(Tax Update) The Impact of JS-SEZ to Johor’s SME

Johor has been extremely hot lately, despite the rain we experienced over the past week.

Last year, we saw the establishment of the Forest City Special Financial Zone and several giant data centers. This year, the Johor-Singapore Special Economic Zone (JS-SEZ) has been launched. It seems like Johor is on its way to becoming the next Shenzhen 深圳!

Key Information of JS-SEZ

The JS-SEZ focuses on 11 economic sectors, including manufacturing, logistics, food security, tourism, energy, digital economy, green economy, financial services, business services, education, and health.

Additional priority sectors include aerospace, medical devices, electrical and electronics, chemicals, and pharmaceuticals.

✅ Special corporate tax rate of 5% for up to 15 years for companies undertaking new investments in high-growth and high value-added activities. ✅ Special tax rate of 15% for up to 10 years for eligible knowledge workers in the JS-SEZ.

What is the potential benefits to Johor SME ?

The Johor-Singapore Special Economic Zone (JS-SEZ) is a game-changer for SMEs in Johor, offering a wealth of opportunities to accelerate business growth. Here’s a quick overview of the potential benefits:

✅Access to larger markets

The JS-SEZ is set to attract multinational companies, creating new opportunities for SMEs to expand their customer base and secure higher sales volumes. SMEs can also integrate into larger supply chains as suppliers or service providers, ensuring more stable business prospects.

✅Enhanced infrastructure

With improved logistics and state-of-the-art facilities, SMEs can benefit from reduced transportation costs, faster deliveries, and easier access to markets and raw materials.

✅Financial growth

Foreign investment in the JS-SEZ can open doors for SMEs through increased demand, partnerships, and better access to capital.

✅ Innovation and skill development

The zone fosters knowledge transfer from larger companies and offers skill development programs, empowering SMEs to innovate and compete effectively.

✅ Government support

Tax incentives and dedicated business support programs can help SMEs upgrade their operations and tap into new markets.

The JS-SEZ holds immense potential for SMEs, but the key lies in their ability to adapt and seize the opportunities ahead.

Potential Threats of The JS-SEZ

Of course .... The JS-SEZ poses challenges for local SMEs, including intense competition from foreign firms, skill shortages, rising costs, supply chain disruption, and technological gaps.

Local SMEs must adapt to shifting markets, new regulations, and consumer behavior to thrive amidst these pressures and leverage emerging opportunities.

PS : Authored by Mr Koh Teck Peng, the Group Principal, in his personal LinkedIn post https://bit.ly/3Wkt9ZV

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