What Are NKRAs?

Tax Incentives for Employers

  • Double deduction on expenditure incurred for the provision and maintenance of child care centres at workplace
  • Double deduction on child care allowance given to employees (employees exempted from tax up to RM2400/year)
  • Industrial Building Allowance at 10% annually for buildings used as child care centres

Double Deduction on expenditure incurred for the provision and maintenance of child care centres at workplace

Employers who provide and maintain a childcare centre at or around the workplace for their employees qualify for double tax deduction on the expenditure incurred in setting up and operating the childcare centre. Examples of operating expenses incurred are rental, utilities, teachers’ payroll costs, food, etc. 


Illustration 1
Simple Computation Normal Case Without Double Deduction With Incentive Double Tax deductions
Revenue RM 800,000 RM 800,000
Less : Operating expenses (RM 120,000) (RM 240,000): RM120k x 2
Profit before tax RM 680,000 RM 560,000
Tax payable (*20%) * SME tax rate RM136,000 RM 112,000
TAX SAVINGS (RM136k – RM112K)   RM 24,000


Double Deduction on childcare allowance given to employees

Employers who grant or provide child care allowance to their employees qualify for double tax deduction on the amount that was granted to the employee, up to a maximum of RM2,400/year.

The employee is exempted from tax up to RM2,400/ year on the childcare allowance amount received from the employer. However, any amount received beyond RM2,400/year is taxable, as it considered part of the remuneration of the employee.

Illustration 2

Simple Tax Computation on Employee Normal case Without Exemption With Exemption (childcare allowance RM200/month) With Exemption (childcare allowance RM500/month)
Salary RM 60,000 RM 60,000 RM 60,000
Add : Childcare allowance
(RM200 x 12 mths)
RM 2,400 RM 0
(RM2,400 – RM2,400)
RM3,600
(RM6,000–RM2,400)
Total salary RM 62,400 RM 60,000 RM63,600
Less : Reliefs (RM13,000) (RM13,000) (RM13,000)
Chargeable income RM49,400 RM47,000 RM50,600
Tax payable RM2,784 RM2,520 RM2,964
    Tax savings - RM264
(RM2,784 – RM2,520)
Additional tax - RM444
(RM2,964 – RM2,520)
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