(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.

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(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!

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(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?

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(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.

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(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

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(Tax Update) Investing in Kids' Future: Tax Incentives on Child Care and Kindergartens

Investing in child care and kindergartens isn't just good for kids; it's a smart choice for investors too. With more parents working, there's a growing need for quality places where children can learn and grow.

The government is stepping up, offering tax breaks to encourage investment in this important area. This means investing in child care and kindergartens can be financially rewarding and help shape the future of our children.

Let's dive into why putting your money into early education is a win-win for everyone involved.

Public Ruling 4/2016 Tax Incentive for Child Care Centre and Kindergarten Operators

Public Ruling No. 4/2016 by the Inland Revenue Board of Malaysia, we draft out a compelling case study highlighting the significant tax incentives and their impact on the financial performance and sustainability of child care centres and kindergartens.

This case study aims to provide potential investors with a comprehensive understanding of the financial benefits of investing in these operations, underscored by real-world examples and legislative support.

Tax Incentives Overview:

Registration Requirement

Must be registered with the relevant authority: Department of Social Welfare for child care centres or the State Education Department under the Ministry of Education for kindergartens.

Exemption of Statutory Income

The tax exemption applies to business statutory income for a period of five consecutive years.

For existing operators, the exemption commences from the Year of Assessment (YA) 2013.

For new operators, the exemption starts from the YA during which the first invoice is issued.

Industrial Building Allowance

Operators who incur qualifying building expenditure on construction or purchase of a building used in their operations can claim a 10% industrial building allowance annually for ten years.

This incentive is aimed at reducing operating costs and enhancing service quality.

Non-Applicability

The tax incentives do not apply to operators of private pre-schools whose activities are integrated with private primary schools.

Separate Business Sources

If an operator of a child care centre or kindergarten carries on another business, the income from that other business must be treated as a separate source of income, and separate accounts must be maintained.

Adjusted Losses

Adjusted losses incurred from the start of the business until the year before the exemption period, and during the exemption period, can be carried forward and deducted from the statutory income of the business in the post-exempt YAs until fully utilized.

Discontinuation

If the business ceases operation, any unutilized brought forward adjusted loss will be disregarded.

Real-Case Examples:

Situation

ABC is an established child care centre that has been operating since 2020.

For the year of assessment 2020, ABC reported an adjusted income of RM80,000.

Impact of Tax Incentives

Under the tax exemption incentive, ABCs' statutory income of RM80,000 is exempt from tax for five consecutive years, starting from the year of assessment 2020.

This exemption translates into direct tax savings, enhancing the centre's cash flow and providing additional funds that could be redirected towards improving facilities, staff training, or further expansion.

Benefit Analysis

The immediate financial benefit is the preservation of cash that would otherwise be paid as tax. Assuming a corporate tax rate of 15% (concessionary SME rate), the savings amount to approximately RM12,000 for that year alone.

Over the five-year exemption period, assuming steady income, the total tax savings could be significant, providing a substantial financial cushion that can be reinvested into the business.

Conclusion

The government's tax incentives for child care centre and kindergarten operators present a lucrative opportunity for potential investors. By reducing tax liabilities and aiding in the recovery of capital expenditures, these incentives enhance the financial attractiveness and sustainability of investments in the early childhood education sector.

Investors are encouraged to leverage these benefits to contribute to the development of quality child care and education facilities, supporting societal needs and generating substantial returns on investment.

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(Tax Update) Buy Property Under Company or Individual

Buying property under your personal name or through a Sdn Bhd (Sendirian Berhad, which is similar to a Private Limited Company) in Malaysia involves several considerations, including tax implications, liability, financing, and estate planning.

As an approved tax agent, we would guide you through the pros and cons of each approach, tailored to your specific circumstances. It's important to remember that the right choice depends on your financial situation, investment goals, and personal preferences.

Personal Name Purchase

Pros:

• Simpler process: Generally more straightforward than company purchase.

• Tax Benefits: Eligible for RPGT exemptions and potentially lower stamp duties, especially for first-time buyers.

• Better Financing Rates: Often lower mortgage interest rates than those available to companies.

• Stamp duty : Residential properties purchased worth between RM500,001 to RM1 million will get a 75% stamp duty exemption only up until 31st December 2023.

Cons:

• Personal Liability: You're personally liable for debts and legal issues.

• Limited Tax Deductions: Fewer opportunities for deductions on rental income-related expenses.

Sdn Bhd Purchase

Pros:

• Limited Liability: Shareholders' liability is capped, protecting personal assets.

• Tax Advantages: Can benefit from tax deductions on property expenses and potentially favorable corporate tax rates. Eligible for Investment Building Allowance (IBA) when leasing as industrial buildings. Watch out S60F Income Tax Act 1967 tax restriction on expenses.

• Estate Planning: Easier transfer of ownership through shares.

• Asset Management: Suited for managing multiple properties.

Cons:

• Higher Costs: Involves setup, annual compliance, and accounting fees.

• Complex Tax Filings: Must file audited accounts and annual returns.

• Less Favorable Financing: Lower loan margins compared to individual purchases.

Tax Considerations

• Rental Income: Non-SME Investment Holding Companies face a 24% tax on rental income.

• RPGT: Individuals benefit from no RPGT from the sixth year, whereas companies face up to 30% depending on the sale timing.

• Tax Audit Risks: High-risk profiles may trigger LHDN audits.

• Industry Building Allowance: Potential tax reduction for property used as industrial buildings.

• Capital Gain Tax : Be cautious of the new tax implications associated with the transfer of shares.

Loan Considerations

• Financing: Individuals can secure up to 90% financing for residential properties, while Sdn Bhds may only get up to 60%.

Administrative Expenses

• Setup and Maintenance: Sdn Bhd entails initial and ongoing costs, whereas personal purchases incur no extra administrative expenses.

Conclusion

Your decision should be informed by a comprehensive analysis considering your financial situation, investment strategy, and goals.

While personal purchases offer simplicity and certain tax benefits, Sdn Bhds provide liability protection and estate planning advantages but come with higher costs and stricter tax treatment on rental income.

Consulting a tax professional or financial advisor is crucial for personalized advice, ensuring your choice aligns with financial goals and legal requirements.

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• 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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) Is bad debt tax deductible?

Non-trade debts that are written off as bad, or provisions made in respect of non-trade debts that are doubtful, either specific or general, are not deductible in the computation of adjusted income. Similarly, recoveries relating to non- trade debts written off earlier are not taxable.

This tax question has become increasingly common “Should taxpayers use legal action to recover any debts for tax purposes?”.

Let’s talk about the bad debts written off in a tax perspective :

What Is Bad Debts

Debts that are allowed as a deduction in ascertaining the adjusted income of a business is a trade debt that is irrecoverable either wholly or partly. Such debt is written off as bad. Trade debt is a debt that arises from the sales of goods or services and has been included in the gross income of the business.

1. Issue

What is the tax treatment for bad debts?

2. Conclusion

If reasonable steps have been taken to recover the irrecoverable debts but showing there is no

way to recover the debt, the amount of irrecoverable debts is tax deductible.

However, if there are still any other reasonable steps for recovery, such debt cannot be written off

as irrecoverable. Thus, it is not tax deductible.

3. Reasons

For a trade debt to be written off as bad and allowed as a deduction, generally two conditions

are to be fulfilled.

1. The debt shall be an amount that has been included in the gross income of a person for the

basis period for a YA before the relevant YA.

2. The debt is irrecoverable.

To support a claim for deduction of a bad debt written off for tax purposes, there should be

sufficient evidence of such steps taken, including one or more of the following:

a) issuing reminder notices;

b) debt restructuring scheme;

c) rescheduling of debt settlement;

d) negotiation or arbitration of a disputed debt; or

e) legal action (filing of a civil suit, obtaining judgement from the court, and execution of the judgement).

After reasonable steps for recovery have been taken, debt can be considered wholly irrecoverable on the occurrence of any one of the following :

a) the debtor has died without leaving any assets from which the debt can be recovered;

b) the debtor is bankrupt or under liquidation and there are no assets from which the debt can be recovered;

c) the debt is statute-barred;

d) the debtor cannot be traced despite various attempts and there are no known assets from which the debt can be recovered;

e) attempts at negotiation or arbitration of a disputed debt have failed and the anticipated cost of litigation is prohibitive; or

f) any other circumstances where there is no likelihood of cost-effective recovery.

4. Sources

Public ruling no. 4/2019 Tax treatment of wholly & partly irrecoverable debts and bad debts

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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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(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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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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(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

• 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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(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

• 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

• Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24

• Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24

• Capital Gain Tax: Unresolved Questions https://www.ktp.com.my/blog/capital-gain-tax-unresolved-questions/23feb24

• Capital Gain Tax : Gains From Disposal Of Capital Asset Arising From Outside Malaysia Received in Malaysia https://www.ktp.com.my/blog/capital-gain-tax-exemption-foreign-source-income/05march24

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

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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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

(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.

(Tax Update) Form E FAQ

Form E 常见问题呢

阅读我们过去在 Facebook 上的 E/EA 表格上的分享 :

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

https://bit.ly/3r5k2go

2) E呈报(E Filing)Form E 终极秘籍 dated on 15/03/2021

https://bit.ly/35pjcm9

3) 温馨提示 - Form E 截至日期为31/03/2021 dated on 12/03/2021

https://bit.ly/35wKebq

4) Form EA 有什么? Dated on 22/02/2021

https://bit.ly/3g1LQMg

5) 花红几时需要报进Form EA? Dated on 16/02/2021

https://bit.ly/349JSGZ

6) 公司给员工红包可不可以扣税? 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

是时候呈报𝐅𝐨𝐫𝐦 𝐄了，让我们为您复习一遍！dated on 28/01/2021 各位雇主与员工请注意！！！

https://bit.ly/3u4aSCz

9) 你知不知道 ... IRB不再打印+发E表格(Form E) 给雇主! Dated on 25/01/2021

https://bit.ly/349K4pH

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• 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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

(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

• 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

• Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24

• Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24

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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

(Tax Update) Form E 常见错误

回顾我们过去在2021年3月16日为 KTP|THK 客户举办的免费网络研讨会 -Form E 常见错误.

这是一次富有成效的活动，为参与者提供了宝贵的见解和知识. 活动由资深专家 Ms. Caroline Lim 担任主持和发言人，她的专业知识和丰富经验为整个研讨会增添了深度和价值.

Ms. Caroline Lim 以其独特的洞察力和精湛的表达能力，深入探讨了 Form E 表格常见的错误和解决方法. 她不仅详细解释了可能导致错误的原因, 还分享了有效的纠正措施和最佳实践, 帮助参与者避免在填写表格时犯下相同的错误.

通过她的专业指导, 参与者们对如何正确地填写Form E表格有了更清晰的理解, 增强了他们的专业能力和信心. 这种开放式的交流氛围使每个人都能从彼此的经验中学习, 并共同探讨解决问题的方法, 进一步丰富了整个研讨会的内容和成果.

总的来说，这次研讨会为KTP|THK客户带来了实质性的帮助和价值.

感谢 Ms. Caroline Lim 及所有参与者的付出和贡献, 期待未来我们能继续举办类似的活动，为客户提供更多优质的服务和支持.

在我们的 YouTube 上观看 15 分钟视频 https://youtu.be/84szaL-0Tok 

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

• Website www.ktp.com.my

• Instagram https://bit.ly/3Rko5kN

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

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

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

(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.

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• 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

• Website www.ktp.com.my

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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

• Website www.thks.com.my

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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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• 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

• Website www.ktp.com.my

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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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

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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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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

• Website www.thks.com.my

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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

• 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

• Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24

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• 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

• Website www.ktp.com.my

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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

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

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• Facebook http://bit.ly/3rPxz9o

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