The Malaysian government has introduced several tax incentives to encourage companies to adopt more employee-friendly practices. These initiatives focus on flexibility, inclusivity, and support for caregiving responsibilities, offering financial relief to employers who invest in the well-being of their workforce.
- Flexible Work Arrangements (FWA)
Employers who implement flexible work arrangements such as remote work, staggered hours, or hybrid setups are eligible for a 50% tax deduction on related expenses, including training programs and software purchases. This deduction is capped at RM500,000. The purpose of this incentive is to help companies modernize their work policies, promote work-life balance, and retain employees who seek greater flexibility in how and where they work.
- Hiring Women Returning to Work
Small and Medium Enterprises (SMEs) that hire women returning to the workforce after a career break of at least two years can claim a 50% tax deduction on employment expenses for a 12-month period. This initiative is designed to encourage gender diversity in the workplace and to support women in resuming their professional careers after taking time off for caregiving, family, or personal reasons. It reduces the financial impact on employers while promoting inclusivity and equal opportunity.
- Caregiving Leave
Companies that provide up to 12 months of paid caregiving leave to employees who are responsible for caring for children, elderly parents, or disabled family members are entitled to a 50% tax deduction on the costs associated with this benefit. This policy aims to support employees with caregiving responsibilities, helping them balance work and family life without the fear of losing income or job security. It also encourages employers to create a compassionate and supportive work culture.
- Hiring Disabled Individuals (Orang Kurang Upaya – OKU)
Employers who hire individuals registered as disabled with the Department of Social Welfare (Jabatan Kebajikan Masyarakat, or JKM) are eligible for a double tax deduction on the remuneration paid to these employees. This means that for every ringgit paid in salary to a disabled employee, the company can deduct twice that amount from its taxable income. The aim of this incentive is to promote workplace inclusivity and provide equal employment opportunities for persons with disabilities. It encourages businesses to recognize the skills and contributions of disabled individuals while benefiting financially from the support they offer.
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