With Covid-19 severely affecting businesses, maximising cash flow as well as employee retention has become a significant issue. To this end, the government has introduced the Enhanced Wage Subsidy Programme (“WSP”) aimed at supporting employers in their operations and to retain employees. Businesses may wish to review their eligibility for this programme to help them through these trying times. We at BDO have summarised the WSP and some common questions and responses from SOCSO based on information currently available.
The conditions in applying for the WSP and the application process is outlined as follows:
Frequently Asked Questions
1. Apart from companies, do partnerships and sole proprietors also qualify?
Yes, as long as the following conditions are satisfied:
a) Registered with or contributing to SOCSO;
b) Registered with the CCM or local authorities before 1 January 2020; and
c) Commenced operations before 1 January 2020.
2. How is the 50% decline in revenue to be calculated?
Note that only companies with 76 employees and above are required to satisfy this condition.
If Company X’s revenue in January 2020 is RM10 mil and this has declined to RM2 mil in March 2020, then Company X may apply for the WSP in April 2020 and upon approval, is eligible to receive wage subsidy from 1 April 2020 to 30 June 2020 (3-month period).
Assuming Company X’s revenue in January is RM10 mil and February RM11 mil and in March RM5.5 mil.Company X may apply for the WSP in April 2020 as there is a 50% reduction in revenue in March 2020 as compared to February 2020.
3. Does the company need to get its financial statements (“FS”) or sales reports verified by auditors?
No, the FS or sales reports need only to be certified by Management. Note that only companies with 76 employees and above are required to provide this documentation.
4. Once you receive the subsidy do you need to re-submit an application to receive payment in the subsequent months?
No, an employer is not required to re-submit the application to receive payments in the second and third month. However the employer is required to update SOCSO if there are any changes to the status of the business or number of eligible employees.
5. Which category of employers/ employees are not eligible for WSP?
a) Employers who began operations on or after 1 January 2020;
b) Employers and employees who have not registered with or contributed to SOCSO;
c) Employees who have received financial assistance under the Employment Retention Programme (“ERP”) in the same month;
d) Employees who are earning above RM4,000 per month;
e) Employees who have already been dismissed;
f) Public sector workers, statutory bodies and local authorities;
g) Foreign workers and expatriates; or
h) The self-employed (including freelancers).
6. How is monthly salary defined?
The interpretation of wage under the Employees’ Social Security Act 1969 will apply.This includes all remuneration payable in money by an employer to an employee including gross salary, overtime, commission, paid leave, extra work on holidays, incentive allowances and service charges.
7. What is the corporate tax treatment of wage subsidies?
The subsidy income from the Federal or State Government is exempted from tax under Income Tax (Exemption)(No.22) Order 2006.
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