DANAVEST

KUALA LUMPUR: The reclassification of small and medium enterprises (SMEs) under Budget 2009 will ensure that tax incentives and allocations be enjoyed by the right target sector.

Companies with a paid-up capital not exceeding RM2.5 million but controlled by companies with more than RM2.5 million paid-up capital no longer qualify as SMEs from year of assessment (YA) 2009 onwards and would be left out of the preferential tax rate of 20% for the first RM500,000 chargeable income.

SMEs are defined as companies with a paid-up capital of RM2.5 million or less. The definition was silent on their shareholders, so they could be individuals or listed companies.

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