where SMEs rarely have access to highly experienced CFO.

Accounting service providers like Ledgen, for example, possess strong analytical abilities that will help businesses understand business performance and plan accordingly.

Conclusion

How does your current accounting function work? Are you utilising the available options to improve your accounting? Do you have a lot of personnel turnover? Are you on track to satisfy your deadlines to your key stakeholders?

 To excel and deliver the desired quality of service to their clients, accountants in the newer norm will need to exhibit agility in adjusting to changes in accounting standards, tax regulations, and technology.

Our accounting specialists in Singapore, Hong Kong, and Malaysia have a wealth of experience aiding clients with setting up and maintaining a proper set of accounts that are  tailored to meet your internal management requirements. Work better and smarter in the newer norm with us today.

In Singapore, an individual must file his/her personal income tax return on 15^th (paper-filing) or 18^th April (e-filing) each year.

You should note that all gains and profits derived by an employee in respect of his employment are taxable unless they are specifically exempted under the Income Tax Act or exempted by virtue of an administrative concession granted by the Inland Revenue Authority of Singapore (“IRAS”).

Whether you are an individual income taxpayer or an employer, you may wish to take note of some common filing errors highlighted below:

Non-filing of personal income tax return

An individual should file his/her income tax return unless he receives a No-Filing Service (“NFS”) notification from the IRAS.  This is regardless of if he/she derived any income in the preceding year or if his/her employer is on the Auto Inclusion Scheme (“AIS”) for Employment Income.

If he/she does not file his income tax return by the due date, the IRAS will take enforcement actions.  In addition, the IRAS may issue a Notice of Estimated Assessment based on information provided in the past years of assessment.

Relief claims

A Singapore tax resident is entitled to personal income tax reliefs subject to meeting qualifying conditions.  As such, before e-filing his/her income tax return, he/she should ensure that he/she meets the qualifying conditions for the tax reliefs which would have been automatically pre-filled in his/her tax return (based on prior years’ information).

If an individual wishes to claim new reliefs, he/she should input the relevant claim in his/her tax return.  For example, with the arrival of a new child, an individual may include a claim in his/her tax return for qualifying child relief or handicapped child relief accordingly.

Declaration of income and employment benefits

(a)    Salary
An employee is taxable on income derived from the exercise of an employment with his/her Singapore employer.  In a situation where his/her salary is borne partly by the Singapore employer and the overseas parent company, the portion borne by the overseas parent company should be declared in the employee’s Form IR8A.  This is regardless of whether the employee’s salary is credited to a Singapore bank account or an overseas bank account.

(b)   Car benefits
Where an employer provides car benefits to an employee, he/she is taxable on the private usage of the car.  The IRAS has amended the formulae to compute the taxable value of car benefits with effect from the Year of Assessment (“YA”) 2020.  The taxable benefit is dependent on whether the car is new, second-hand, a car with renewed COE or a leased car and includes the actual running and maintenance cost of the car.

(c)    Home Leave Passage
In the past, home leave passage provided to expatriates were taxed at a concessionary rate and limited to a fixed number per year.  However, with effect from YA 2018, home leave passage provided to an expatriate employee, his spouse or his children are taxable in full.

However, where the expatriate is an employee of a company which has been granted certain tax incentives before 1 January 2004, there are specific tax rules on the taxation of such home leave passage.

(d)    Overseas Holiday Trips
Where an employer provides an overseas holiday trip to its employees, this benefit is taxable even though it is available to all staff.

(e)    Share Options and Share Awards
An employee is subject to tax on gains arising from Employee Share Options (ESOP) and other forms of Employee Share Ownership (ESOW) plans if the plans are granted to him/her while he/she is exercising employment in Singapore.  Generally, under ESOP, the gains are taxable when the employee exercises his/her share options.  As for ESOW (with no vesting period)/ESOW (with a vesting period), the employee will be taxed on the gains in the year when the shares are granted/when the shares vest with the employee.

In a situation when the foreign employee ceases employment in Singapore or a Singapore Permanent Resident leaves Singapore permanently, the “deemed exercise rule” will apply to bring the gains from ESOP and ESOW plans as “deemed income” of the employee, one month before the date of cessation of employment or the date the right or benefit is granted, whichever is the later.

(f)    Director’s fee
A director is assessable to tax on his director’s fees in the year he is entitled to receive the fee.  Generally, this is the date the fees are voted and approved at the company’s Annual General Meeting (“AGM”).

(i)     Director’s fees approved in arrears
Director’s fees approved in arrears refer to fees that are approved after the director has rendered his services to the company for the accounting year concerned.  In this case, the earliest date on which the director is entitled to the fees is the date the fees are approved at the company’s AGM.

Example

Director’s fee of SGD 10,000 for year ended 31 December 2020 is approved at the company’s AGM on 28 February 2021.  Accordingly, the director’s fee will be regarded as income for 2021 and brought to tax in the YA 2022.

(ii)   Director’s fees approved in advance

Director’s fees approved in advance refer to fees that are approved before the director renders his services to the company for the accounting year concerned, when such fees are approved at the company’s AGM.     Thus, the earliest date on which the director is entitled to the director’s fee is as and when he renders his services.

Example

A company held its AGM on 31 January 2022 to approve director’s fees of SGD 80,000 for the accounting year ending 31 December 2022.  In this instance, the director’s fee of SGD 80,000 has been approved in advance since the director has not performed his services for the company.  Accordingly, he is not entitled to the director’s fee on 31 January 2022.

Where a company pays director’s fees to a non-resident director, it must be mindful of  potential withholding tax implications.

Filing Form IR21 – Tax clearance for foreign or Singapore Permanent Resident {“SPR”) Employees

An employer must seek tax clearance from the IRAS if its employee (foreigner or SPR) ceases his employment with the company, goes on an overseas posting or leaves Singapore for more than three months.  The Form IR21 must be submitted to the IRAS at least one month from the foregoing events.  In addition, the employer must withhold all monies due to the employee from the date that it is aware of the employee’s cessation of employment or impending departure from Singapore, until a Tax Clearance Directive is issued by the IRAS.

If the employer does not file or is late in filing the Form IR21, the IRAS may impose a fine of up to S$1,000.

Please contact us if you require assistance with your/your employees’ tax filing matters.

One helpful way to ensure your organisation is on the ball with your taxes is by outsourcing it to the pros. Outsourcing tax compliance obligations has several advantages for businesses. Of course, you should do your homework before signing on the dotted line. So today, let’s explore the advantages of getting professional tax experts to help you. 

We’ll first look at some benefits of outsourcing tax preparation. Then, we’ll identify the signs that you should outsource your tax activities in hopes you will make an informed decision for your company. 

Benefits of Outsourcing Tax Compliance & Preparation 

1. Reduce Errors & Boost Compliance

   Your outsourced tax compliance team will make sure that you are following all federal, state, and local tax laws and policies. Tax professionals can also keep you up to date on any new tax or accounting standards, as well as any upcoming adjustments. Ultimately, they’ll help avoid fines and penalties as a result of delays and errors caused by incorrectly calculated taxes.

2. Strategize Tax Planning Better
   By outsourcing your tax compliance and preparation services, you will be able to calculate your tax using effective planning, strategy, and method. Outsource partners can minimise redundancies and laborious procedures with a data-centric approach, as well as increase efficiency through digitization.
3. Access to Higher Level of Expertise
   You can engage with tax and finance professionals in relevant fields when you outsource. They can supply you with a ready-to-go team that knows what to do from the get-go, with no training required. Apart from that, they are well versed in legislation and tax law which enables them to help and provide advice on matters of concern.
   
4. Minimise Future Disputes

   Outsourcing your tax preparation will ensure that your data is accurately collected, categorised, and sorted so that the outsourced team can utilise it to prepare and file local taxes for your company as needed. To perform jobs with 100% accuracy, they usually use a two-step review procedure. This will ensure accuracy and minimise disputes with the authorities. 

5. Reduce Cost & Save Time 

   According to Deloitte, businesses outsource mostly for cost-efficiency and agility. Tax outsourcing also helps you to cut your tax preparation costs, as well as saving you and your internal team’s time and energy calculating and responding to tax inquiries. Usually, the cost of building in-house tax teams is only justified when there’s enough scale in the company, especially if they’re also operating in a multi-jurisdictional region. 

6. Focus on Core Matters & Build Reputation

   By outsourcing tax compliance, you would have more room to focus on other pertinent matters that need your attention. Leave the taxes to the professionals while you work on growing and improving your business. Accurate and timely tax compliance can also be beneficial to win investors and gain their confidence that your company is capable and reliable.  

Signs You Should Start Outsourcing Tax Activities

1. You Require Innovation
   If you and/or your business are tight on time and resources to come up with better solutions and creative products for your customers, you might understand how each hour and day is valued. Outsourcing could help you re-prioritise business development so you can focus your efforts on innovation and leave the mundane task to the professionals.
2. You Maxed Out Your Capacities 

   When a team’s capacities are reaching their limits and initiatives are stalling, it may be time to outsource to keep everyone moving forward. Before making a final selection, ask your team what their specific needs are and what it would take to achieve their goal accordingly.  

   It can be hard to decide whether to outsource or keep something in-house because both have advantages and disadvantages. Examining what competitive benefits you obtain by keeping a non-core service in-house is a smart method to determine whether you should outsource it.

3. You’re Behind Deadlines 

   Are you struggling to respond to local tax authorities queries? Do you find yourself lacking the time, knowledge, and expertise to give in the details? Hence, it’s better to outsource the tax matters. You have a better chance of achieving your tax deadline and avoiding penalties and errors.

4. Your Team’s Skills & Needs Do Not Match 

   For a lot of SMEs and startups, employees have to wear different hats. As you scale and grow, these hats have to be specialised and skills become niche. Tax computation can increase in complexity as your business grows as well. Outsourcing can be considered when your team needs extra help or when long-term training on taxes is not an urgent priority.  

Conclusion 

More and more businesses have discovered the advantages of tax compliance outsourcing. In certain industries, cost reductions are so considerable that the business can prosper and grow considerably more quickly. Certain departments such as accounting and tax compliance are better to be outsourced as it requires experts in the industry to work on it to ensure errors and compliance is met.  

With a presence in Singapore, Malaysia and Hong Kong, Ledgen Group has become a preferred partner for tax compliance and preparation. Our team of tax professionals are able to assist with many forms of jurisdictions and regulations for both corporate and personal taxations. Connect with us and discover how we can help. 

In recent years, the practice of outsourcing corporate operations has grown in popularity in the business world. Technology, as well as some difficult economic times, have altered the way business executives view the world. Among the many activities a business can outsource, accounting is one of the most common ones we’ve seen, with 37% of SMEs getting their accounting  outsourced. 

Before you take the leap and outsource your accounting function, it’s critical to assess the advantages and drawbacks so you can make an informed choice about outsourcing or keeping your operations in-house. So let’s dive straight in: 

Why Choose to Outsource Accounting?  

• Reduce Payroll Headcounts 

Full-time employees are super helpful to firms, but they can be costly. Aside from the expenses of benefits and pay, internal turnover results in a loss of expertise or account-specific history. Outsourcing is a great alternative since it delivers competent teams of specialists without the additional training involved. 

• Strengthen Core Competencies

Outsourcing helps companies to concentrate on their core strengths, increasing their competitive edge while strategically focusing on what their internal resources excel at. 

When to Outsource Accounting? 

You might be ready to outsource when you have the buy-ins needed, the budget, and the paperwork required. Don’t worry too much about the time of year or the fiscal year in which you want to start. Outsourced accounting services can reconcile your tax returns regardless of when you complete implementation. 

Basically, it might be the right time to outsource if and when:

• You’re an SME or a startup that doesn’t require a full-time bookkeeper but still needs someone with more skills to handle your books. 
• You’re a company of any size that cannot find a full-time employee with the right skills. 
• You’re a growing company that wants to scale but struggles to expand the accounting department. 
• You need temporary accounting help within a short period such as the end of the year reports, maternity leaves, or other help needed. 
• You do not plan to maintain an internal finance team for your subsidiary in each local country.

Whether or not you will engage with an outsourcing service provider anytime soon, it’s still important to be aware of your options. As you examine potential outsourcing partners, start defining who among your teammates should be involved in the implementation process, which team member should get financial reporting, and how that information will be distributed. 

Depending on your needs and workflow, reports can be requested on a daily, monthly, quarterly, and annual basis. Consider the kind of reports that will meet the demands of your specific organisation when you investigate outsourcing choices. 

What to Look for In an Accounting Outsource Provider?

• Track Record 

When looking for a potential accounting outsourcing partner, consider the number of years they’ve been in service. You can also look at their past clients and read the case studies to understand how the firm has delivered clients’ needs.  

• Process & Communication

Outsourcing partners should be skilled at building and managing procedures, and they should be able to add value through a superior set of processes and effective communication. Do they have a process for their workflow which you can understand? Are they responsive, helpful and eager to assist? 

• Range of Expertise 

Of course, a professional accounting service provider should be fluent in setting up and maintaining accounts, reconciling, and other accounting skills. But what other skills and services do the firm offer? Many service providers stick to typical accounting activities like bookkeeping, while other providers are capable of handling more tasks, such as financial analysis for decision support. In the end, you’ll be better off hiring someone who can manage a wider range of vital tasks. 

• Wide Regional Coverage 

It’s wise to opt for a service provider that has a wider regional coverage in more than one major city, especially for businesses with operations and offices in multiple locations. Outsourcing with a partner who already has an established presence in all your operating locations saves up the time and cost, as well as ensuring accuracy and compliance. It is better in the long-term than having to work with multiple independent accountants across different countries. 

Conclusion 

When it comes to deciding whether or not to outsource your company’s bookkeeping, accounting, and controller activities, there is no one-size-fits-all solution. Ensure that outsourcing would provide benefits and ROI to your business. And when you’re ready to collaborate with an outsourcing partner that can help your company streamline accounting functions, connect with Ledgen Group today. 

We are a preferred accounting outsourcing partner with a presence in 3 key Asian regions; Singapore, Malaysia and Hong Kong. Our satisfied clients had seen us go above and beyond in delivering professional services and advice, helping them grow through all the complexities.