Malaysia’s 4As requests tax relief for ad industry

The Association of Accredited Advertising Agents Malaysia (4As) submitted a joint memorandum to the government, appealing for tax and non-tax-based temporary support for its members.

The memorandum requests an exemption from Sales and Service Tax (SST), and asks that double deduction relief of advertising expenditures incurred by all Malaysian-owned companies be exempted from claims submission, with extensions on qualifying criteria for tax deduction.

The memorandum was submitted by 4As and prepared in consultation by Commercial Radio Malaysia (CRM), Malaysian Media Specialists Association (MSA), Malaysian Advertisers Association (MAA), Malaysian Newspaper Publishers Association (MNPA) and Outdoor Advertising Association of Malaysia (OAAM).

Malaysia’s ad industry has suffered from a decline of 20% in spending from January through May 2020, the organisation stated. This is on the back of decreased revenue streams ranging between 20% and 50%. The 4As predicts that ad spend will continue to drop by 20% year-on-year by the end of 2020 while revenues are expected to flatline.

The organisation also said that most of the industry’s creative and media agencies, including some media owners, have experienced pay cuts ranging from 10% to 30%, while an estimated 5% to 10% of employees have been laid off. A further 10% of agencies are estimated to have closed down or re-engineered their offerings. A worrying 20% of agencies are expected to close down in three months if conditions don’t improve, the organisation said.

Media owners and publishers that rely heavily on adspend have also taken a hit. Media Prima Berhad—one of Malaysia’s biggest broadcast networks—is reported to be in distress and is beginning to retrench staff. In April, Blu Inc, the publisher of more than 20 print lifestyle titles, shut down after 40 years of operation. 4As predicts that these conditions are expected to remain over the next six to 18 months.

The temporary assistance from the government is expected to mitigate unemployment in the industry across advertising, media, and publishing, the organisation said.