Tax

(Tax Update) Reinvestment Allowance Common Mistakes

(Tax Update) Reinvestment Allowance Common Mistakes
View Full Size

(Tax Update) Reinvestment Allowance Common Mistakes

The Reinvestment Allowance (RA) offers a significant tax incentive for Malaysian companies committed to reinvesting in qualifying projects related to agricultural, manufacturing, and integrated activities.

Here are more common mistakes businesses make when claiming the Reinvestment Allowance (RA), based on detailed findings from the Inland Revenue Board of Malaysia (IRB):

Insufficient Supporting Documentation:

Lack of comprehensive documentation

Many businesses rely solely on purchase invoices. The absence of project papers, feasibility studies, business plans, budgets, directors' resolutions, and other relevant documents supporting the project can lead to disqualification of the RA claim.

Documentation retention

Failure to keep supporting documents for at least seven years as required by Malaysian tax law.

Misalignment of Investment and Usage

Mismatch of entities

Sometimes, the company that incurs the investment is not the same as the company that uses the plant and machinery, leading to ineligible RA claims.

Related party transactions

Claiming RA on the transfer of assets from related parties who have previously claimed RA on the same assets is a significant error, as it can be seen as double-dipping into tax benefits.

Improper Allocation of Expenditures

Benefit to related companies/directors

Claiming RA on assets incurred for the benefits of related companies or directors, rather than for qualifying business activities.

Non-Qualifying activities

Businesses sometimes mistakenly claim RA on activities or assets that do not qualify under the RA guidelines.

Issues with Payment Records

Absence of payment records

Not maintaining proper payment records to support the acquisition and use of qualified assets can lead to RA claims being rejected during audits.

Concurrent Claims with Other Tax Incentives

Overlap with other incentives

Businesses often err by claiming RA concurrently with other tax incentives like Pioneer Status (PS) or Investment Tax Allowance (ITA), without understanding the exclusivity clauses that might apply.

Lack of Detailed Project Documentation

No written or pictorial production flow

Failing to provide a written or pictorial representation of the production flow for the qualifying project, which is essential to demonstrate the direct application of the investment towards eligible activities.

Final Words

These common errors underscore the complexity of tax planning and compliance. Businesses should ensure thorough documentation, accurate allocation of expenses, and clear understanding of the IRB's regulations regarding RA.

Engaging with a tax professional can provide the necessary guidance and support to navigate these challenges effectively.

Source

Public Ruling 10/2022 Reinvestment Allowance Part 1 - Manufacturing Activity
Public Ruling 11/2022 Reinvestment Allowance Part 2 - Agricultural and Integrated Activity

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)

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.

(Tax Update) Reinvestment Allowance Public Ruling

(Tax Update) Reinvestment Allowance Public Ruling
View Full Size

(Tax Update) Reinvestment Allowance Public Ruling

The Reinvestment Allowance (RA) offers a significant tax incentive for Malaysian companies committed to reinvesting in qualifying projects related to agricultural, manufacturing, and integrated activities.

This guide simplifies the complex aspects of RA and explains how businesses can capitalize on this opportunity to reduce their tax liabilities.

Objectives of RA

Our primary goal is to ensure that businesses are well-informed about the benefits of RA and the conditions under which they can claim this allowance.

This is particularly pertinent for companies planning substantial reinvestment into their operational capabilities.

Eligibility Criteria of RA

Company status

Taxpayer must be a resident company in Malaysia.

Operational duration

Must have been in operation for at least 36 months.

Project types

Investment must be directed towards expansion, modernization, or automation of existing business operations within the same industry, or diversification into related products within the same industry.

Qualifying Expenditures

Capital expenditure

Costs associated with the acquisition of new machinery, upgrading existing facilities, diversification or expanding production capacity are eligible.

Specific activities

For agricultural businesses, eligible expenses might include land preparation, crop planting, and installation of irrigation systems.

Financial Advantage:

Tax deduction

RA allows for a claim of 60% of qualifying capital expenditure incurred during the year, which can be deducted against the statutory income of the business.

Limitation

The amount of RA claimed is restricted to 70% of the statutory income from the business for the year.

Tax Implications:

By reducing taxable income, RA not only decreases the immediate tax burden but also improves cash flow, enabling further investment in business growth and innovation. This fosters a cycle of reinvestment and development, enhancing long-term business viability and competitiveness.

How to Claim

Documentation

Companies need to include RA claims in their annual tax returns using the specific forms provided by the Inland Revenue Board of Malaysia (IRBM).

Compliance

It is essential to retain all documents related to RA claims as these may be required for audit purposes.

Latest Development RA

Budget 2021 has announced that a special Reinvestment Allowance (RA) will be given for eligible manufacturing and agricultural projects in Years of assessment (YA) 2020 to YA 2022.

This means that eligible companies that have fully utilized their 15-years RA can enjoy additional RA claims for 3 years (YA2020 to YA2022).

Conclusion

The RA provides a tangible incentive for businesses to reinvest in enhancing their operational capacities. By understanding and utilizing this tax incentive, companies can significantly benefit from reduced tax liabilities while strategically positioning themselves for future growth.

Source

Public Ruling 10/2022 Reinvestment Allowance Part 1 - Manufacturing Activity
Public Ruling 11/2022 Reinvestment Allowance Part 2 - Agricultural and Integrated Activity

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)

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.

#Thk

#KTP

E - Invoice Guidelines for Micro SME

E - Invoice Guidelines for Micro SME
View Full Size

(Tax Update) E - Invoice Guidelines for Micro SME

Finance Minister II Datuk Seri Amir Hamzah Azizan recently outlined new e-invoicing regulations and support mechanisms during a parliamentary session.

Here are the key points:

E-Invoicing Requirement:

MSMEs with annual revenues less than RM150,000 are exempt from issuing e-invoices currently. However, all businesses, including small traders, are encouraged to adopt e-invoicing to align with Malaysia's digital business aspirations.

Support for MSMEs

The government recognizes the challenges MSMEs face, such as increased operational costs and the need for IT system upgrades. To mitigate these, MSMEs are allowed to issue consolidated e-invoices that summarize all sales transactions monthly.

MyInvois Portal

MSMEs can utilize the MyInvois portal for e-invoicing at no additional cost. This tool helps streamline the digital invoicing process.

Tax Incentives

Custom system developers or users of third-party solutions can benefit from accelerated capital allowance claims, reducing from four to three years for purchasing devices and software starting in the 2024 assessment year.

A tax deduction up to RM50,000 per assessment year is available from 2024 to 2027 for consultancy fees incurred in implementing e-invoicing.

Implementation Timeline

  • From August 1, 2024, companies with a turnover exceeding RM100 million are mandated to implement e-invoicing.

  • Businesses earning between RM25 million and RM100 million must adopt e-invoicing by January 1, 2025.

  • By July 1, 2025, all other businesses, including SMEs, hawkers, and traders, are required to start e-invoicing.

Finance Minister Amir emphasized that the government would adopt an ''educate and correct'' approach to support the transition and remains committed to assisting companies, including MSMEs, in moving to e-invoicing. This initiative aims to enhance business efficiency and align Malaysian businesses with global digital standards.

Our Key Takeaway

We welcome this initiative and are eagerly awaiting the official guidelines from the Inland Revenue Board (IRB) regarding this concession. Stay tuned for our upcoming update on the latest developments in e-invoicing.

Taxation on Limited Liability Partnerships (LLPs) : Simplified Guide

Taxation on Limited Liability Partnerships (LLPs) : Simplified Guide
View Full Size

(Tax Update) Taxation on Limited Liability Partnerships (LLPs) : Simplified Guide

In Malaysia, taxation for LLPs follows specific rules set by the Inland Revenue Board, blending features from companies and partnerships. Notably, the LLP Act is poised for amendments focused on enhancing transparency and accountability.

These amendments will require LLPs to maintain a register of beneficial owners, disclose detailed ownership information, and lodge this with the Registrar. Such changes aim to align with international standards to combat money laundering and improve corporate governance.

We are going to clarify tax implications for clients considering or currently in an LLP under IRB’s Public Ruling 8/2022 Taxation on LLP.

Introduction of LLP

Limited Liability Partnerships (LLPs) provide a hybrid structure with benefits akin to corporations but operate with the flexibility of a partnership.

This format is beneficial for small to medium-sized enterprises (SMEs) or professionals who require a simpler entity with limited liability.

Taxation Basics

LLPs in Malaysia are taxed at the entity level, unlike traditional partnerships where individual partners are taxed.

The profits of an LLP are taxed directly to the LLP, and not to the partners.

Key Features

Formation and Legal Status:

LLPs are registered under the Limited Liability Partnerships Act 2012.

They must end with ''PLT'' after the partnership’s name indicating their status.

Capital Contribution

Partners can contribute capital in cash or kind, but not as loans.

Such contributions determine the financial backbone of the LLP.

Management and Control

Tax residency of an LLP is determined by where the management and control activities are conducted.

Important decisions should be made in Malaysia to maintain local tax residency status.

Tax Implications

Tax rates follow a tiered structure similar to corporate rates.

Special provisions apply for income under RM50 million from business sources and a capital contribution of RM2.5 million or less.

Compliance Requirements

LLPs are not required to audit financial statements but must maintain accurate records for tax purposes.

Proper bookkeeping and financial disclosures are crucial for compliance.

Deductions and Allowances

Specific expenses and capital investments are deductible under the tax law.

It is crucial to document all financial activities in the LLP agreement to claim deductions.

Benefits of LLP

LLPs enjoy limited liability protection, reducing personal risk for partners.

Flexible management structure without the stringent requirements of a corporation.

Final Words

Choosing an LLP structure offers flexibility and protection but requires careful consideration of tax obligations and compliance requirements.

For detailed advice and assistance, consider engaging a tax consultant or visit our website KTP for expert guidance.

Source

IRB’s Public Ruling 8/2022 https://www.hasil.gov.my/media/3wzlz0nl/pr_8_2022.pdf

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)

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.

#Thk

#KTP

(Tax Update) Exemption of Foreign Source Income

(Tax Update) Exemption of Foreign Source Income
View Full Size

(Tax Update) Exemption of Foreign Source Income

IRB has issued a technical guidelines on “Tax Treatment in Relation to Income received from Abroad (Amendment)” dated 20 June 2024. The Amended Guidelines replace IRB’s Technical Guidelines on Tax Treatment in relation to Income Received from Abroad (Amendment) dated 29 December 2022..

The amendments to the tax guidelines on foreign-sourced income received in Malaysia, which are effective from January 1, 2022, introduce more flexible criteria for taxpayers seeking exemptions on this type of income, specifically dividend income.

Here's a detailed breakdown of the key changes and what they mean:

Previous Guidelines

Under the old rules, to qualify for an exemption on foreign-sourced dividend income, taxpayers had to meet all three of the following conditions:

  • Economic Substance Requirement : There needed to be substantial business activities in the country from where the income originated.

  • Taxation of Dividend Income : The dividend income must have been subject to tax in that foreign country.

  • Headline Tax Rate : The foreign country's corporate tax rate had to be at least 15%.

New Amendments - Eligibility for Tax Exemption

  • Applies To : The exemption applies to resident companies, resident limited liability partnerships (LLPs), and resident individual partners involved in a partnership business in Malaysia (IIP).

  • Duration : From January 1, 2022, to December 31, 2026.

  • Conditions for Exemption :

    • Option A:

      a) The dividend income must have been taxed in the originating country.

      b) The highest tax rate (headline tax) in that country must be at least 15%.

    • Option B:

      Comply with the economic substance requirements, demonstrating significant business activities in the foreign country.

Clarification on Determining the Headline Tax Rate

The guidelines provide additional clarity on when the headline tax rate is determined, which is illustrated in Examples 6 and 7.

This helps in understanding how to evaluate the tax rates applicable at the time the income was earned.

Detailed Economic Substance Requirements

Specified Economic Activities

The guidelines specify what constitutes economic activities for both investment holding entities and non-investment holding entities, clarifying what activities need to be conducted to meet the substance requirements.

Employment of Service Directors

A service director employed under a contract of service is recognized as an employee, which aids in meeting the economic substance criteria.

Outsourcing Permitted

Outsourcing of specified economic activities is permissible, provided certain conditions are met. This allows flexibility in how companies manage and report their business activities in foreign jurisdictions.

Why These Tax Updates Matter

These detailed updates make it clearer for Malaysian entities and individuals who earn foreign-sourced dividend income to understand and comply with the requirements for tax exemptions.

The options provided for meeting the exemption criteria (either through tax status and headline tax rate or through economic substance) offer flexibility, accommodating different business models and international arrangements.

Furthermore, the clarifications on economic substance requirements and the conditions for outsourcing ensure that businesses can plan their operations and tax strategies with greater certainty.

The acknowledgment of service directors and the conditions for outsourcing help in structuring business operations efficiently while complying with tax laws.

Source

IRB’s Technical Guideline Tax Treatment In Relation To Income Received From Abroad https://www.hasil.gov.my/media/fzofh1gz/20240620-guidelines-tax-treatment-in-relation-to-income-received-from-abroad-amendment-june-2024.pdf

Maximizing Tax Incentive with Investment Tax Allowance

Maximizing Tax Incentive with Investment Tax Allowance
View Full Size

(Tax Update) Maximizing Tax Incentive with Investment Tax Allowance

At KTP, we understand the complexities that manufacturers face, particularly in navigating the realm of tax incentives. A significant opportunity currently available is the Investment Tax Allowance (ITA) which can substantially benefit companies involved with promoted products in the manufacturing sector.

Here’s why you should consider this incentive for your business growth and innovation strategies.

What is the Investment Tax Allowance (ITA)?

The ITA offers a lucrative tax incentive for manufacturers that produce specific promoted products in Malaysia. This allowance is essentially a tax deduction from the qualifying capital expenditure incurred by businesses, aiming to boost domestic manufacturing capabilities and technological advancements.

Benefits of the Investment Tax Allowance

Attractive Allowance Rates

Businesses can claim an allowance of up to 100% on their qualifying capital expenditure. This makes a significant impact on reducing the overall taxable income, thus lowering tax liabilities and enhancing cash flow.

Wide Range of Promoted Products

The ITA covers a diverse array of manufacturing activities and products, from high-tech electronics to resource-based manufacturing such as palm oil biomass and rubber. This inclusivity ensures many sectors can benefit from the allowance.

Enhanced Competitiveness

By reducing tax burdens, companies can reinvest savings into further innovation, quality improvement, or expansion, enhancing their competitive edge both locally and globally.

Support for High Technology and Small Scale Companies

Special provisions under the ITA support high technology and small scale companies, encouraging startups and SMEs to invest in innovative and high-value manufacturing.

How to Qualify for the Investment Tax Allowance

To be eligible, companies must engage in the manufacture of promoted products as determined by the Ministry of International Trade and Industry in concurrence with the Ministry of Finance. Companies must also meet specific criteria and conditions outlined by the Malaysian Investment Development Authority (MIDA).

Applying for the Investment Tax Allowance

Applications must be submitted in writing to MIDA, with all necessary documentation and adherence to the outlined guidelines.

Approval from MIDA not only secures the tax incentive but also affirms the strategic importance of your business operations within the sector.

Conclusion

At KTP, as your trusted tax agent and advisor, we are here to assist you in navigating the application process, ensuring compliance, and maximizing the benefits from the Investment Tax Allowance.

If your business is part of the manufacturing sector and you're looking to leverage this incentive, visit our website at www.ktp.com.my or contact us today for a detailed consultation.

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)

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.

#Thk

#KTP

(Tax Update) Can a landlord claim Industrial Building Allowance

(Tax Update) Can a landlord claim Industrial Building Allowance
View Full Size

(Tax Update) Can a landlord claim Industrial Building Allowance on his/her building?

Navigating the tax benefits associated with Industrial Buildings (IB) and the Industrial Building Allowance (IBA) in Malaysia can significantly impact your business’s financial planning.

This blog post, tailored for KTP’s clients with minimal tax knowledge, breaks down these concepts into understandable segments. Here, we reference the Public Ruling 8/2016, Public Ruling 8/2016 and Schedule 3 of the Income Tax Act 1967 which provides the guidelines on IBA.

Understanding Industrial Buildings (IB)

An industrial building in Malaysia includes properties used for manufacturing, processing, storage, or any other similar industrial purposes. These buildings are pivotal for businesses involved in production and operations, making them eligible for tax deductions through the IBA.

Here’s a more detailed list of the types of buildings that can qualify for IBA, as described in the public ruling o 3/2018, 8/2016 and Schedule 3 of the Income Tax Act 1967

  • Factories : Buildings used primarily for manufacturing or processing goods and materials. This includes all structures used in connection with manufacturing, such as storage facilities for raw materials and finished products if they are on the same site as the factory.

  • Warehouses : Specifically those used in connection with a qualifying industrial activity, such as storage of goods to be processed or manufactured.

  • Workshops : Buildings where goods are produced or repaired, as long as they are part of a larger industrial operation.

  • Buildings used for Research and Development : Buildings used specifically for industrial or scientific research related to the manufacturing process.

  • Buildings housing Industrial Power Generation : Includes buildings that house machinery used for generating power for industrial activity, as long as the power is used for operating the industrial facility.

  • Agricultural Buildings : Includes buildings used for the processing of agricultural produce, such as mills for processing rice or sugar.

  • Buildings used in Mining and Quarrying : Any building used directly in connection with mining operations or the processing of minerals.

Business Operator is the Owner of the Building

Commencing from the year of assessment 2016, the provision under subparagraph 16B(1), Schedule 3 of the ITA clarifies that a person who is eligible to claim IBA must be the owner and business operator of the above-mentioned types of industrial buildings.

A building owner who rents out his building to another person to carry on the business is not eligible to claim IBA on that building although the tenant uses it as an industrial building.

It is important to note that the tenant is eligible to claim IBA in respect of the capital expenditure incurred by him on alteration or renovations on the building that he uses as an industrial building.

What is Industrial Building Allowance (IBA)?

IBA is a tax relief mechanism designed to encourage the construction or purchase of industrial buildings. It allows businesses to deduct a percentage of the expenditure incurred on these buildings from their taxable income, effectively reducing the overall tax burden.

For detailed rate (initial and annual) allowance, you may refer to the Public Ruling 8/2016 Industrial Building Part 1.
 

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)

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.

Investment Holding Company As Per Public Ruling

Investment Holding Company As Per Public Ruling
View Full Size

(Tax Update) Investment Holding Company As Per Public Ruling

In Malaysia, there are special businesses called Investment Holding Companies (IHCs). Unlike regular companies that sell products or services, IHCs make money by managing investments like shares, properties, or earning interest.

Public Ruling 2/2024, issued by the Inland Revenue Board of Malaysia, is titled “Investment Holding Company” and was released on May 28, 20241. It replace the old Public Ruling 10/2015 on IHC.

It provides guidance on the interpretation of tax laws, policies, and procedures related to investment holding companies. This ruling is intended to assist both the public and officers of the Inland Revenue Board by clarifying the Director General of Inland Revenue’s stance on specific tax matters.

What is an Investment Holding Company (IHC)?

Think of an IHC as a big boss who controls various valuable assets—like owning stocks in different companies, real estate, or bonds. Their main job is to look after these investments and earn money from them, rather than selling goods or everyday services.

An IHC means a company whose activities consist mainly in the holding of investments and not less than 80% of its gross income other than gross income from a source consisting of a business of holding of an investment (whether exempt or not) is derived from the holding of those investment.

What is a Business of Holding of an Investment ?

A company is involved in renting out property and also offers maintenance or support services for those properties.

This means that besides allowing someone to use the property based on a lease or rental agreement, the company takes care of the property by providing upkeep services like cleaning, repairs, and managing facilities such as lifts, stairs, and outdoor areas like parking lots and gardens.

How Are IHCs Taxed?

Here’s how IHCs are taxed depending on the type of income they receive:

  • Money from Shares (Dividend Income): When IHCs receive dividends from the shares they own, this income is not taxed again. Why? Because the company distributing the dividends has already paid taxes on those profits.

  • Money from Interest (Interest Income): If an IHC earns interest from things like fixed deposits or bonds, this income is taxable. The IHC must report this income and pay taxes just like any other company.

  • Money from Renting Out Property (Rental Income): Just like interest, any income from renting out property owned by the IHC is taxable.

What About Expenses?

All businesses incur costs, but not all expenses can reduce their taxable income.

The tax treatment for an IHC depends on whether the IHC is or is not listed on the Bursa Malaysia. The special tax treatment for an IHC is provided under section 60F of the ITA for an IHC not listed on the Bursa Malaysia

For IHCs not listed on Bursa Malaysia, only expenses directly linked to earning taxable income are deductible. For example, costs to manage a rental property can be deducted from the rental income. However, general expenses like office supplies or company events are not deductible.

Why This Matters to You

Investment Holding Company (IHC) can no longer be considered as SME starting year 2020. That means it shall no longer be kept as 17% tax rate but 24% now.

Difference Between Old and New Public Ruling IHC

Expenses and deduction related to single-tier dividend

Capital allowance and deductions relating to single-tie dividends are to be disregarded

Time Limit for Unabsorbed Business Loss Carried Forward

Restrict to carry forward unabsorbed business loss for a period of 10 years with effect from YA 2019

Conclusion

For more detailed information, you can check the Public Ruling 2/2024 from the Inland Revenue Board of Malaysia titled ''Investment Holding Company,'' released on May 28, 2024.

This ruling provides guidance on tax laws related to IHCs and is intended to help the public and tax officers understand specific tax matters better.

You can view the full document on the official website of the Inland Revenue Board of Malaysia or consult with a tax professional for deeper insights.

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)

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.

#Thk

#KTP

E-Invoice : FAQ Part 1

E-Invoice : FAQ Part 1
View Full Size

(Tax Update) E-Invoice : FAQ Part 1

Welcome to KTP's definitive guide to e-invoicing! As your trusted auditors and tax agents, we're here to simplify the transition to e-invoices for everyone.

Whether you're a business owner, accountant, or just getting to grips with digital invoicing, this video is packed with essential information and answers to your most asked questions.

Dive into our FAQ Part 1 session to ensure your business stays compliant and ahead of the curve with e-invoicing.

Timestamps:

0:00 - Introduction to E-Invoicing

1:15 - Implementation Timelines Explained

3:50 - Understanding Mandatory Data Fields

6:30 - The Future of Handwritten Invoices

8:45 - Handling Staff Expenses and Claims with E-Invoices

11:10 - Conclusion and Additional Resources

FAQs on E-Invoice Implementation:

1. Implementation Timeline

  • Scenario 1

    If your company’s e-invoice implementation date is set for 2025 but your client’s date is 1 August 2024, you might need to adopt e-invoicing earlier to accommodate your client's requirements. Adjusting your schedule can ensure seamless transactions and maintain good business relations.

  • Scenario 2

    If facing a similar timeline with your supplier, it’s crucial to understand any specific requirements they might have. Early preparation can prevent disruptions in your supply chain.

2. Data Fields

With e-invoicing, there might be up to 55 required fields. While this sounds extensive, not all fields may be mandatory for every transaction.

It’s important to identify which fields are essential for your specific business context to ensure compliance without overburdening your processes.

3. Issuing Handwritten Invoices/Receipts

The shift to e-invoicing doesn't necessarily eliminate the possibility of using handwritten invoices or receipts. However, digital invoices are becoming a standard due to their efficiency and compliance benefits. Check if specific regulations apply to your industry.

4. Staff Expenses and Claims

  • Scenario 1

    E-invoices for professional subscriptions under an employee’s name can typically be claimed, provided they align with company policies and are properly documented.

  • Scenario 2

    Entertainment expenses billed under an employee’s name can also be claimed. Ensure that such expenses are justified, reasonable, and fall within company guidelines.

  • Scenario 3

    For overseas business trips, accommodation expenses invoiced in an employee's name are generally reimbursable. It's crucial these expenses are pre-approved and within the company’s travel policy limits.

For more insights and personalized advice on e-invoicing, don’t forget to subscribe to our channel and check out our other resources.

KTP is here to help you navigate the complexities of modern business compliance with ease and confidence.

YouTube Video on E-Invoice FAQ

Watch the 25 minutes webinar on IRB Tax Audit in our YouTube https://youtu.be/WjWFAVBy8bc

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)

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.

A Complete Guide on E-Invoice

A Complete Guide on E-Invoice
View Full Size

(Tax Update) A Complete Guide on E-Invoice

Are You Prepared for the Upcoming Changes?

As Malaysia moves towards a more digital economy, the implementation of the e-invoicing system marks a significant step. This change, aimed at improving efficiency, transparency, and compliance in business transactions, is something all businesses must prepare for.

Here’s an overview to help you understand what’s coming and how you can get ready on E-Invoice.

Internal Training on E-Invoice (30-Apr-24)

Stay updated and informed through our active learning sessions and knowledge-sharing articles. Join the learning. https://www.ktp.com.my/blog/active-learning-on-sharing-of-knowledge-e-invoice/30apr2024

E-Invoice Webinar

For those new to e-invoicing, our webinar series on the basics provides a comprehensive overview.

Part 1: Everything You Need to Know (23-Apr-24) :

Watch now https://www.ktp.com.my/blog/e-invoice-basics-everything-you-need-to-know/23apr2024

Part 2: Consolidated and Self-Billed Invoices (29-Apr-24) :

Watch now https://www.ktp.com.my/blog/e-invoice-basic-consolidated-and-self-billed/29apr202

Latest E-Invoice Guidelines

Keeping up-to-date with the latest guidelines is essential. We provide summaries and links to the most recent e-invoice guidelines released by the authorities :

IRBM e-invoice Guideline Version 2.30 (09-Apr-24) :

Read more https://www.ktp.com.my/blog/irbm-e-invoice-guideline-version-230-6april2024/09apr2024

e-Invoice Guideline 2.1 (01-Nov-23) :

Read more https://www.ktp.com.my/blog/tax-update-e-invoice-guideline-2-1/01nov22

e-Invoice Guideline 2.0 (12-Oct-23) :

Read more https://www.ktp.com.my/blog/tax-update-e-invoice-guideline-2/12oct23

Industry-Specific FAQs (24-Nov-23)

Different industries may face unique challenges. Our FAQ for the Healthcare Industry addresses specific concerns and provides tailored advice.

Read the FAQs. https://www.ktp.com.my/blog/e-invoice-faq-for-healthcare-industry/24nov22

Transition Challenges and Strategies (17-Aug-23)

Transitioning to e-invoicing may present several challenges. Our article discusses common issues and offers strategies to overcome them effectively.

Explore transition strategies. https://www.ktp.com.my/blog/e-invoicing-malaysia-transition-challenges-and-strategies/17aug23

Are You Ready? (10-Aug-23)

Preparation is key to a smooth transition. Our guide on readiness checks and essential steps will help your business gear up for the upcoming changes.

Find out if you are ready. https://www.ktp.com.my/blog/e-invoicing-malaysia-are-you-ready/10aug23

Coverage and Scope (03-Aug-23)

Which businesses are required to adopt e-invoicing? Our coverage article explains the scope and the types of transactions that will be affected.

Learn about the coverage.https://www.ktp.com.my/blog/e-invoicing-malaysia-coverage/3aug23

Timeline for Implementation (02-Aug-23)

Understanding the timeline for the e-invoicing rollout is crucial for businesses to plan and transition smoothly. We have outlined the key dates and phases of implementation to keep you informed and prepared.

Check the timeline. https://www.ktp.com.my/blog/e-invoicing-malaysia-timeline/2aug23

The Workflow of E-Invoicing (31-Jul-23)

The e-invoicing workflow involves several key steps to ensure that invoices are issued, received, and processed digitally. Our detailed article on the e-invoicing workflow provides insights into each stage, from creation to approval and archiving.

Read more.https://www.ktp.com.my/blog/e-invoicing-malaysia-the-workflow/31jul23

We encourage all our clients to stay informed and proactive in their preparation for the upcoming e-invoicing system.

For further details, please refer to the linked articles and feel free to contact us for any specific queries.

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)

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.

#Thk

#KTP

What is ESG in simple words?

What is ESG in simple words?
View Full Size

What is ESG in simple words?

In today's business landscape, ESG, which stands for Environmental, Social, and Governance, represents a framework of policies or standard operating procedures adopted by companies to amplify positive impacts and mitigate negative effects across these three dimensions.

Socially conscious investors utilize these procedures as screening tools to assess the suitability of potential investments.

The environmental criteria assess how well a company acts as a steward of nature, while the social criteria evaluate its management of relationships with employees, suppliers, customers, and local communities.

Governance criteria focus on aspects such as company leadership, executive compensation, audits, internal controls, and shareholder rights. By considering all these criteria, a company can develop a comprehensive framework to evaluate its impact on society and the environment, as well as its overall sustainability and ethical conduct.

Why is the business world placing significant importance on ESG factors nowadays?

Lately, investors have increasingly recognized the significance of ESG criteria when making investment choices. Consequently, numerous businesses have started incorporating ESG principles into their operations and strategic planning.

ESG investing is also known as sustainable investing, responsible investing, and impact investing. When evaluating ESG criteria, investors consider a wide array of behaviors, policies, and procedures implemented by the company.

ESG investors prioritize companies that demonstrate responsibility towards the environment, act as good corporate citizens, and are led by accountable employees.

What factors do sustainable investors take into account when evaluating potential investments?

In assessing environmental impact, investors scrutinize corporate practices regarding climate impact, energy consumption, pollution mitigation, natural resource preservation, treatment of animals, and waste disposal. This evaluation encompasses aspects such as greenhouse gas emissions, handling of hazardous waste, and adherence to environmental laws.

In examining the social aspect, investors focus on both internal and external stakeholders. They assess whether the company allocates a portion of its profits to the local community and encourages employee involvement in societal welfare initiatives. Furthermore, they consider workplace conditions that prioritize the health and safety of employees.

Finally, in the realm of governance, investors evaluate whether a company employs precise and transparent accounting practices, promotes integrity and diversity in leadership selection, and remains accountable to shareholders.

They seek assurance that companies steer clear of conflicts of interest in appointing board members and senior executives and refrain from leveraging political contributions for preferential treatment or illicit activities.

Final Words on ESG

In essence, ESG serves as an assessment method encompassing environmental, social, and governance concerns. Within the private sector, it comprises a set of standards employed to assess a company’s risks and behaviors. This framework plays a vital role in aiding sustainable investors in gauging a company's alignment with their principles and analyzing its overall value for their investment objectives.

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)

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.

#Thk

#KTP

Understanding IRB Tax Audits in Malaysia

Understanding IRB Tax Audits in Malaysia
View Full Size

Understanding IRB Tax Audits in Malaysia

Here are the top five common questions taxpayers in Malaysia often raise concerning the Inland Revenue Board (IRB) tax audits:

  • Why I kena tax audit?

  • What are the consequences of discrepancies found during an audit?

  • What documents should I prepare for a tax audit?

  • What is the hot issues IRB normally focus in a tax audit?

  • Can I appeal an audit decision?

Tax Audit

Join us as we talk seriously the crucial aspects of tax audits conducted by the Inland Revenue Board of Malaysia (IRBM).

Our experts together with Mr Koh Teck Peng (the Group Principal) and Miss Lim Nguan Lian (the Client Relationship Manager) cover everything you need to know to navigate IRB desk and tax audit with confidence.

Key Topics Discussed:

  • Introduction to Tax Audits - What exactly is a tax audit, and why is it important?

  • Objectives of Tax Audits - Discover the main goals of conducting a tax audit.

  • Audit Period - Learn about the coverage period for which your finances may be audited.

  • Audit Triggers - Identify what factors might trigger a tax audit.

  • Conduct of Tax Audits - Understand the audit process and what taxpayers should expect.

  • Preparation for Audits - Find out which documents and records are essential to prepare for an audit.

  • Roles and Responsibilities - Clarify the rights and duties of IRB officers, taxpayers, and tax agents during the audit.

  • Audit Outcomes - Explore potential outcomes and consequences of a tax audit.

  • Handling Penalties - Procedures for the payment of additional taxes and penalties resulting from an audit.

  • Dispute Resolution - Options available for taxpayers who are dissatisfied with their assessment notices.

Don’t miss out on expert insights to help you prepare for and respond to IRBM tax audits effectively.

YouTube Video

Watch the 60 minutes webinar on IRB Tax Audit in our YouTube https://youtu.be/muZ_1APeMmU

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)

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.

#Thk

#KTP

Complying with IRB Requests for Tax Information and Documents in Malaysia

Complying with IRB Requests for Tax Information and Documents in Malaysia
View Full Size

Complying with IRB Requests for Tax Information and Documents in Malaysia

If you have received the notice/letter under Section 81 of the Income Tax Act 1967, it is compulsory to submit the information to LHDNM within 30 days from the date of the notice/letter.

We strongly advise against ignoring any request for tax information and documents from the Inland Revenue Board (IRB) of Malaysia. Such requests are not merely formalities but are a critical aspect of the tax administration process. Here’s what you need to know about these requests and the implications of non-compliance.

What is an IRB Request for Information?

The IRB is responsible for tax collection and ensuring compliance with tax laws. When they issue a request for information, it typically involves asking taxpayers to provide specific documents or details to verify their tax submissions. This can include income statements, receipts, or documentation related to deductions and exemptions.

Legal Obligations

Taxpayers are legally obligated to respond to these requests. The Malaysian Income Tax Act 1967 mandates that taxpayers provide accurate and complete information to the IRB. Failure to comply can be seen as an offense under the tax laws.

Consequences of Non-Compliance

Ignoring a request from the IRB can lead to severe consequences, including:

  • Penalties and Fines: The IRB can impose substantial fines and penalties for non-compliance, which might exceed the amount of tax due.

  • Audits and Investigations: Non-compliance can trigger a more thorough audit of your financial affairs. An audit can be intrusive, time-consuming, and stressful.

  • Legal Action: In extreme cases, the IRB can initiate legal action against individuals or entities that fail to comply with their requests. This can result in criminal charges and potential conviction.

Best Practices for Responding

  • Timely Response: Always respond within the timeframe specified in the request. If you need more time, communicate this to the IRB immediately and request an extension.

  • Accuracy and Completeness: Ensure that all information and documents provided are accurate and complete. Any discrepancies can lead to further scrutiny.

  • Seek Professional Help: If the request is complex or you are unsure about the information required, consider consulting a tax professional. This ensures that you are providing the correct information and mitigates the risk of errors.

Conclusion

While it might be tempting to ignore requests from the IRB hoping they might go away, such an approach can lead to significant legal and financial troubles. It’s crucial to treat these requests with the seriousness they deserve and respond appropriately.

Always remember that maintaining compliance is not just about adhering to legal requirements; it's about contributing responsibly to the nation's fiscal health and integrity.

Past Blog on IRB Profiling Information System (previously known as Information Collection Program)

IRBM Information Collection Program dated 26 May 2022 https://www.ktp.com.my/blog/irbm-information-collection-program/26may2022

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)

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.

Understanding Transfer Pricing (TP) : A Basic Guide

Understanding Transfer Pricing (TP) : A Basic Guide
View Full Size

Understanding Transfer Pricing (TP) : A Basic Guide

Welcome to our KTP channel!

Today's video dives into the essentials of Transfer Pricing (TP), a crucial concept for businesses operating in multiple countries. We'll answer the most common questions about TP in an easy-to-understand manner.

Whether you're a business owner, a student, or just curious about how international transactions work, this video is for you!

Questions We will Explore on TP :

1. What is Transfer Pricing? - Learn what TP is and why it's important.

2. When are TP Rules Applicable? - Find out the situations where TP rules must be followed.

3. Thresholds for TP Documentation - Discover if there are any minimum requirements for creating TP documents.

4. Essential Elements of TP Documents - Understand what you need to include in a full TP document and a minimum report.

5. Exemptions from Preparing TP Documents - Learn when you might not need to prepare these documents.

6. Submission Requirements - Is it necessary to submit TP documents? We'll tell you.

7. Penalties for Not Furnishing TP Documents - Know the consequences of failing to provide required TP documentation.

8. Effective Date of TP Rules - Find out when these rules started to apply.

9. Challenges of TP Documentation - Discuss the difficulties businesses face with TP documentation.

YouTube Video

Watch our 30-minute YouTube video, ''Understanding Transfer Pricing (TP): A Basic Guide,'' featuring Mr. Koh Teck Peng, the Group Principal, and Miss Lim Nguan Lian, the Client Relations Manager of KTP | THK. https://youtu.be/Cu6sxaBLXkc

Don't forget to like, comment, and subscribe for more insightful content. Hit the bell icon to get notifications about our latest videos. Stay tuned and enjoy learning with us!

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)

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.

#Thk

#KTP

E-Invoice Basic - Consolidated and Self-Billed | Part 2

E-Invoice Basic - Consolidated and Self-Billed | Part 2
View Full Size

(Tax Update) E-Invoice Basic - Consolidated and Self-Billed | Part 2

Introduction

Join us for a detailed 20-minute session presented by KTP, a leading auditor and tax agent in Johor Bahru, as We explore the details of e-invoicing, focusing on both consolidated and self-billed e-invoices.

This webinar is designed for businesses and professionals seeking to understand and implement these invoicing methods in compliance with the Inland Revenue Board of Malaysia (IRBM) regulations.

Webinar Details

Part A: Consolidated E-Invoice

1. Understanding Consolidated E-Invoices

* Definition and essential features.

* Appropriate scenarios for issuing a consolidated e-invoice.

2. Regulatory Compliance

* Key deadlines for submitting consolidated e-invoices to the IRBM.

3. Practical Application

* Step-by-step guide on issuing a consolidated e-invoice

* Mandatory data fields required on a consolidated e-invoice.

* Industries and activities where consolidated e-invoices are not applicable.

4. Handling Special Cases

* Procedures for issuing an e-invoice upon a later request by a B2C buyer.

Part B: Self-Billed E-Invoice

1. Introduction to Self-Billed E-Invoices

* What is a self-billed e-invoice?

* Transactions that typically require self-billing.

2. Issuance Process

* Detailed guide on how to issue a self-billed e-invoice.

* Required data fields for self-billed e-invoices.

Conclusion:

This session aims to equip participants with the knowledge to effectively manage e-invoicing requirements, ensuring compliance and efficiency in their business operations. Whether you are new to the topic or looking to refine your practices, this webinar will provide valuable insights into the world of e-invoices.

Video

Watch 20 minutes consolidated and self-bill e-invoice video on our Youtube https://youtu.be/Tj7THcbkaTE

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)

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.

#Thk

#KTP

Tax Impact on Director’s Account

Tax Impact on Director’s Account
View Full Size

(Tax Update) Tax Impact on Director’s Account

When a director provides significant advances to a company, it complicates their tax position.

IRBM will scrutinize the source of these funds, particularly for large advances, to verify tax compliance. Additionally, unrecorded “sales” in a director's account suggest possible underreporting of company income.

These director’s advances may be viewed as investments, with any returns (like interest) taxable as income for the director. IRBM ensure these transactions involve market-rate interest, are well-documented, and reported correctly.

In Malaysia, the tax implications of advances to and from directors are primarily governed by the Income Tax Act 1967 and the relevant Public Rulings issued by the Inland Revenue Board Malaysia (IRBM)

Here's a concise overview of the tax impacts and the corresponding legal references:

Tax Impact of Advance to Director

Benefit in Kind

Any interest-free or low-interest loans provided to a director are considered a benefit in kind and are taxable. The difference between the market rate of interest and the rate charged, if any, is deemed interest and must be included in the director's taxable income.

Reference: Public Ruling No. 11/2006, “Benefits in Kind”.

Deemed Interest

If the loan is interest-free or granted at an interest rate below the market rate, the company must calculate deemed interest, which is considered income of the company and a taxable benefit to the director.

Reference: Income Tax Act 1967, Section 39(1)(h).

Tax Impact of Advance from Director

Interest Income

If a director lends money to the company and charges interest, the interest income received by the director is taxable under his personal income tax.

Reference: Income Tax Act 1967, Section 4(a) which covers the taxability of income from sources of a revenue nature.

Documentation and Reporting

The company must ensure proper documentation of the loan, including the interest rate, terms of repayment, and use of the loan funds. These loans must be reported in both the company’s and the director’s tax filings.

Reference: Public Ruling No. 3/2010, “Director’s Remuneration”.

General Provisions

Arm's Length Standard

Any transaction between the company and its directors should meet the arm's length standard, particularly in the case of multinational corporations to avoid issues of transfer pricing.

Reference: Public Ruling No. 11/2006.

Disclosure and Record Keeping

Companies are required to maintain records of all transactions with directors, including loans and advances, to provide evidence of the nature and purpose of such transactions during audits.

Reference: Income Tax Act 1967, Section 82.

These points provide a structured look at how tax implications are handled regarding advances to and from directors in Malaysia, adhering to the provisions laid out in the Income Tax Act and the relevant Public Rulings.

Always consult with a tax professional or directly refer to the specific legal and tax documents for detailed applications and any updates to the tax ruling and guidelines.

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)

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.

#Thk

#KTP

(Tax Update) E-Invoice Basics: Everything You Need to Know | Part 1 Overview

(Tax Update) E-Invoice Basics: Everything You Need to Know | Part 1 Overview
View Full Size

(Tax Update) E-Invoice Basics: Everything You Need to Know | Part 1 Overview

Welcome to Day 1 of our in-depth series on e-invoicing! Whether you're a business owner, finance professional, or just curious about digital transformation, this video is your starting point for understanding e-invoices.

Here's what we cover:

🔹 Introduction to E-Invoice - Learn what e-invoices are and how they differ from traditional invoicing methods.

🔹 Mandatory Implementation - Discover which businesses are required to implement e-invoicing and the deadlines to be aware of.

🔹 Exemptions Explained - Find out if your business could be exempt from the mandatory e-invoice requirements.

🔹 Sending Mechanisms - We explain the various methods available for sending e-invoices and how to choose the best one for your business.

🔹 Effective Dates & Timeline - Key dates you need to mark on your calendar regarding the rollout of e-invoicing.

🔹 Types & Formats - Overview of different types of e-invoices and the standard formats you should use.

🔹 Process Flow - A step-by-step guide to the process flow of issuing and managing e-invoices.

🔹 Compliance Consequences - Understand the penalties and consequences of failing to comply with e-invoicing regulations.

Don't miss this comprehensive guide to getting started with e-invoicing. Subscribe for more insights and updates on e-invoicing and stay ahead in your business!

Video

Watch 25 minutes CGT video on our Youtube https://youtu.be/9AYgEGh5EVs

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)

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.

#Thk

#KTP

(Tax Update) Capital Gain Tax Malaysia

(Tax Update) Capital Gain Tax Malaysia
View Full Size

(Tax Update) Capital Gain Tax Malaysia

Effective 1 January 2024, Malaysia introduced a capital gains tax (CGT) through the Finance (No. 2) Act 2023 under which gains or profits from the disposal of capital assets are treated as income chargeable to income tax under the Income Tax Act 1967 (ITA).

Welcome to our guide on Capital Gains Tax (CGT)! If you're new to taxes or finding CGT confusing, don't worry. We, #ktp, here to help you understand everything easily.

In this video, we'll explain CGT basics in simple terms. We'll cover when CGT starts, who has to pay it, what it applies to, and more.

Let's get started on CGT

1. What is Capital Gain Tax (CGT)?

2. What is the effective date of CGT?

3. Who is liable/ chargeable to CGT?

4. What is the scope of CGT imposition?

5. How are the disposal and acquisition dates be determined?

6. How is the disposal price determined?

7. What constitutes a gain arise from disposal of CG?

8. How are losses treated under CGT?

9. What is the rate of tax?

10. When are returns required to be filed and taxes paid?

Video

Watch 15 minutes CGT video on our Youtube https://youtu.be/GNtW58J0Bio

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)

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.

#Thk

#KTP

(Tax Update) IRBM e-invoice Guideline Version 2.30 (published on 6/4/24)

(Tax Update) IRBM e-invoice Guideline Version 2.30 (published on 6/4/24)
View Full Size

(Tax Update) IRBM e-invoice Guideline Version 2.30 (published on 6/4/24)

The Inland Revenue Board of Malaysia (IRBM) recently updated its Software Development Kit (SDK) and guidelines for e-invoice on 6 April 2024. With important deadlines approaching for businesses of different sizes, it's crucial for taxpayers to understand these changes and how they affect their operations.

Here's a simpler breakdown of the updates:

Self-Billed e-Invoice for Importation

Malaysian businesses involved in importing goods and services must now issue a self-billed e-Invoice within a specific timeframe after receiving their Customs import declaration. This requirement aims to streamline tax documentation and compliance for imports, with deadlines tailored to the date of receiving the Customs declaration.

To be more specific, for importation of goods, the self-billed e-Invoice is required to be raised by the end of the month following the month in which Customs declaration (K1) is obtained. As an example, if K1 is obtained anytime during the month of August, the self-billed e-Invoice is required to be raised by 30th September.

As for importation of services, self-billed e-Invoice is required to be issued latest by the end of the month following the month in which the rule for timing of imported service tax is satisfied, i.e. earlier of payment and receipt of invoice. For avoidance of doubt, the requirement for self-billed e-Invoice applies regardless of whether imported service tax is required to be accounted on the invoice.

FOREX Clarification

The recent updates provide clarity on handling foreign exchange (FOREX) rates in transactions involving foreign currencies. Businesses have the flexibility to choose the FOREX rate based on their internal policy unless specific regulatory requirements dictate otherwise.

This clarification helps businesses in accurately reporting their financial transactions involving foreign currencies.

Non-Monetary Transactions

The IRBM has clarified that e-Invoicing requirements extend to non-monetary transactions, such as incentive trips and gift vouchers given to dealers. This update ensures that all forms of transactions, whether monetary or non-monetary, are appropriately documented and compliant with e-Invoicing regulations.

Credit Notes for Multiple e-Invoices

It's now confirmed that businesses can issue a single credit note that adjusts the transaction values of multiple e-Invoices. This flexibility is particularly useful for businesses dealing with returns or adjustments across several invoices, simplifying the process without being constrained by character limits.

Consolidated e-Invoices for Individuals

Businesses can issue consolidated e-Invoices for payments made to individuals, simplifying documentation and reporting.

However, payments to individuals acting as agents, dealers, or distributors require individual transactional self-billed e-Invoices, addressing tax compliance more rigorously.

Interest Payments

The updates outline specific requirements for issuing e-Invoices or self-billed e-Invoices for interest payments. The responsibility for issuing these documents depends on the nature of the transaction and the parties involved, aiming to close tax compliance gaps effectively.

Flexibility for Statements as e-Invoices

There's now greater flexibility in using statements as e-Invoices. Businesses can include adjustments and rebates within these documents, facilitating a more streamlined approach to e-Invoicing and compliance.

Size Limitation

New size limitations for e-Invoice submissions to the IRBM have been introduced, including a maximum submission size of 5MB, a cap of 100 e-Invoices per submission, and a maximum size of 300KB per e-Invoice. These limits are crucial for managing the data flow to the IRBM efficiently.

Digital Signature

Businesses can utilize the digital signature of their service provider for e-Invoice submission to the IRBM. This provision allows for a seamless integration and submission process, ensuring the authenticity and integrity of the e-Invoices submitted.

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)

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.

#Thk

#KTP

How to Pay Withholding Tax Online

How to Pay Withholding Tax Online
View Full Size

(Tax Update) How to Pay Withholding Tax Online

Paying and submitting withholding tax in Malaysia under the Electronic Transmission of Tax (eTT) system involves several steps, generally centered around using the Malaysian Inland Revenue Board's (LHDN) online platforms.

The eTT system is designed to streamline the process of declaring and paying taxes, including withholding tax, which is a tax deducted at source on certain types of payments made to non-residents in Malaysia.

Here’s a step-by-step guides :

Start at the MyTax Website

  • Access the MyTax website and head over to ''ezHasil Services.''

  • Select the ''e-TT'' option, followed by ''Electronic Telegraphic Transfer.''

Proceed Through the Steps

  • Click ''Next'' to move forward.

  • Enter your identification details and click ''Next'' again.

  • Provide your email address and proceed to the next step.

  • Input the One-Time Password (OTP) code you receive for verification.

Enter Payment Details

  • Navigate to the ''Payment Details'' section.

  • Choose ''Withholding Tax (WHT)'' as the payment type.

  • Fill in your tax number, address, and select the applicable tax section.

Submission and Virtual Account Number

  • Review all the information you've entered to ensure accuracy.

  • Submit your information.

  • Upon submission, you'll receive a Virtual Account (VA) Number. Print this out for your records.

Complete the Payment

  • Use the provided VA number to make your payment. This can be done via online banking, at a bank counter, or through an ATM.

Email Supporting Documents

  • After payment, email the necessary supporting documents. This includes the Withholding Tax form, a copy of the invoice, proof of payment, the VA number, and the bank transfer slip.

This guide provides a general overview. The specific steps, forms, and procedures may vary slightly depending on various factors, including changes in the e-Filing system or updates in tax laws.

For the most current and detailed instructions, it’s best to consult the LHDN’s official website or contact your trusted tax agent directly.

Past Blog on Withholding Tax

  • Tax Update on Withholding Tax on Royalties dated on 06.12.2023

    https://www.ktp.com.my/blog/tax-treatment-on-copyright-and-software-payments-by-distributor-reseller-to-non-resident/06dec23

     

  • Tax Update: Use Of e-WHT For WHT Payment dated on 08.09.2023

    https://www.ktp.com.my/blog/use-of-e-wht-for-wht-payment/08sept23

     

  • Tax Update - Form E-107D : 2% Tax Deduction For Commission to Agents, Dealers or Distributors dated on 29.06.2023

    https://www.ktp.com.my/blog/2percent-tax-deduction-for-commission-/29june23

     

  • Tax Update on Withholding Tax dated 07.11.2022

    https://www.ktp.com.my/blog/tax-update-on-withholding-tax/07nov22

     

  • Small Value Withholding Tax Payment (update) dated 07.10.2022

    https://www.ktp.com.my/blog/small-value-withholding-tax-payment-update/07oct22

     

  • Small Value Withholding Tax Payment dated 19.08.2022

    https://www.ktp.com.my/blog/small-value-withholding-tax-payment/19aug22

     

  • (Update) 2% Withholding Tax on Commission to Agents dated on 12.07.2022

    https://www.ktp.com.my/blog/2percent-withholding-tax-on-payments-to-agents/12july22

     

  • (Latest update) Withholding Tax on Payments to Agents dated 21.04.2022

    https://www.ktp.com.my/blog/2percent-withholding-tax-on-payments-to-agents/21apr22

     

  • Withholding Tax on Payments to Agents dated 17.03.2022

    https://www.ktp.com.my/blog/2percent-withholding-tax-on-payments-to-agents/17mar22

     

  • Top 5 Withholding Tax Questions dated 28.01.2022

    https://www.ktp.com.my/blog/top-5-withholding-tax-questions/28jan22

     

  • 2% withholding tax on commission dated 30.12.2021

    https://www.ktp.com.my/blog/2-withholding-tax-on-commission/30dec21

     

  • (English Version) Do you know how to reduce withholding tax with the certificate of residence (COR)? Dated 23.11.2021

    https://www.ktp.com.my/blog/certificate-of-residence-lhdn/22nov21

     

  • (Chinese Version) 您知道如何使用居住证 (COR) 减少预扣税吗?dated 23.11.2021

    https://www.ktp.com.my/blog/certificate-of-residence-lhdn-chinese/22nov21

     

  • (English Version) Budget 2022 – SME edition dated 18.11.2021

    https://www.ktp.com.my/blog/tax-budget-2022-sme-edition/18nov21

     

  • (Chinese Version) 2022 年预算摘要 - 中小企业版dated 19.11.2021

    https://www.ktp.com.my/blog/tax-budget-2022-sme-edition-chinese/19nov21

     

  • 两个重要改变 - 预扣税(withholding tax)dated 11.11.2021

    https://www.ktp.com.my/blog/withholding-tax-malaysia/11nov21

     

  • Purpose and usage of certificate of residence under withholding tax in Malaysia dated 23.04.2021

    https://www.ktp.com.my/blog/certificate-of-residence/23april2021

     

  • 马来西亚预扣税 (𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐭𝐚𝐱)的规则概述(第3篇) dated 21.09.2020

    https://www.ktp.com.my/blog/fwwses3ezyrg9gf-7r8xl-aaa5d-739bg-8lcep-c266s-s32bd-wf736-e4xsk-x3fp4-gj5z8-mwgzk-m3696-gw4b5-mmmbe

     

  • 马来西亚预扣税 (𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐭𝐚𝐱)的规则概述(第2️⃣篇) dated 21.09.2020

    https://www.ktp.com.my/blog/fwwses3ezyrg9gf-7r8xl-aaa5d-739bg-8lcep-c266s-s32bd-wf736-e4xsk-x3fp4-gj5z8-mwgzk-m3696-gw4b5

     

  • 马来西亚预扣税(withholding tax)的规则概述 (第1️⃣篇) dated 15.09.2020

    https://www.ktp.com.my/blog/fwwses3ezyrg9gf-7r8xl-aaa5d-739bg-8lcep-c266s-s32bd-wf736-e4xsk-x3fp4-gj5z8-mwgzk-m3696

     

  • Withholding Tax In Malaysia Part 2 of 2 dated 28.06.2019 (eKTP 114)

    https://www.ktp.com.my/blog/withholding-tax-in-malaysia-part-2-of-2

     

  • Withholding Tax In Malaysia Part 1 of 2 dated 28.06.2019 (eKTP 113)

    https://www.ktp.com.my/blog/withholding-tax-in-malaysia-part-1-of-2

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)

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.

#Thk

#KTP


 

THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723­X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

Wisma THK, No. 41, 41-01, 41-02, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru, Johor, Malaysia.
+6012-771 7903 (Secretary Department)
+6012-771 7803 (Account Department)
+607-361 3443
 

PDPA Form

 
 
Switch to Mobile Version
Subscribe Newsletter