Tax Update
12 October 2011
Reference
PERSONAL TAX
Tax Treatment For Private Retirement Scheme
To promote sufficient savings upon reaching retirement, a new tax relief up to RM
3,000 on contribution to a Private Retirement Scheme (PRS) and insurance annuity for
10 years is given from Year of Assessment (YA) 2012 onwards. Thus, the existing relief
of RM 6,000 is only applicable for life insurance premium and contribution to
approved scheme other than PRS and the deferred annuity of RM 1,000 is rationalised.
However, the withdrawals of contribution from PRS by employees prior to maturity
period or prior to reaching mandatory retirement age is subject to tax.
COMPANY TAX
Tax Deduction On Franchise Fee
Effective from YA 2012, the franchise fee incurred by the franchisee is given tax
deduction for purposes of income tax computation in order develop a local product
brand to become strong in the domestic market and accepted in overseas market.
TAX ADMINISTRATION
Compensation For Late Refund Of Income Tax
In order to ensure taxpayers receive a fair treatment, they will be compensated up to
2% of the amount of the refund in the situation where IRB made a late refund
payment based on following circumstances from YA 2013 onwards:
- After 90 days from the due date for e-Filing and
- After 120 days from the due date for manual tax filing
On the conditions that the taxpayers have filed their tax return before the stipulated
due date as follows:
- Salaried individuals - not later 30 April
- Individual with business income - not later 30 June and
- Companies - not later than 7 month from expiry of the accounting period
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Reference
Time Bar For Tax Audit
With effective from YA 2013, the time bar for tax audit is proposed to be reduced from
6 years to 5 years from the date of tax assessment is made (except for cases of false
declaration, willful late payment and negligence) in order to enhance confident of
investors and in line with best practices.
Enhancing Administration System And Tax Compliance
To increase the efficiency of work due to IT advances, it is proposed that for individual
taxpayers allowed doing e-Filing via mobile devices and several information such as
total income, PCB deductions, EPF contributions, insurance and zakat for salaried
group are pre-filed by IRB for those using e-Filing system from YA 2012 onwards.
REAL PROPERTY GAIN TAX (RPGT)
Based on budget proposal, the acquirer will be subject to the following RPGT rates on
the gains from disposal of properties based on period as follow:
Holding Period
Companies
Individual (Citizen
& Permanent
Resident)
Individual
(Non-Citizen)
Disposal within 2 years
Disposal 2 until 5 years
Disposal after 5 years
10 %
5%
0%
10 %
5%
0%
10 %
5%
0%
Will be effective from 1 January 2012.
INDIRECT TAX
Extension Of Tax Incentives For Hybrid And Electric Cars
To promote assembling of hybrid and electric cars in the country and to ensure
sustainable growth of the nation, a full exemption of import duty and excise duty,
which has been given on new CBU hybrid car and electric cars from 1 January 2011 to
31 December 2011, to be extended to another two years until 31 December 2013.
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Reference
TAX INCENTIVE
Tax Incentive For New 4 And 5 Star Hotels In Peninsular Malaysia
Previously, the tax incentive for new investments in 4 and 5 star hotels only given in
Sabah and Sarawak and there is no tax incentives are given in Peninsular Malaysia. To
encourage development and provide better accommodation facilities to boost tourism
industry, it is proposed that tax incentives [such as Pioneer Status (PS) and Investment
Tax Allowance (ITA)] be given to investors undertaking new investments in 4 and 5
stars hotels in Peninsular Malaysia. The applications must be received by Malaysia
Investment Development Authority (MIDA) from 8 October 2011 until 31 December
2013.
Extension Of Tax Incentive Period For Real Estate Investment Trust (REITs)
To promote the development of REITs as well as strengthen the capital and property
market, the tax incentives be extended for another 5 years as follows:(i)
Foreign institutional investors, particularly pension funds and collective
investment funds receiving dividends from REITs listed on Bursa Malaysia,
are subject to final withholding tax at 10% effective from 1 January 2012
until 31 December 2016; and
(ii)
Non-corporate investors including resident and non-resident individuals
and other local entities receiving dividends from REITs listed on Bursa
Malaysia, are subject to final withholding tax at 10% effective from 1
January 2012 until 31 December 2016.
Incentive For Awarding Scholarships
To encourage private sector to carry out social responsibility and encourage student to
further their study to higher level in local institutions, it is proposed that scholarships
awarded by private companies to Malaysian students pursuing study at diploma and
bachelor’s degree in local institutions of higher learning registered with the Ministry of
Higher Education be given double deduction. Scholarships awarded are for students
that fulfill the following criteria:(i)
(ii)
(iii)
Full time student;
Have no sources of income; and
Total monthly income of parents or guardian does not exceed RM 5,000
Effective from YA 2012 until 2016.
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Reference
Incentive For Companies To Participate In Career Fairs Abroad
It is proposed that expenses incurred by companies in participating in career fairs
abroad that are endorsed by Talent Corporation Malaysia Berhad (TalentCorp) be
given double deduction from YA 2012 until 2016 to attract more talented Malaysian
and students to return home and work in Malaysia.
Tax Incentive For The Issuance Of Islamic Securities Based On Wakalah
Principle
To promote the growth of the Islamic capital market, it is now proposed that expenses
on the issuance of Islamic securities based on Wakalah (power of attorney) principle
approved by the Securities Commission or the Labuan Financial Services Authority is
also given deduction for the purpose of income tax computation for YA 2012 until
2015.
Extension Of Exemption Period On Income From The Trading Of Non-Ringgit
Sukuk
To ensure Malaysia as an international issuance and trading base for non-ringgit
sukuk, the tax exemption given earlier on activities related to the issuance and trading
of non-ringgit sukuk from YA 2009 until 2011 is now extended 3 years until YA 2014.
Rationalisation Of Tax Incentive For Shipping Companies
It is proposed that the tax incentive whish has been granted to shipping companies,
which is fully exempted from tax (i.e. 100%), for 27 years since YA 1984, be
rationalised to 70% with effective from YA 2012 onwards.
Tax Incentive For Structured Internship Programme
Currently the expenses incurred by a company in providing practical training including
an internship programme are eligible for deduction for income tax computation
purposes. To enable student to expose to the real working environment earlier, it is
now proposed that companies implementing the structured internship programme
which set by the Ministry of Higher Education in collaboration with Talent Corporation
Malaysia Berhad will be given double deduction for the purpose of income tax
purposes from YA 2012 until YA 2016.
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Reference
Incentive For Private School
To further enhance the private sector’s involvement in providing education services
which helps to build a knowledge culture, it is proposed that tax incentive be extended
to private schools and international schools registered and fulfilled the requirement
stipulated by Ministry of Education as follow:
Category / Incentive
Effective date
Profit Oriented Private Schools
Income tax exemption of 70% for 5 years; or
ITA of 100% on the qualifying capital
expenditure incurred within 5 years. The
allowance to be set-off against 70% of the
statutory income for each YA
Application received by MIDA from 8
October 2011 until 31 December 2015
Profit Oriented International Schools
Income tax exemption of 70% for 5 years
Application received by MIDA from 8
October 2011 until 31 December 2015
Profit Oriented Private Schools and
International School
Import duty and sales tax will be exempted for
educational equipment and double deduction
for overseas promotional expenses
Application received by MIDA from 8
October 2011 and from YA 2012
Tax Incentive For Treasury Management Centre (TMC)
TMC is a centre that provides financial and fund management services to a group of
related companies within or outside the country. This is to enable the local banking
sector to have more new funds be injected by multinational companies and provide
the knowledge-based economy and high income nation for Malaysians.
In order to encourage multinational corporations to choose Malaysia as a competitive
financial centre for their TMC, it is proposed to be given 4 incentive packages as
following:i)
70% tax exemption on the statutory income arising from the qualifying services
such as all fees income, management income, interest income from lending,
interest income and gains received from placement of funds with licensed
onshore banks or short term investments (onshore and offshore) as part of
managing surplus funds within the group, foreign exchange gains from
managing risks for the group e.g. exchange rate risk, interest rate risk and
commodity risk; and guarantee fees which rendered by the TMC to its related
companies for a period of 5 years.
ii) Exemption from withholding tax on interest payments on borrowings by the
TMC for used for the conduct of TMC activities.
iii) Full exemption from stamp duty on all loan/service agreements executed by
TMC in Malaysia for qualifying TMC activities; and
iv) Expatriates working in a TMC are taxed only on the portion of their chargeable
income attributable to the number of days they are in Malaysia.
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Reference
The qualifying services are defined to include services such as cash management,
current account management, financing and debt management, investment services,
finance risk management and also the corporate and financial advisory services. All the
applications have to be remitted to MIDA from 8 October 2011 until 31 December
2016.
Tax Incentive For Providers Of Industrial Design Services In Malaysia
Previously, there is no incentive given to the provider of industrial design services
since the industrial design service is able to contribute towards improvement of
functionality and safety products and also plays an important role in continuously
improving productivity, quality and product competitiveness. The government had
proposed to give Pioneer Status with income tax exemption of 70% on statutory
income for 5 years and the applications must be remitted to MIDA from 8 October
2011 until 31 December 2016. The Industrial provider must fulfill the criteria and
conditions as follows:Criteria
i)
At least 50% Malaysian designer to be employed by new service providers; and
ii) For the existing service providers need to be undertaking the expansion by
upgrading the design facilities by increasing at least 50% on the capital
investment and employ an additional 50% qualified Malaysian Designers.
Conditions
i) The industrial design service providers and Malaysian designers must be
registered with the Malaysian Design Council;
ii) The industrial design service providers must be incorporated under Companies
Act 1965 or Business Registration Act 1956 and shall provide industrial design
services to non-related companies; and
iii) The industrial design service providers are meant for the purpose of mass
production.
STAMP DUTY
Stamp Duty Exemption On Loan Agreement Under Skim Perumahan Rakyat
1Malaysia (PR1MA)
To increase the affordability of middle income group to own residential properties, it is
proposed 100% stamp duty exemption be given on loan agreements for the purchase
of residential properties under the PR1MA Scheme priced up to RM 300,000 which the
S&P agreements is executed from 1 January 2012 until 31 December 2016.
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Reference
Stamp Duty Exemption On Loan Agreements For Micro Finance And
Professional Services Fund
To reduce cost of doing business for micro enterprises and small and medium
enterprise (SME), the government has proposed 100% stamp duty exemption on the
loan agreement up to RM 50,000 under Micro Financing Scheme with any banking and
financial institutions for instruments executed from 1 January 2012.
Furthermore, professional groups which are to establish firms in rural areas also
eligible for the 100% stamp duty exemption on loan agreements up to RM 50,000
undertaken from the Professional Services Fund between any professionals with Bank
Simpanan Nasional.
OTHERS
Assistance for Individual Owners of Budget Taxis and Hire Cars
To reduce the cost of operations of individual budget taxis owners and to provide a
better quality service, more customer-friendly to improve the country’s image as a
tourist-friendly nation, it is proposed that:
- 100% sales tax and excise duty exemption on purchase of new locally
manufactured cars used as budget taxis or hire cars commencing from 8 October
2011;
- Exemption of excise duty and sales tax on taxis sold or transferred of ownership
after seven years of registration commencing from 8 October 2011;
- Road tax of RM 20 per year will be waived from 1 January 2012 onwards;
- Interest rate subsidy of 2% per annum for 2 years on full loans which managed by
Bank Simpanan Nasional (BSN) commencing 1 January 2012 until 31 December
2013; and
- Assistance of RM 3,000 for replacement of budget taxis and hire cars aged more
than seven years but less than ten years. For ten years and above, RM 1,000 will
be given. These assistances will applicable from 1 January 2012 until+ 31
December 2013.
One Off Cash Assistance
-
One-off assistance of RM 500 to be given to households with monthly income of
RM 3,000 and below
School assistance of RM 100 to all primary and secondary school students from
Year 1 to Form 5 nationwide
Book vouchers of RM 200 to all Malaysian students in public and private local
institutions, matriculation and also Form 6 students nationwide
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Reference
MISCELLANEOUS
-
-
For those in private sector earning RM 5,000 and below, employers’ EPF
contribution will be increased from 12% to 13%
Payments of primary and secondary education will be abolished
Senior citizens aged 60 years old above will be given free outpatient registration
fees in all government hospitals and clinics and also entitled to 50% on LRT and
Monorail fares
My First Home Scheme be increased the house cost from RM 220,000 to RM
400,000 for household income RM 3,000 monthly and below
Government servant will be extended the compulsory age from 58 years old to 60
years old
SME Revitalisation Fund of RM 100 million will be available from January 2012 to
offer loans up to a maximum of RM 1 million for entrepreneurs
Commercialisation Innovation Fund of RM 500 million will be established to
enable SMEs to commercialise their research products
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Reminder
Type of returns
Form CP 204
Deadline
31 October 2011/
30 November 2011 /
Year End
Year End
30 November 2012
31 December 2012
Form CP 204A
th
(6 revision)
30 April 2011
31 May 2011
Form CP 204A
th
(9 revision)
31 January 2012
29 February 2012
Forms C & R
31 March 2011
30 April 2011
N/A
N/A
Form B (B
usiness sources
income)
For further enquiries, please contact the
following :Patrick Teo Chin Keong
Tax Director
patteo.tax@k-konsultgroup.com.my
K Y Chan
Tax Manager
chanky.tax@k-konsultgroup.com.my
Tel : 03-2166 2303
Fax: 03-2166 8303
Disclaimer
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permission of the publishers.
The above contains information in summary form and are therefore intended for general guidance only. They are not intended to be a substitute for detailed research or the exercise of professional judgement.
Neither K-Konsult Taxation Sdn Bhd nor any other member of K-Konsult Group can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any materials in the above.
On any specific matter, reference should be made to appropriate advisor.
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