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Form E 2024 Guidelines

Form E 2024 Guidelines
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(Tax Update) Form E 2024 Guidelines

What is CP8D?

Form E (also known as Borang E or CP8D ) is a form that allows the employer to all staff particulars to LHDN, this form will have to be submitted to LHDN via the e-Filing method on a yearly basis.

Appointment as Director or Employer or Representative

Effective from Year 2023, Form E and Statement e-C.P.8D are mandatory to submit through e-Filing.

To submit Form E, statement e-C.P.8D and e-CP22 through e-filing is only allowed for the individual who is Employer or Employer Representative only.

The role of Employer or Employer Representative can be added in MyTax for individuals who have a digital certificate.

1. Director (Private Sector , Private Sector other than Company)

This role needs to submit through MyTax include a supporting document

2. Deputy director (Private Sector, Private Sector other than Company)

• Individuals who have role as Director can appoint any individual under the same organization to be appointed as Director representative.

• No need any supporting document

• Approvals are automatic

• Director can terminate the director representative at any time

3. Employer (Private Sector + Private Sector other than Company)

• This role will be given automatically if the application of Director have been approved

4. Employer (Sole Proprietorship , Government Sector, Statutory Body, Local authority)

• This role application can submit through MyTax include a supporting document

5. Employer Representative (All category of employer)

• Individuals who have role as employer can appoint any individual under the same organization to be appointed as employer representative.

• No need any supporting document

• Approvals are automatic

• Employer can terminate the employer representative at any time

Retirement Ages in CP8D

 Retirement date shall be determined by retirement age in Malaysia which is 60 years old. For example, date of birth of an employee is 1st January 1990. The retirement date of the employee is 1st January 2050.

For those employees which already reached retirement age, then a contract date shall be determined and declared in CP8D.

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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

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Logistics Sector Business-to-Business Service Tax Exemption.

Logistics Sector Business-to-Business Service Tax Exemption.
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(Tax Update) Logistics Sector Business-to-Business Service Tax Exemption.

Key Summary

 

The Finance Minister announced that taxes for logistics services won’t apply to certain areas to avoid extra taxing at different levels. From March 1, 2024, a 6% tax was planned for these services, but now the government says the following won’t be taxed:

  • Services for goods sent abroad.

  • Services for moving goods from one ship to another at a port.

  • Services for moving goods through a place without staying there.

  • Door-to-door delivery services.

  • Online delivery of food and drinks.

Businesses in logistics won’t have to pay this tax when they buy the same services from each other.

The government made this change after listening to people’s concerns, including lawmakers, to make sure businesses aren’t paying too much tax when they use different logistics services.

Ministry of Finance Announcement

 

The expanded scope of exemption was announced by Minister of Finance II Datuk Seri Amir Hamzah Azizan in the Parliament on Monday.

The 6% service tax on the logistics sector was introduced on March 1. Other exemptions on the newly imposed tax include logistics services for transhipment, goods in transit, door-to-door, e-commerce food deliveries, and direct export products.

For newly registered logistics service providers, they will only be imposed the 6% service tax from April onwards, the ministry added.

Source :

 

Ministry of Finance announcement on SST certain exemption for logistic company

https://www.mof.gov.my/portal/ms/berita/siaran-media/skop-pengecualian-cukai-perkhidmatan-sektor-logistik-diperluas-bagi-mengurangkan-kesan-cukai-berganda


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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

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Understanding MFRS 116 : Accounting on Property, Plant, and Equipment

Understanding MFRS 116 : Accounting on Property, Plant, and Equipment
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(Acc Update) Understanding MFRS 116 : Accounting on Property, Plant, and Equipment

Let’s learn MFRS 116, a key accounting standard for buildings, machinery, and equipment. Uncover the crucial guidelines it establishes and understand their impact on businesses globally.

What is MFRS 116?

MFRS 116 is a rule from Malaysia on how to account for property, plants, and equipment (PPE), updating the old rule, MFRS 117.

It tells companies how to recognize PPE as assets if they think these assets will bring future benefits and if they can accurately figure out the costs. This includes adding up all costs needed to get the asset ready for use.

Main Points Explained

Recognizing Assets

MFRS 116 focuses on correctly identifying PPE assets, making sure they will likely bring future benefits and that their costs can be accurately measured. This helps keep financial reports trustworthy, letting others understand a company's assets clearly.

Measuring Costs

After an asset is recognized, its cost is calculated by taking the original cost and subtracting any depreciation (value loss over time) and losses in value. All costs directly related to getting or building the asset are included. This careful calculation helps in making smart decisions and keeps financial reports clear.

Depreciation

Depreciation spreads out the cost of an asset over its useful life. Companies must choose a depreciation method that matches how the asset's benefits are used up over time. This makes sure the asset's value in the books matches its real contribution to the business.

Revaluation

MFRS 116 lets companies adjust the book value of an asset to its current market value, but it's not required. If companies choose to do this, they need to update the values regularly. This option lets companies show the true value of their assets.

Telling Others

Companies must share detailed information about their PPE, including values, depreciation methods, and life spans. This openness helps investors and others understand the company's financial health better.

Example: Updating Equipment Value

Imagine a company with a factory that suddenly becomes more valuable because of new technology. MFRS 116 says the company should update the factory's value in their books to show its true current worth. This shows the rule's focus on keeping financial information up-to-date and reliable.

Why It Matters for Businesses

Following MFRS 116 is important for companies because it affects their financial reports, taxes, and decisions. By sticking to these rules, companies make their financial statements more believable, clear, and trustworthy. This also helps compare different companies more easily, improving analysis within and across industries.

To sum up, MFRS 116 guides businesses in accurately and transparently accounting for their buildings, machines, and equipment. Understanding and applying these rules helps businesses deal with accounting challenges confidently, earning trust from those involved.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

Guidelines on Capital Gains Tax for Unlisted Shares

Guidelines on Capital Gains Tax for Unlisted Shares
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(Tax Update) Capital Gain Tax: Guidelines on Capital Gains Tax for Unlisted Shares

The Inland Revenue Board of Malaysia has issued the Guidelines on Capital Gains Tax for Unlisted Shares dated 1 March 2024 on its website.

The CGT Guidelines explain the CGT treatment on the gains or profits from the disposal of:

a.   Shares of a company incorporated in Malaysia not listed on the stock exchange; and

b.   Shares of a controlled company incorporated outside Malaysia that owns real property situated

in Malaysia or shares of another controlled company or both.

Key Summaries of the Exemption Order

  • Introduction of CGT under the Income Tax Act 1967 (ITA) effective from January 1, 2024, with implementation starting March 1, 2024.

  • CGT applies to profits from the disposal of capital assets, including unlisted shares of companies incorporated in Malaysia and foreign-controlled companies owning property in Malaysia or shares in other controlled companies.

  • The guideline provides explanations for terms such as ''capital asset,'' ''consideration,'' ''disposal,'' ''stock exchange,'' and ''shares.''

  • Entities liable for CGT include limited liability partnerships, trusts, cooperatives, including Labuan entities subject to tax under ITA.

  • CGT imposition based on the year of assessment in which the disposal transaction occurs.

  • Methodology for determining the disposal and acquisition dates and values of capital assets.

  • Calculation of profits or gains from the disposal of capital assets and the handling of unabsorbed losses.

  • Transfer of capital assets to stock in trade and disposal of shares in relevant companies as per Section 15C of the ITA.

  • Claiming foreign tax credits, the CGT rate, and reporting requirements.

  • Exemptions and conditions under which CGT may not apply or be calculated differently.

Past Blog on CGT

Read our past blog on CGT

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

Service Tax Increase To 8%

Service Tax Increase To 8%
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(Tax Update) Service Tax Increase To 8%

We discuss the service tax rate will increase from 6% to 8% on all taxable services with effect from 1 March 2024, except for F&B, telecommunication services, vehicle parking space services and logistic services.

The scope of service tax will also be widened to include karaoke centre services, delivery services, brokerage and underwriting services, logistics services as well as repair and maintanence, effective 1 March 2024.

Key Summary

Service Tax Rate Increase

  • Starting from 1 March 2024, the service tax rate will go up to 8%.

  • Some services like food, beverages, telecom, parking, and logistics will still be taxed at 6%.

  • Credit card fees will stay at RM25 per card per year.

  • Other services like accommodation, clubs, and professional services will be taxed at 8%.

Transition Rules for the Tax Increase

  • Services provided before 1 March 2024, will be taxed at 6%, but services after that date will be taxed at 8%.

  • If a service spans 1 March 2024, part of it will be taxed at 6% and the rest at 8%.

  • Payments made before 1 March 2024, for services after that date will be taxed at 6% if provided within six months, and 8% if provided after six months.

  • Special rules will apply to businesses offering services taxed at different rates.

Expansion of Taxable Services

  • New services like karaoke centers, brokerage, and logistics will be taxed.

  • Logistics services involve managing the movement and storage of goods and information efficiently.

  • Some services like food delivery and transshipment won't be taxed.

  • Businesses providing logistics services to other businesses will be exempt from tax.

Expansion of Taxable Services - Repair & Maintenance

Royal Malaysian Custom Departments released the Service Tax guidance for maintenance or repair services in Malaysia, as of February 26, 2024. Key points include:

  • Introduction of service tax on maintenance or repair services under the Service Tax Act 2018 from September 1, 2018.

  • Mandatory registration for providers exceeding a threshold, with a focus on maintenance or repair services.

  • Details on taxable and exempt services, including specific examples.

  • Clarification on the tax treatment of various maintenance and repair activities.

  • Guidelines for service providers on registration, tax imposition, and compliance requirements.The government has unexpectedly decided to expand the scope of the sales and service tax (SST) to include almost all types of repair and maintenance jobs.

  • Maintenance management services related to residential land or buildings provided by developers, joint management bodies, management corporations, or residential associations are not subject to service tax.

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

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Form E FAQ

Form E FAQ
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(Tax Update) Form E FAQ

Form E ³£¼ûÎÊÌâÄØ

ÔĶÁÎÒÃǹýÈ¥ÔÚ Facebook É쵀 E/EA ±í¸ñÉϵķÖÏí :

1) Tax Filing Deadline 2022 Malaysia dated on 10/01/2022

https://bit.ly/3r5k2go

2) E³Ê±¨(E Filing)Form E ÖÕ¼«Ãؼ® dated on 15/03/2021

https://bit.ly/35pjcm9

3) ÎÂÜ°Ìáʾ - Form E ½ØÖÁÈÕÆÚΪ31/03/2021 dated on 12/03/2021

https://bit.ly/35wKebq

4) Form EA ÓÐʲô? Dated on 22/02/2021

https://bit.ly/3g1LQMg

5) »¨ºì¼¸Ê±ÐèÒª±¨½øForm EA? Dated on 16/02/2021

https://bit.ly/349JSGZ

6) ¹«Ë¾¸øÔ±¹¤ºì°ü¿É²»¿ÉÒÔ¿ÛË°? Dated on 10/02/2021

https://bit.ly/3KPMI4G

7) Deadline for Form E submission is approaching! dated on 09/02/2021

https://bit.ly/3KMqsZL

ÊÇʱºò³Ê±¨𝐅𝐨𝐫𝐦 𝐄ÁË£¬ÈÃÎÒÃÇΪÄú¸´Ï°Ò»±é£¡dated on 28/01/2021 ¸÷λ¹ÍÖ÷ÓëÔ±¹¤Çë×¢Ò⣡£¡£¡

https://bit.ly/3u4aSCz

9) ÄãÖª²»ÖªµÀ ... IRB²»ÔÙ´òÓ¡+·¢E±í¸ñ(Form E) ¸ø¹ÍÖ÷! Dated on 25/01/2021

https://bit.ly/349K4pH

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

Capital Gain Tax: Unresolved Questions

Capital Gain Tax: Unresolved Questions
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(Tax Update) Capital Gain Tax: Unresolved Questions

Introduction

Effective from 1st January 2024, company, limited liability partnership, trust body, and co-operative society which receives gains or profits from the disposal of capital assets consisting of:

  1. share of a company incorporated in Malaysia not listed on the stock exchange; or

  2. share of a controlled company incorporated outside Malaysia that owns real property situated in Malaysia or shares of another controlled company or both,

are subject to Capital Gains Tax (CGT) under the Income Tax Act 1967.

Exemption Period

Any disposal for the period of 1st January 2024 to 29th February 2024 is exempted from Capital Gains Tax under The Income Tax (Exemption) (No. 7) Order 2023.

The taxpayer is not required to submit a tax return for the disposal of that capital asset within the above period.

CGT Filing and Tax Payment Deadline

IRBM has published Capital Gains Tax Return Form (CGTRF) Filing Programme on 15 January 2024 with key takeaways is summarised as below :

Taxpayers are to submit CGT tax returns and make tax payments within sixty (60) days of the date of disposal.

For assessments raised under sections 91, 96A, and subsections 90(3), 101(2) of ITA 1967, the tax / balance of tax shall be paid within 30 days from the date of assessment. Nevertheless, a grace period of 7 days is given.

Taxpayers are required to submit tax returns through e-Filing (e-CKM Form). Kindly visit MyTax portal at https://mytax.hasil.gov.my to access e-CKM Form from 1st March 2024.

Taxpayers shall have a Tax Identification Number (TIN) and Digital Certificate to access e-CKM.

Unresolved Questions

On January 15, 2024, the Inland Revenue Board of Malaysia (IRBM) shared the filing process for the Capital Gains Tax Return Form (CGTRF) but didn't provide further guidance.

With the new Capital Gains Tax (CGT) beginning on March 1, 2024, the lack of clear instructions has left taxpayers and businesses unsure about how to proceed.

  • The Exemption Order does not change the start date for a lower 2% tax option on unlisted shares bought before 2024. If bought between January and February 2024, future sales are taxed at 10%, not 2%. There might be a ''tax-free'' period due to a technicality, but this wasn't officially announced.

  • Redeemable preference shares' redemption isn't clearly defined as a ''disposal'' for CGT, suggesting future clarification.

  • The term ''real property'' lacks a clear definition for CGT purposes, and it's unclear how the 75% test for foreign company disposals applies over time.

  • Exemptions mentioned previously might be added later. For foreign-sourced gains to be tax-exempt, companies must meet certain economic substance requirements in Malaysia.

  • It's uncertain how losses from domestic and foreign asset disposals are treated for tax purposes, indicating a need for further guidance.

Past Blog on CGT

Read our past blog on CGT

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

Role of Company Secretary Under The AMLD Malaysia

Role of Company Secretary Under The AMLD Malaysia
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(Sec update) Role of Company Secretary Under the AMLD Malaysia

What is the Role of the Company Secretary’s play as a reporting institution under the Anti-money Laundering, Anti-terrorism Financing and proceeds of Unlawful Activities Act 2001 (AMLA)?

What is Malaysian AMLA regime?

Before we determine our role, we should understand the meaning of money laundering. Money laundering is a process of converting cash, funds or property derived from criminal activities to give it a legitimate appearance. It is a process to clean ‘dirty’ money to disguise its criminal origin.

How about terrorism financing? It is an act of providing financial support to terrorists or terrorist organisations to enable them to carry out terrorist acts or to benefit any terrorist or terrorist organisation.

Like many other countries, Malaysia government is highly concerned about this area, where money laundering, terrorism financing and proliferation financing pose a significant challenge to the financial system and the overall business sector.

What is The Role of Company Secretary Under AML

Company secretaries are required to comply with Bank Negara Malaysia’s (BNM) Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Designated Non-Financial businesses and professions & non-Bank financial institutions policy documents (BNM Policy Document).

Company secretaries are appointed as one of the reporting institutions by Bank Negara Malaysia (BNM), they are playing an important role in this area.

They are required to take the necessary steps to prevent Money laundering / Terrorism Financing and have a system to report suspected transactions to the Financial Intelligence and Enforcement Department (FIED).

Company secretaries have to carry out the following measures to prevent Money Laundering / Terrorism Financing :

  • Compliance with laws

  • Cooperation with law enforcement agencies

  • Establishing internal Control

  • Risk-based approach

  • Customer Due Diligence

A Company Secretary is mandated to conduct CDD on customers when establishing business relations by overseeing transactions. To identify and verify the customer’s identity using reliable, independent source documents, data or information such as identification card.

Additionally, it is crucial to verify the authorization of any person acting on behalf of the customer and confirm their identity. The company secretary must ensure the beneficial ownership’s identity by using reliable information to ensure confidence in their identification.

AMLA Reporting Entity

There are many appointed Reporting Institutions, both in the financial and non-financial sectors.

For examples:

  • Financial Intermediaries,

  • Lawyers,

  • Accountants,

  • Registered Estate Agents, and etc.

All appointed reporting Institutions to work hand in hand with the Malaysian Government and Bank Negara Malaysia to prevent money laundering and terrorism financing, contributing to Malaysia’s brighter future.

 

PS : Authored by Hui Ting, our secretary associate in THK, in her personal LinkedIn post

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

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Form E ³£¼û´íÎó

Form E ³£¼û´íÎó
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(Tax Update) Form E ³£¼û´íÎó

»Ø¹ËÎÒÃǹýÈ¥ÔÚ2021Äê3ÔÂ16ÈÕΪ KTP|THK ¿Í»§¾Ù°ìµÄÃâ·ÑÍøÂçÑÐÌÖ»á -Form E ³£¼û´íÎó.

ÕâÊÇÒ»´Î¸»ÓгÉЧµÄ»î¶¯£¬Îª²ÎÓëÕßÌṩÁ˱¦¹óµÄ¼û½âºÍ֪ʶ. »î¶¯ÓÉ×ÊÉîר¼Ò Ms. Caroline Lim µ£ÈÎÖ÷³ÖºÍ·¢ÑÔÈË£¬ËýµÄרҵ֪ʶºÍ·á¸»¾­ÑéΪÕû¸öÑÐÌÖ»áÔöÌíÁËÉî¶ÈºÍ¼ÛÖµ.

Ms. Caroline Lim ÒÔÆä¶ÀÌصĶ´²ìÁ¦ºÍ¾«Õ¿µÄ±í´ïÄÜÁ¦£¬ÉîÈë̽ÌÖÁË Form E ±í¸ñ³£¼ûµÄ´íÎóºÍ½â¾ö·½·¨. Ëý²»½öÏêϸ½âÊÍÁË¿ÉÄܵ¼Ö´íÎóµÄÔ­Òò, »¹·ÖÏíÁËÓÐЧµÄ¾ÀÕý´ëÊ©ºÍ×î¼Ñʵ¼ù, °ïÖú²ÎÓëÕß±ÜÃâÔÚÌîд±í¸ñʱ·¸ÏÂÏàͬµÄ´íÎó.

ͨ¹ýËýµÄרҵָµ¼, ²ÎÓëÕßÃǶÔÈçºÎÕýÈ·µØÌîдForm E±í¸ñÓÐÁ˸üÇåÎúµÄÀí½â, ÔöÇ¿ÁËËûÃǵÄרҵÄÜÁ¦ºÍÐÅÐÄ. ÕâÖÖ¿ª·ÅʽµÄ½»Á÷·ÕΧʹÿ¸öÈ˶¼Äܴӱ˴˵ľ­ÑéÖÐѧϰ, ²¢¹²Í¬Ì½ÌÖ½â¾öÎÊÌâµÄ·½·¨, ½øÒ»²½·á¸»ÁËÕû¸öÑÐÌÖ»áµÄÄÚÈݺͳɹû.

×ܵÄÀ´Ëµ£¬Õâ´ÎÑÐÌÖ»áΪKTP|THK¿Í»§´øÀ´ÁËʵÖÊÐԵİïÖúºÍ¼ÛÖµ.

¸Ðл Ms. Caroline Lim ¼°ËùÓвÎÓëÕߵĸ¶³öºÍ¹±Ï×, ÆÚ´ýδÀ´ÎÒÃÇÄܼÌÐø¾Ù°ìÀàËƵĻ£¬Îª¿Í»§Ìṩ¸ü¶àÓÅÖʵķþÎñºÍÖ§³Ö.

ÔÚÎÒÃÇµÄ YouTube ÉϹۿ´ 15 ·ÖÖÓÊÓƵ https://youtu.be/84szaL-0Tok 

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KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

Malaysia Service Tax rise to 8% March 2024

Malaysia Service Tax rise to 8% March 2024
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(Tax Update) What is the new SST rate in Malaysia 1 March 2024?

 

In this blog, we discuss the service tax rate will increase from 6% to 8% on all taxable services with effect from 1 March 2024, except for F&B, telecommunication services, vehicle parking space services and logistic services.

The scope of service tax will also be widened to include karaoke centre services, delivery services, brokerage and underwriting services, as well as logistics services, effective 1 March 2024.

Key Summary

Service Tax Rate Increase

 

  • Starting from 1 March 2024, the service tax rate will go up to 8%.

  • Some services like food, beverages, telecom, parking, and logistics will still be taxed at 6%.

  • Credit card fees will stay at RM25 per card per year.

  • Other services like accommodation, clubs, and professional services will be taxed at 8%.

Transition Rules for the Tax Increase:

 

  • Services provided before 1 March 2024, will be taxed at 6%, but services after that date will be taxed at 8%.

  • If a service spans 1 March 2024, part of it will be taxed at 6% and the rest at 8%.

  • Payments made before 1 March 2024, for services after that date will be taxed at 6% if provided within six months, and 8% if provided after six months.

  • Special rules will apply to businesses offering services taxed at different rates.

Expansion of Taxable Services:

 

  • New services like karaoke centers, brokerage, and logistics will be taxed.

  • Logistics services involve managing the movement and storage of goods and information efficiently.

  • Some services like food delivery and transshipment won't be taxed.

  • Businesses providing logistics services to other businesses will be exempt from tax.

Overall, these changes could affect how much tax businesses and consumers pay for certain services in Malaysia.

Visit Us

 

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

 

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

 

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What Directors Should Do After Incorporation

What Directors Should Do After Incorporation
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(Sec update) What Directors Should Do After Incorporation

Embarking on the corporate journey in Malaysia involves more than just the initial setup. Directors play a crucial role in steering the company through ongoing responsibilities.

This article outlines key post-incorporation tasks, including filing Annual Returns, submitting Financial Statements, and managing Tax Returns to LHDN. Adhering to these deadlines is essential to avoid penalties and ensure regulatory compliance.

Join us as we explore the vital steps directors must take after incorporation for sustained success in the Malaysian business landscape.

Annual Return

According to the Companies Act 2016 in Malaysia, the Annual Return is a statutory document that companies need to file with the Companies Commission of Malaysia (SSM). This document allows companies to update and confirm their registered information with the SSM, including details about shareholders, directors, registered office address, share capital, and financial position.

Typically, the Company Secretary will prepare the Annual Return for the Director's review, approved via the Directors' Written Resolution. Once approved, the Company Secretary will submit the Annual Return (Section 68) via MBRS.

Companies are required to file the Annual Return within 30 days from the anniversary of their incorporation date.

Financial Statement

The board of directors must ensure that the company's financial statement is submitted within the specified deadline to SSM. The board oversees the financial reporting process, ensuring that management fulfills its responsibilities in preparing accurate and reliable financial statements. After the management account is ready, an approved auditor audits the report to provide assurance in accordance with relevant auditing standards.

The auditor expresses an opinion on whether the financial statements present a true and fair view of the company's financial position, results of operations, and cash flows. This opinion is crucial for stakeholders such as bankers, shareholders, employees, and creditors.

Once the audited report is ready, the director circulates it within 6 months from the financial year-end to shareholders by conducting a meeting. After circulation, the auditor passes the audited report to the secretary to arrange for submission to SSM within 30 days from the circulation date.

Tax Return to the Inland Revenue Board of Malaysia (LHDN):

Form E

Employers must submit Form E annually to report employees' income details, including their name, identification number, employment income, and tax deductions. Employers are responsible for deducting the appropriate amount of income tax from employees' salaries and remitting it to the tax authorities.

The deadline for submitting Form E is typically in March of the following year, done electronically through the e-filing system provided by the Inland Revenue Board.

CP204

Used by companies to declare estimated chargeable income and determine installment payments for the upcoming year, CP204 is part of the corporate tax filing process in Malaysia. Companies must submit CP204 within 7 months from the end of their accounting period.

Based on the estimated chargeable income declared, companies must make installment payments through the e-filing system.

Form C

Form C is used by companies to report actual chargeable income, tax adjustments, and other relevant details to the Inland Revenue Board. The deadline for submitting Form C is usually within seven months from the end of the company's financial year. Companies need to provide details of financial transactions, income, expenses, and other relevant financial information. Form C, along with audited financial statements, is typically submitted electronically through the e-filing system.

Conclusion

Late submission of these crucial documents may result in penalties or compounds imposed by SSM or LHDN. Directors must adhere to these deadlines to maintain compliance and avoid legal repercussions.

Engaging these professionals from company secretaries, auditors, accountants, and tax agents not only ensures compliance with regulatory requirements but also provides valuable insights, allowing directors to navigate the intricacies of corporate governance with confidence and precision.

This collaboration ensures precision in meeting regulatory requirements, offering directors the necessary support to steer their businesses toward sustained success.

 

PS : Authored by Syazwan, our secretary associate in THK, in her personal LinkedIn post

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Tax Treatment on Company Trip

Tax Treatment on Company Trip
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(Tax Update) Tax Treatment on Company Trip

In this blog, we discuss the tax treatment for both local and overseas trips provided by a company to its employees. Here's a key takeaway for your understanding.

Company-Sponsored Employee Trips: Understanding Tax Implications

When a company offers its employees the opportunity to embark on trips, whether within their home country or abroad, it's important to consider the tax implications for both the employer and the employee. In this article, we'll delve into the tax treatment of these trips in detail.

1. Tax Treatment for Employer and Employee for Local and Overseas Trips

Let's break down the tax treatment for both local and overseas company-sponsored trips from the perspective of the employer and the employee:

Local Trips:

For Employers: The costs incurred for airfares, meals, and accommodation related to local trips are eligible for a full deduction when calculating the company's taxable income. This is classified as an entertainment expense according to the Addendum to Public Ruling No.1/2003 Tax Treatment on Leave Passage.

For Employees: Local trips do not impact the employee's taxable income, as there is no leave passage cost associated with these journeys.

Overseas Trips:

For Employers: In the case of overseas trips, the cost of airfares (treated as leave passage cost) is not deductible for the employer. However, the costs related to food and accommodation are deductible as entertainment expenses, with the condition that they are restricted to the amount spent on the employee.

For Employees: For the first overseas trip in a calendar year, employees are eligible for an exemption on the leave passage cost (airfares), limited to a maximum value of RM3,000.00. However, for second overseas trips onwards, the cost of airfares (leave passage cost) becomes assessable as employment income.

2. Key Facts

Local Trip: According to the Addendum to Public Ruling No.1/2003 Tax Treatment on Leave Passage, expenses incurred by an employer to facilitate a yearly event within Malaysia involving the employer, employee, and immediate family members fall under the category of entertainment expenses. As such, local company trips are fully deductible in the company's tax computation. From the employee's perspective, these trips do not affect their taxable income, as no leave passage cost is involved.

Overseas Trip: Paragraph 10 of Public Ruling No.1/2003 states that expenditures related to leave passages, whether within or outside Malaysia, are not deductible in the company's tax computation. However, the ruling further elaborates:

  • Only the cost of airfares is treated as leave passage cost and is not allowed for deduction.

  • Other costs, such as food and accommodation, are deductible as entertainment expenses but are limited to the amount spent on the employee.

For employees, paragraph 8(ii) of this public ruling outlines that an exemption, limited to a maximum value of RM3,000, is granted on the leave passage cost (airfares) for one overseas trip outside Malaysia in a calendar year. Subsequently, for the second overseas trip onwards, the cost of airfares becomes assessable as employment income.

Source :

  • Reference Public Ruling No.1/2003 – Tax Treatment of Leave Passage https://phl.hasil.gov.my/pdf/pdfam/PR1_2003.pdf

  • Addendum to Public Ruling No.1/2003 – Tax Treatment of Leave Passage https://phl.hasil.gov.my/pdf/pdfam/PR1_2003_Add1.pdf

  • Income Tax Act 1967 https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf

  • Public Ruling No.4/2015 – Entertainment Expense https://phl.hasil.gov.my/pdf/pdfam/PR_4_2015.pdf

PS : Authored by Bryan Kam Shi Zhen and Gan Yong Chun, our audit associates with KTP, in their personal LinkedIn post.

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We Are Hiring Now

We Are Hiring Now
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We Are Hiring Now

Are you curious about the KTP experience?

 

In this enlightening session conducted in English on the Zoom platform, we invite you to dive deep into the diverse experiences at KTP as shared by our dynamic team members:

1. Ain, an enthusiastic intern.

2. Aiman, a motivated fresh graduate.

3. Fatira, an experienced professional.

They'll be candidly sharing their personal journeys and insights gained during their first six months at KTP.

Don't miss this opportunity to gain insider perspectives and valuable insights into life at KTP!

Watch the full (40 minutes) interview in our YouTube

 

https://youtu.be/GHEiCH0-3MQ

Send in your full resume to careers@ktp.com.my


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An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

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A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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Public Ruling 10/2023 Pioneer Status Incentive

Public Ruling 10/2023 Pioneer Status Incentive
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(Tax Update) Unlocking the Benefits of Pioneer Status Tax Incentive

Public Ruling 10/2023 Pioneer Status Incentive

The publication of Public Ruling 10/2023 on the Pioneer Status Incentive by IRBM on December 29, 2023, is particularly relevant. As tax agents, we consistently recommend that our taxpayers and investors consult official publications from MIDA.

This incentive is designed to attract and facilitate investment in key sectors, offering substantial tax benefits to qualifying companies. As an investor, understanding these details is critical for making informed decisions about potential investments in Malaysia

Pioneer Status is, in general, given by way of exemption from tax on 70% of the statutory income for five years and the remaining 30% is taxed at the prevailing tax rate.

For a comprehensive understanding of the Pioneer Status tax incentive, we invite you to explore our case study, available on our KTP website at https://www.ktp.com.my/pioneer-status.

Here's a summary of key points of Public Ruling 10/2023 :

Objective

This incentive aims to explain the pioneer status available to companies engaged in promoted activities or producing promoted products in Malaysia.

Pioneer Status

It's a tax incentive under the Promotion of Investments Act (PIA), providing tax relief on statutory business income for companies in certain sectors.

Qualifying Companies

Pioneer status is granted to companies undertaking promoted activities or producing promoted products. This includes sectors like manufacturing, agriculture, hotels, tourism, etc.

Promoted Activities and Products

These are determined by the Minister of International Trade and Industry, in concurrence with the Minister of Finance, and are updated periodically.

Application Process

Applications for pioneer status are handled by the Malaysian Investment Development Authority (MIDA). Companies can apply for pioneer status for multiple activities or products.

Grant of Pioneer Status

The status is granted based on the fulfillment of certain criteria and is subject to conditions specified in the approval letter.

Pioneer Certificate

Companies must apply for this within 24 months of pioneer status approval. It certifies the company as a pioneer company, identifies the pioneer factory, and states the production day.

Withdrawal and Cancellation

Pioneer status can be withdrawn or canceled if the company fails to comply with terms and conditions.

Tax Relief Period

Typically five years from the production day, during which part or all of the statutory income from the pioneer business is exempt from tax. Extension of Tax Relief Period: Companies can apply for an extension of another five years.

Tax Treatment

The ruling details the tax treatment of pioneer companies, including basis periods, computation of pioneer income, and capital allowances.

Pioneer Company Losses

Statutory income of a pioneer business will be fully or partially exempted, but subject to deductions for losses.

Separate Accounts

Companies must keep separate accounts for the pioneer and any other business activities.

Source :

Public Ruling 10/2023 Pioneer Status Incentive https://www.hasil.gov.my/media/wrqhhbta/pr-10-2023-pioneer-status-incentive.pdf

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What is the capital gains tax in 2024 Malaysia?

What is the capital gains tax in 2024 Malaysia?
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(Tax Update) Capital Gain Tax: Filing Deadline

Introduction

Effective from 1st January 2024, company, limited liability partnership, trust body, and co-operative society which receives gains or profits from the disposal of capital assets consisting of:

  1. share of a company incorporated in Malaysia not listed on the stock exchange; or

  2. share of a controlled company incorporated outside Malaysia that owns real property situated in Malaysia or shares of another controlled company or both,

are subject to Capital Gains Tax (CGT) under the Income Tax Act 1967.

Exemption Period

Any disposal for the period of 1st January 2024 to 29th February 2024 is exempted from Capital Gains Tax under The Income Tax (Exemption) (No. 7) Order 2023.

The taxpayer is not required to submit a tax return for the disposal of that capital asset within the above period.

Responsibility of Taxpayers on CGT

Chargeable persons according to the provisions of section 66 to section 75B are responsible for submitting CGT tax returns.

The appointed representatives are responsible for submitting CGT tax returns on behalf of the taxpayer. The representatives are assessable and chargeable to tax and the payment of tax charged.

A licensed tax agent under section 153 of the ITA 1967 can be appointed to submit CGT tax returns.

CGT Filing and Tax Payment Deadline

Taxpayers are to submit CGT tax returns and make tax payments within sixty days of the date of disposal.

For assessments raised under sections 91, 96A, and subsections 90(3), 101(2) of ITA 1967, the tax / balance of tax shall be paid within 30 days from the date of assessment. Nevertheless, a grace period of 7 days is given

Tax Return

Taxpayers are required to submit tax returns through e-Filing (e-CKM Form). Kindly visit MyTax portal at https://mytax.hasil.gov.my to access e-CKM Form from 1st March 2024.

Taxpayers shall have a Tax Identification Number (TIN) and Digital Certificate to access e-CKM.

Past Blog on CGT

Read our past blog on CGT

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What Is The Surcharge For Transfer Pricing (TP) Malaysia?

What Is The Surcharge For Transfer Pricing (TP) Malaysia?
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(Tax update) What Is The Surcharge For Transfer Pricing (TP) Malaysia?

Surcharge 5%

With effect from 1 January 2021, the IRBM may impose a surcharge of up to 5% on any increase in income or reduction of any deduction / loss arising from these adjustments.

A surcharge is imposed on a Transfer Pricing (TP) adjustment made under Section 140A of the Income Tax Act 1967 (ITA) which results in an increase in income or a reduction of any deduction or loss. When any taxpayer does not comply with the arm’s length principles, a surcharge will be imposed on that adjustment regardless of whether the taxpayer is in a loss position or a tax exempt company.

The imposition of surcharge of up to 5% on any transfer pricing adjustment under Section 140A(3C) was released on 18 January 2024 in Frequently Asked Question (FAQ) in IRBM website.

Key Takeaways of the FAQ

Surcharge on incorrect transfer prices

Starting from January 1, 2021, the IRB can impose a surcharge of up to 5% on any transfer pricing adjustments. This applies even if the adjustment doesn’t result in additional tax payable, affecting loss-making or tax-exempt companies.

Application of surcharge

The surcharge applies to tax audits initiated from January 1, 2021, onwards, regardless of the financial year being audited. Only a surcharge will be imposed in cases where transfer pricing adjustments result in additional income, not a penalty for submitting an incorrect return.

Non-appealability of surcharge

The surcharge, which is not a tax, cannot be appealed through legal processes but only to the Director General of Inland Revenue on a case-by-case basis.

Penalties for not furnishing documentation

Failure to provide contemporaneous transfer pricing documentation within 14 days of request can result in penalties ranging from RM20,000 to RM100,000, and potentially a prison term of up to six months.

Mutually Exclusive with Section 113 (2)

The FAQ states that the surcharge is mutually exclusive with the penalty under Section 113(2).

What is the new TP rule in Malaysia?

The documentation must be prepared before the due date for submitting income tax returns and must include the date of completion.

The IRB scrutinizes various aspects like sales/purchase margins, profitability, intragroup services, and intragroup financing. Lack of benchmarks, consistent losses, and insufficient supporting documents are some of the red flags.

Even companies enjoying tax holidays or incurring losses must adhere to transfer pricing rules, as any adjustments by the IRB will attract a surcharge.

Taxpayers are advised to scrutinize their related company transactions to ensure compliance with the arm's length principle to avoid penalties and fines.

Failure to provide contemporaneous transfer pricing documentation within 14 days of request can result in penalties ranging from RM20,000 to RM100,000, and potentially a prison term of up to six months.

The transfer pricing scene in Malaysia is rapidly evolving, and taxpayers are advised to stay informed and compliant to avoid severe penalties and fines.

Sources

IRBM : FAQ on TP 18/1/2024

https://www.hasil.gov.my/media/w0ag5bsp/faq-on-matters-arising-from-subsection-140a-3c-ita-1967.pdf

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What are the most important clauses in a shareholder agreement?

What are the most important clauses in a shareholder agreement?
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(Sec update) Top 5 Crucial Clauses in Shareholders' Agreement

One or more business partners incorporating a company may seem like a straightforward process that does not require any agreement. However, some of the shareholders may want to consider entering a shareholder’s agreement, especially if you are a minority shareholder in the company.

Although the Companies Act 2016 does provide some protection for shareholders, such as oppression of minority shareholders. When shareholders sign a Shareholders Agreement (SHA), the court typically gives it priority, as the SHA reflects the final intent of the parties' relationship nature.

If “Without” an SHA, it may be more challenging to find legal grounds to make a claim, as the protections provided by the company's constitution may be insufficient.

Leverage our 25 years of unparalleled company secretarial experience to uncover the five (5) indispensable clauses that can make or break your Shareholders' Agreement. Don't embark on your business journey without this invaluable knowledge

Top 5 Clauses in Shareholders’ Agreement

We have pointed out the following five common clauses in a Shareholders' Agreement (SHA) that may help to protect your rights as a minority shareholder:

1. Reserved Matters

In the SHA may state the reserved matters that require unanimous voting by the company. This clause is crucial for minority shareholders, providing protection against the majority shareholders' rights (who are likely to win with a majority vote at company meetings).

Examples of reserved matters such as include changes in the company's business, an increase in the company's share capital (which dilutes everyone's ownership), exercising borrowing powers (such as obtaining substantial loans from banks), or creating security interests (such as registering a charge on company assets).

2. Shareholder Obligations

Each Shareholder's obligations in the company can be clearly defined in the SHA. Such as a common clause states, ''Shareholders shall act in the best interests of the company.'' If each shareholder provides different contributions, this clause helps specify individual obligations.

For example, Mr. A is obligated to invest funds in the company; Mr. B has to contribute his/her expertise in certain areas, maybe in terms of knowledge or skills; and Mr. C, with decades of management experience, oversees and implements various company projects.

3. Directors

Companies usually have an odd number of directors to prevent deadlock situations. For some situations, the majority shareholders may appoint directors count tends to favor them in maintaining control at the executive level.

However, minority shareholders should insist on the right to appoint at least one director by adding this clause in the SHA, ensuring representation on the board allows easy oversight of company operations and protects minority shareholder interests.

4. Equity Transfer

To ensure clear provisions when another shareholder wishes to exit the company, this is preventing potential co-ownership with your competitor. It's crucial to explicitly outline (Exit Conditions) such details in the shareholders' agreement.

Another key provision is the purchase price for the existing shareholder's shares. The Shareholders may state the selling price in the SHA as agreed upon among the Shareholders for whoever exits the company in a certain time. Unless the exiting shareholder agrees to give up shares at the initial investment price (often impractical), some valuation mechanism may be necessary. However, valuing a company can be costly.

Specific clauses like pre-emptive rights, tag-along rights, drag-along rights, and drag-with rights exist and may be included in the SHA but may not be necessary, especially for small to medium-sized enterprises.

5. Dispute Situation

Dispute resolution clauses provide shareholders with options to resolve conflicts among them. For instance, a shareholders' agreement may include an arbitration clause, meaning any disputes must be resolved through arbitration rather than litigation in court.

However, as a minority shareholder, caution should be exercised before agreeing to an arbitration clause unless you fully understand its implications.

In conclusion, shareholders' agreements are common and can effectively protect the interests of all involved shareholders, especially minorities. Even if a company did not initially sign such an agreement, there's nothing stopping shareholders from subsequently doing so.

PS : Authored by Hui Ting, our secretary associates in THK, in her personal LinkedIn post

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enterprise vs sdn bhd

enterprise vs sdn bhd
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(Sec update) Unlocking Tax Incentives: Discover Why SDN BHD Companies Qualify, While Enterprises Miss Out!

Why Sdn Bhd ?

In the vibrant tapestry of Malaysia's business landscape, the decision to venture as an entrepreneur or establish a Sendirian Berhad (Sdn Bhd) is a critical crossroads that warrants careful consideration. While entrepreneurship embodies the spirit of innovation and individualism, incorporating an Sdn Bhd unveils a realm of strategic advantages that can significantly propel your business forward.

Let's delve into the compelling reasons why choosing the corporate path might be the catalyst for unlocking your business potential.

What Sets Apart Sdn Bhd and Entrepreneurship in Malaysia?

The fundamental distinction lies in the legal structure.

Sdn Bhd represents a private limited company, offering legal separation from personal assets, while entrepreneurship often involves individuals operating as sole proprietors without such distinction.

Limited Liability: How Does it Differ in Malaysia?

Entrepreneurs in Malaysia face unlimited personal liability, exposing personal assets to business risks. Contrastingly, Sdn Bhd owners benefit from limited liability, creating a protective shield for personal finances.

Tax Implications: How Does the Choice Affect Taxation in Malaysia?

In the realm of taxation in Malaysia, entrepreneurs find themselves grappling with the impact of their choices on personal income tax and corporate tax. While individual business owners are subjected to personal income tax on their profits, the landscape changes for Sdn Bhd companies, where the focus shifts to corporate tax.

This distinction significantly shapes the tax liability, with Sdn Bhd companies potentially benefiting from lower corporate tax rates and access to tax incentives, thereby creating a more advantageous tax environment.

 Tax incentives are benefits that the government offers to certain businesses to encourage investment and development in Malaysia. Some of the tax incentives are:

  • Pioneer status (PS) : a full or partial exemption of income tax for a period of five years for businesses that produce or do something new or important.

  • Investment tax allowance (ITA) : an extra deduction of capital expenditure for a period of five years for businesses that invest in a new or important project.

Government Grants in Malaysia: A Comparative Analysis for Sdn Bhd, Sole Proprietors, and Partnerships

Private limited companies, commonly referred to as Sdn Bhd, often enjoy more favorable treatment when it comes to government grants and incentives. The Malaysian government frequently tailors these programs to encourage the growth and development of structured businesses.

Sdn Bhd entities generally have access to a broader range of support initiatives, including tax incentives, financial assistance, and industry-specific grants. Conversely, sole proprietors and partnerships may find that their eligibility for government grants is more restricted.

Capital Raising Dynamics: Malaysia's Entrepreneurial Landscape vs Sdn Bhd

Entrepreneurs in Malaysia may find it challenging to raise significant capital individually. Sdn Bhd owners can issue shares, providing a more accessible avenue to attract investors and fund business expansion with financial institution.

Risk Management: Structured Approach vs Personal Liability in Malaysia

Operating as an Sdn Bhd in Malaysia offers a structured approach to risk management, with limited liability safeguarding personal assets. Entrepreneurs, however, bear full personal liability for business risks.

Legal Compliance: Navigating Regulations in Malaysia

Sdn Bhd owners in Malaysia must adhere to complex legal compliance requirements, including audits and regulatory filings. Entrepreneurs, while subject to legal requirements, face a generally simpler compliance landscape.

Key Takeaway

In conclusion, the choice between operating as an Sdn Bhd and pursuing entrepreneurship in Malaysia involves multifaceted considerations. Entrepreneurs and business owners must carefully weigh these factors against their unique circumstances and aspirations, making an informed decision aligned with the dynamic Malaysian business landscape.

PS : Authored by Mohammad Syazwan Bin Ishak, our secretary associates in THK, in his personal LinkedIn post

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Real Property Company Tax 2024

Real Property Company Tax 2024
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(Tax update) Real Property Company (RPC) under Capital Gain Tax (CGT)

What is an RPC?

A Real Property Company (RPC) in the context of Malaysian tax law is typically a company whose primary business is dealing with real property, such as land or buildings. This can include activities like buying, selling, developing, or renting real estate.

Technically speaking, we use 75% of the value of the company’s total tangible assets as benchmark to define RPC .

Tax Treatment of RPCs:

Traditionally, gains or profits from the disposal of shares in Malaysian RPCs were subject to Real Property Gains Tax (RPGT) under Paragraph 34A, Schedule 2 of the Real Property Gain Tax Act 1976.

However, with the introduction of Capital Gains Tax (CGT), there have been amendments to these provisions.

Tax Computation and Formula:

The specific computation and formula for the taxation of RPCs under RPGT would depend on various factors such as the period of holding the property, the nature of the gains (capital or income), and specific exemptions or relief available.

Typically, RPGT is calculated based on the difference between the acquisition cost and the disposal price of the real property or shares in the RPC. The tax rates range from 0% to 30% depending on the factors mentioned above.

Challenges in RPC Tax Computation (Past) and Taxpayer Preferences

Previously, calculating taxes for Real Property Companies (RPCs) in Malaysia was complex due to complicated Real Property Gains Tax (RPGT) rules. Factors like how long the property was held, various exemptions, and the property's market value made the process challenging.

This complexity led many Malaysian taxpayers to consult lawyers instead of tax agents for RPGT issues, believing lawyers were better suited to handle the legal aspects of property taxes.

We HATE RPC companies as most of them trust lawyers than us.

Summary of Income Tax (Exemption) (No.7) Order 2023:

This order provides an exemption from income tax on gains or profits from the disposal of shares in unlisted Malaysian companies between 1 January 2024 and 29 February 2024.

This exemption does not apply to gains or profits taxable as business income under section 4(a) of the Income Tax Act 1967.

For RPC shares, traditionally subject to RPGT, there seems to be a ''2-month tax holiday period'' due to the CGT exemption and the lack of simultaneous reversal of amendments in RPGTA.

Our Comments on RPC Shares

Before CGT, gains from disposal of shares in Malaysia were considered capital gains and not subject to income tax.

With CGT's implementation, RPGT on gains from disposal of RPC shares by companies, LLPs, trust bodies, or co-operative societies (except Labuan entities) is not applicable from 1 January 2024.

However, due to the 2-month CGT exemption on unlisted shares and no simultaneous amendment reversal in RPGTA, there's a temporary ''tax holiday'' for gains from RPC shares disposals.

Past Blog

Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23

Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24

Understanding Profitability Ratios

Understanding Profitability Ratios
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{Acc Update} Understanding Profitability Ratios

Understanding your company's financial health is key to success, especially for small and medium enterprises (SMEs) in Malaysia. Our 'Understanding Profitability Ratios: A Practical Guide for Non-Accountants''‘ is designed to simplify financial insights for non-English speakers.

At THK, a leading accounting firm in Malaysia in Southern region, we provide comprehensive services in auditing, taxation, bookkeeping, corporate secretarial, and business advisory. This guide uses straightforward language to explain crucial financial concepts, helping you make informed decisions for your business.

Simplified analytical tools are key to unlocking the mysteries of financial data, offering clear insights into a company's financial story. These tools, especially profitability ratios, are easy to understand and vital for assessing a company's efficiency, stability, and overall financial health.

Simplified Guide to Profitability Ratios:

Join us as we explore four key types of profitability ratios in an easy-to-understand format:

Gross Profit Margin

  • What It Means: This ratio shows what a business earns after paying for the direct costs of making its products or providing services (like labor and materials).

  • Simple Formula: (Gross Profit / Net Sales) x 100%

  • Why It's Important: It helps you understand how well the company is controlling its direct costs.

Operating Expense Ratio

  • What It Means: This ratio helps us look at a company's overall costs and how efficiently it handles its everyday operations.

  • Simple Formula: (Total Operating Expenses / Net Sales) x 100%

  • Why It's Important: It shows how effectively a company is managing its regular expenses compared to its income.

Pre-Tax Profit Margin

  • What It Means: This tells us what percentage of sales becomes profit before considering income tax.

  • Simple Formula: (Profit Before Tax / Net Sales) x 100%

  • Why It's Important: It offers insights into how efficiently a company operates and earns profit before taxes.

Net Profit Margin

  • What It Means: This ratio reveals the actual profit a company makes in a year, after taxes are paid.

  • Simple Formula: (Profit After Tax / Net Sales) x 100%

  • Why It's Important: It gives a clear view of the company's ultimate profitability after tax expenses.

In conclusion, understanding these profit ratios is crucial for the financial well-being of your business. Our firm, KTP, is dedicated to assisting Malaysian SMEs in navigating their financial journey with our expert auditing, taxation, bookkeeping, corporate secretarial, and business advisory services.

Visit our websites at www.ktp.com.my and www.thks.com.my for more insights and professional assistance.


 

THK Management Advisory Sdn Bhd

Wisma THK, No. 41, 41-01, 41-02, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru, Johor, Malaysia.
+6012-771 7903
+607-361 3443
 
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