Tax

Withholding Tax Malaysia 2022

Withholding Tax Malaysia 2022
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Top 5 Withholding Tax Questions

Introduction - What is Withholding Tax

Withholding tax is an amount withheld by the party making payment (payer) on income earned by a non-resident (payee) and paid to the Inland Revenue Board of Malaysia.

'Payer' refers to an individual/body other than individual carrying on a business in Malaysia. He is required to withhold tax on payments for services rendered/technical advice/rental or other payments made under any agreement for the use of any moveable property and paid to a -resident payee.

'Payee' refers to a non-resident individual/body other than individual in Malaysia who receives the above payments.

Withholding Tax Deduction

The Income Tax Act, 1967 provides that where a person (referred herein as ''payer'') is liable to make payment as listed below (other than income of non-resident public entertainers) to a non-resident person ( NR payee), he shall deduct withholding tax at the prescribed rate from such payment and (whether such tax has been deducted or not) pay that tax to the Director General of Inland Revenue within one month after such payment has been paid or credited to the NR payee.

Top 5 Withholding Tax Questions

1. What is subject to withholding tax?

2. How is tax withholding calculated?

3. Why is withholding tax deducted?

4. When is withholding tax due ?

5. What is the withholding tax rate?

Past blog

Read our past blog on withholding tax in Malaysia
1. 两个重要改变 - 预扣税 (withholding tax) dated 11/11/2021

https://bit.ly/3H7SmwL

2. 马来西亚预扣税 (withholding tax) 的规则概述(第3篇) dated 21/09/2020

https://bit.ly/3tXJqXg

3. 马来西亚预扣税 (withholding tax) 的规则概述(第2️⃣篇) dated 21/09/2020

https://bit.ly/3IG3FN5

4. 马来西亚预扣税 (withholding tax) 的规则概述 (第1️⃣篇) dated 15/09/2020

https://bit.ly/34bgn7R

5. Withholding Tax In Malaysia Part 2 of 2 dated 28/06/2019 (eKTP114) https://bit.ly/3AyvKmE

6. Withholding Tax In Malaysia Part 1 of 2 dated 28/06/2019 (eKTP113) https://bit.ly/32FzgiQ

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

THK (Secretarial, Account, Payroll, Advisory)

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Reinvestment Allowance (RA) on Factory

Reinvestment Allowance (RA) on Factory
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The Myths on Reinvestment Allowance (RA)

What is RA?

The allowance is given for 15 years from the first year of claim. The allowance is computed at 60% of QCE incurred and can be utilised against 70% of statutory income.

The allowance will be withdrawn if the asset for which the allowance is granted is disposed of within five years

Definition of factory

Factory means “portion of the floor areas of a building or an extension of a

the building used for the purposes of a qualifying project to place or install plant or machinery or to store any raw materials, or goods or materials manufactured prior to sale:

1/10 ruling on factory

Provided that in respect of the portion of the building or extension of the building used for the storage of raw materials, or goods or materials, or both, it shall not be more than one-tenth of the total floor areas of the building or the

extension to that building;”

Tax planning tip

The restriction on warehouse/storage issues which taxpayers may not agree.

There are others tax incentive available in Malaysia namely Pioneer Status or Investment Tax Allowance from MIDA which is more business friendly.

Past KTP blog on RA

Read our past blog posting on RA

1. RA part 1 dated 26/02/21

https://www.ktp.com.my/blog/ra-part1/26feb2021?rq=reinvestment%20allowance

2. RA part 2 dated 04/03/21

https://www.ktp.com.my/blog/special-ra-part2/04march2021?rq=reinvestment%20allowance

3. RA part 3 dated 11/03/21

https://www.ktp.com.my/blog/special-ra-part3/11march2021?rq=reinvestment%20allowance

Source


IRB Practice Note 1/2022 - EXPLANATION IN RELATION TO THE DEFINITION OF FACTORY FOR THE PURPOSE OF REINVESTMENT ALLOWANCE CLAIM UNDER SCHEDULE 7A, INCOME TAX ACT 1967

https://phl.hasil.gov.my/pdf/pdfam/PN_1_2022.pdf

PS : Why opt for RA when there are others tax incentives available in Malaysia?

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Tax Deduction on Tax and Secretarial Fee 2022

Tax Deduction on Tax and Secretarial Fee 2022
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Tax Deduction on Tax and Secretarial Fee 2022

With the gazette of The Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing Fee (Amendment Rules 2021), we are pleased to highlight the changes.

T&C apply.

Key summary of the special tax deduction of tax and secretarial fee

  1. The secretarial fee and tax filing fee are deductible in the Year of Assessment when the fees are incurred (the words “and paid” are deleted in the 2021 Rules) with effect from the Year of Assessment 2022.

  2. Secretarial and tax filing fees for YA 2020 and 2021 are only tax-deductible when the fees are incurred and paid.

Secretarial Fee

Secretarial fee charged in respect of secretarial services to comply with the statutory requirements under the Companies Act 2016 is deductible.

1. Lodgement of annual return and Financial statements.

2. Change of name

3. Add or delete business activities

4. Retainer fees

5. Issuance or transfer of shares

6. Update register of members and directors

7. Appointment of director or auditor

General secretary charges NOT deductible:

1. Incorporation fee for new company (include professional fees)

2. Fee for acquisition of shelf company (include professional fees)

3. Name search fee to SSM (include professional fees)

4. Preparation of registration documents

5. Company profile printout from SSM

6. Professional fee for preparation of ordinary/ special resolution

7. Professional fee for preparation of other resolution, confirmation letter to bank or solicitor

8. Professional fees for preparation of trust deed

9. Preparation fees for CTC documents

10. Attestation fees for commissioner for Oaths

Tax Filing Fee

A tax agent approved under the Income Tax Act 1967 (Not ACCA member, MIA member, accounting graduate, ex-tax staff..)

  1. Preparation and submission of income tax returns

  2. Estimate of tax payables

A person in respect of services provided for the preparation and submission of returns in the prescribed form for the purposes of:

  1. Section 26 of the Sales Tax Act 2018

  2. Section 26 of the Service Tax Act 2018

  3. Section 19 of the Departure Levy Act 2019;

  4. Section 19 of the Tourism Tax Act 2017

Read our past blog on the special tax deduction on secretarial and tax filing fee :

1. Tax and Secretarial Fee Tax Deduction Malaysia 2020 dated on 31.12.2020

https://www.ktp.com.my/blog/sectaxfee/31dec2020

2. Discover the latest update on tax deductibility for secretarial and tax fee from IRB guideline dated on 2.10.2020

https://www.ktp.com.my/blog/fwwses3ezyrg9gf-7r8xl-aaa5d-739bg-8lcep-c266s-s32bd-wf736-e4xsk-x3fp4-gj5z8-mwgzk-m3696-gw4b5-mmmbe-2nfz4-wxwag-s27pr-ldnya-zkdxr-2flme-xmbx6-n7fdm

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Myhijau tax incentive on power solar system in Malaysia

Myhijau tax incentive on power solar system in Malaysia
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Myhijau tax incentive on power solar system in Malaysia

☎️KTP's client tax question :

Any tax incentive on power solar system on my factory ?

秘KTP assistance to our KTP's client

The solar system can be qualified under Green Investment Tax Allowance (GITA):

Conditions:

1. To check solar system is the qualifying asset in the MyHIJAU Directory.

2. Otherwise, the Applicant shall notify the manufacturer or supplier to register under the MyHIJAU Mark.

3. Submit application to MIDA/MGTC before incurred capital costs.

4. Submission before 31.12.2023.

5. GITA of 100% against 70% of statutory income

6. & more

Reference:

MGTC Green Technology Tax Incentives Guidelines

https://bit.ly/3FexEd0

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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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Special Tax Deduction on Rental Reduction - Extension

Special Tax Deduction on Rental Reduction - Extension
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Special Tax Deduction on Rental Reduction - Extension

Latest update

The qualifying period on special tax deduction on rental reduction extends to 30 June 2022 following the issuance of

1. The Income Tax (Special Deduction for Reduction of Rental to a Small & Medium Enterprise) (Amendment) Rule 2021.

2. The Income Tax (Special Deduction for Reduction of Rental a Tenant other than a Small & Medium Enterprise) (Amendment) Rule 2021.

General information

A tax deduction is given to taxpayers which provide a reduction of rental on business premises of at least 30% of the monthly rental.

All other conditions remain unchanged.

Past Blogs

Read our past blogs on the special tax deduction on rental reduction :

1.      Special deduction on rental reduction to SME and Non SME dated on 23.09.2021

https://www.ktp.com.my/blog/special-deduction-on-rental-deduction/23sept21

2.      Special Deduction On Rental Reduction - Can taxpayer claim with any gazette order? dated on 15.01.2021

https://www.ktp.com.my/blog/special-rental-deduction/15jan2021       

3.      Can you claim special deduction on RENTAL & RENOVATION under PENJANA Stimulus Package now? Dated on 29.11.2020

https://www.ktp.com.my/blog/ns9lfg2j36acs7w-bphe6-pbtm3-k6mng-gzk5f-747ye-d46bb-dhhms-specialdeductiononrentalrenovation

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THK (Secretarial, Account, Payroll, Advisory)

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Special Tax Deduction on Renovation - Extension

Special Tax Deduction on Renovation - Extension
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Special Tax Deduction on Renovation - Extension

The qualifying period on special tax deduction on renovation extends to 31 December 2022 following the issuance of the Income Tax (Cost of Renovation and Refurbishment of Business Premise) (Amendment) Rule 2021.

Introduction

A special tax deduction on the renovation on business premises is subject to a maximum of RM300,000 incurred for the qualifying period.

All other conditions remain unchanged.

Read our past blogs on the special tax deduction on the renovation :

1. How to claim special tax deduction for renovation? dated on 02.04.2021

https://www.ktp.com.my/blog/how-to-claim-deduction-renovation/02april2021

2. FAQ (English version translated by KTP) on special deduction for the renovation cost Part II dated on 19.03.2021

https://www.ktp.com.my/blog/faq-rennovation-part-2/19march2021

3. FAQ (English version translated by KTP) on special deduction for the renovation cost Part I dated on 17.03.2021

https://www.ktp.com.my/blog/faq-rennovation-part-1/16march2021

4. Special Deduction for Renovation & Refurbishment of Business Premise dated on 29.12.2020

https://www.ktp.com.my/blog/specialdeductionrenovation/2020dec29

5. Can you claim special deduction on RENTAL & RENOVATION under PENJANA Stimulus Package now? Dated on 29.11.2020

https://www.ktp.com.my/blog/ns9lfg2j36acs7w-bphe6-pbtm3-k6mng-gzk5f-747ye-d46bb-dhhms-specialdeductiononrentalrenovation

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

THK (Secretarial, Account, Payroll, Advisory)

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Deferment Of Tax For Floods

Deferment Of Tax For Floods
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Deferment Of Tax For Floods

IRB has issued a press release on the deferment of tax payment for taxpayers affected by the recent floods on 28/12/2021.

Key summaries of the media release

Estimated tax instalment CP204 for Dec 2021

  • Deferred to 31/01/22

  • Email to anggarancukai@HASIL.GOV.MY

Payment of PCB/CP 38 for the month of Dec 2021

  • Deferred to 31 January 2022

  • Complete the form in HASIL website

Instalments on audit/investigation/collection/civil suits on Jan 2022

  • Deferred to February 2022

  • Complete the form in HASIL website

Balance of tax payable

  • Taxpayer application but subject to IRB approval

  • Complete the form in HASIL website

Taxpayers are to furnish full supporting documents. IRB will approve based on the merits of each case

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

THK (Secretarial, Account, Payroll, Advisory)

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LHDN FAQ-Deferment of Tax Instalment 2022

LHDN FAQ-Deferment of Tax Instalment 2022
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LHDN 常见问题解答-延期缴税 2022

LHDN FAQ-Deferment of Tax Instalment 2022

1. SME企业获得的标准是什么？

PMKS 的标准是：

• 在课税年度初，公司的实收资本需少于RM2,500,000.00； 和

• 在课税的年度里，总收入不能超过RM50,000,000.00.

What are the criteria the business gets PMKS status?

The criteria for PMKS are:

• Paid -up capital no more than RM2.5 million for ordinary shares at the beginning of the basis period for a year of assessment; and

• Gross income business amounting to RM50 million and below.

2. 有限合伙企业(PLT) 也有资格延期 给 PMKS 的税？需要的条件标准是什么？

有限合伙的延期付款条件需符合1967年《所得税法令》的第1的2D条件以下：

• 在课税年度初，实收资本贡献(现金或实物)需少于RM2,500,000.00；和

• 在课税的年度里，总收入不能超过RM50,000,000.00.

Is a Limited Liability Partnership entity (PLT) also eligible for deferment tax as given to PMKS? If so, what are the eligibility criteria for LLP to obtain such a deferment?

Yes. An LLP is eligible to obtain deferral of payment based on criteria determination as set out below Paragraph 2D, Table 1, ITA as follows:

• Maximum amount of capital contribution (cash or in-kind) not exceeding RM2.5

million at the beginning of the basis period; and

• Total gross income from business source not exceeding RM50 million for the basis period

3. CP204 的延期付款只限于 课税年度的2022年12月31日还是全部的课税年度呢？

是全部的课税年度，但是延期的付款期限为 2022 年 1 月1日直到 2022 年 6 月 30日。

Is the deferment of payment of CP204 only eligible for all basis periods or limited to the basis period ending 31 December 2022 only?

Deferment of payment of CP204 is eligible for all basic periods from 1 January 2022 to June 30, 2022.

4. 什么是CP204分期付款延期资格？

CP204的延期付款资格，是根据LHDNM收到最新的所得税表格 (BNCP).

What is the eligibility for deferment on CP204 installment payment?

Eligibility for deferment of payment CP204 determined based on PMKS criteria as stated in the Return Form Latest Income Tax (BNCP) received by LHDNM.

5. 符合条件的纳税人，是否需要一次缴清CP204延期付款和 CP500？

当呈交报税表格时，有的差距才需要一次缴清收税的余额.

Are taxpayers eligible deferment of payment of CP204 and CP500 need to clear the deferred payment all at once after the deferment period is over?

No. Payment must be made on time submission of ITRF for the year of assessment

relevant if it still has a balance taxes.

6. 延期付款会触发1967年《所得税法令》的第107B（3）和107C(9)条规吗？

不会.

Is there an increase under subsection 107B (3) and 107C (9) of the ITA ?

No. Increase under subsection 107B (3) and 107C (9) of the ITA will also not apply to the taxpayer who gets deferment of payment of CP204 and CP500.

7. 如果在CP204和CP500的延期期间还的延期付款，可以带在没有延期的时间吗？

不可以带下去.

Do the CP204 and CP500 which has been paid in the deferral period can be brought forward to pay of CP204 and CP500 in the post period of deferral period?

No. Such payments are not allowed for brought forward to the month after expiration deferment period or the next year of assessment.

8. 纳税人是否可以选择拒绝延期支付 CP204 和CP500 自动执行此操作并继续分期付款？ 如果有，纳税人是否需要通知 IRBM？

是的。 纳税人可以拒绝. 无需通知LHDNM。

Whether taxpayers can opt to reject the deferment of payment of CP204 and

CP500 automatically? If so, are the taxpayers need to inform the IRBM?

Yes. Taxpayers can reject deferment of installment payments immediately and there is no need to inform the parties LHDNM.

9. CP500纳税人是否需要做申请延期付款？

不需要。 符合的纳税人可以延期支付从 2022 年 1 月 1 日至 2022 年 6 月 30 日

Are taxpayers subject to CP500 payment need to make application for deferment of payment?

No. Taxpayers subject to CP500 payment is allowed deferment CP500 payment from 1 January 2022 to 30 Jun 2022.

10. IRBM 是否会通知符合资格的纳税人有关延期付款 CP204 和 CP500的通知.

LHDNM根据最新的报税表格并通过注册的电子邮件，通知符合 PMKS 标准的纳税人.如果没有收到电子邮件的纳税人，但是还是符合资格也可以应许延期.

Whether the IRBM will issue notification to the taxpayer eligible for deferment of payment on this CP204 and CP500

Notifications will only be issued to taxpayers who meet the PMKS criteria based on the information specified in up-to-date ITRF and has a registered email with LHDNM. New taxpayers meet the criteria of PMKS or do not have emails registered with the IRBM will not receive the notification.

However, no notification deferment of payment of CP500 to taxpayers because the delay is

allowed automatically.

11. 如果符合资格延期的纳税人，但是没有注册电子邮件就不会收到LHDNM的通知吗？

是的。符合条件的纳税人如果没有收到允许电邮通知，可以在以下的地址申请：

penangguhancp204@hasil.gov.my

Is the deferment of payment of CP204 possible allowed to the taxpayer qualifies for deferment but does not receive a notification for not having an email registered with the IRBM?

Yes. Taxpayers are allowed to deferment of payment of CP204 subject to applications and notifications submitted by email to the following address:

penangguhancp204@hasil.gov.my

12. 符合延期的纳税人是否可以在第 6 个月/或第9个月/或第11个月对CP204 或CP500做修改？

是的

Are taxpayers can file amendments to CP204 in the 6th month/ or the 9th month and / or the 11th month or make amendments to CP500 before 30 June 2022?

Yes

13. 纳税人是否还会收到CP500

是的

Are taxpayers subject to CP500 will still receive CP500 for the Year of Assessment 2022?

Yes

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Notify change of financial year end LHDN

Notify change of financial year end LHDN
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Notify change of financial year end LHDN

Public Ruling 6/2021

Public Ruling 6/2021(PR6/2021): Notification of change in accounting period of a company, trust body, co-operative society issued on 29th December 2021, to replaces PR8/2019 on the same subject to reflect current legislation. There are no significant changes in the new PR.

The objective of this PR is to explain the requirement to notify the IRBM on change of accounting period by entity who liable to make payment on tax estimation.

Key takeaways:

You will understand: -

1. How to notify IRBM?

2. When to notify Inland Revenue Board (IRBM)?

3. What are the consequences of failure to notify IRBM?

Summary of learnings:

1. How to notify?

The IRBM has to be notified via Form CP204B.

2. When to notify IRBM?

It depends on whether the new accounting period is less than or more than the original accounting period:

i. the new accounting period is shortened

The IRBM has to be notified no later than 30 days before the end of the new accounting period.

Illustration A:

Original accounting period: 01.01.2021 – 31.12.2021

New accounting period: 01.01.2021 – 30.06.2021 (Shortened)

Notify IRBM: 30 days before 30.06.2021

ii. the new accounting period is extended

The IRBM has to be notified no later than 30 days before the end of the original accounting period.

Illustration B

Original accounting period: 01.01.2021 – 31.12.2021

New accounting period: 01.01.2021 – 30.06.2022 (Extended)

Notify IRBM: 30 days before 31.12.2021

3. What are the consequences of failure to notify IRBM?

The company fails to furnish the Form CP204B within the prescribed period, the following penalty will be imposed by the IRBM:

i. Subsection 107C (9): 10% increase when taxpayer’s failure to make the instalment payments

ii. Subsection 107C (10): 10% increase in respect of underestimation of tax payable (30% difference from actual tax payable).

iii. Subsection 112(3): Imposing penalty on estimated assessment raised under Section 90(3); and

iv. Paragraph 102(1)(i): Initiate prosecution action in respect of failure to notify the IRBM on change of accounting period.

Source:

Public Ruling: 6/2021 Notification of change of accounting period by a company / limited liability / partnership/ trust body/ co-operative society

https://phl.hasil.gov.my/pdf/pdfam/PR_06_2021.pdf

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Deferment of CP204 Payment 2022

Deferment of CP204 Payment 2022
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Deferment of CP204 Payment 2022

The Postponement of Estimated Tax Payable (CP204) and Instalment Payment Scheme (CP500) will be given automatically to qualified taxpayers with the status of micro, small and medium enterprises (MSMEs or PMKS) from Jan 1 to June 30, 2022.

6 instalment deferment

The Inland Revenue Board (IRB) informed that qualified taxpayers are based on records or the latest Income Tax Statement Form received by the board.

CP 204 deferment

For CP204 payment, business criteria that qualify for the PMKS status are companies, cooperatives, trust bodies and limited liability partnerships with a paid-up capital of less than RM2.5 million for ordinary shares at the start of the basic period of an assessment year.

In addition, the entity’s gross business income of RM50 million or below for an assessment year.

The postponement of CP204 payment to the taxpayer who fulfils the criteria will be sent via registered email with HASiL (the IRB).

What if taxpayers don’t want the deferment?

Taxpayers want to maintain the current tax instalment scheme.

  • IRB is not required to be notified as qualified taxpayers are allowed to follow the original CP 204 or CP 500.

  • Any tax instalments paid during the deferment period will be treated as payments towards the tax instalments for those respective months and will not be allowed to be carried forward for settlement of tax instalments after the deferment period.

Tax estimation

No changes to existing eligibility to revise tax estimates in the 6th or the 9th month and the special 11th month revision (subject to existing conditions)

CP500 deferment

The IRB informed that the postponement of CP500 payment is allowed automatically to all taxpayers concerned for the 2021 assessment year payment (for the payable date of Jan 1, 2022) and the 2022 assessment year payment (for the payable dates of March 1, 2022 and May 1, 2022).

FAQ on deferment

Frequently asked questions (FAQ) on the postponement could be accessed via the link https://phl.hasil.gov.my/pdf/pdfam/SOALAN_LAZIM_PINDAAN_BAJET_2022_CP204.pdf and the public can contact the HASiL Recovery Call Centre (HRCC) at 03-8751 1000 for further information.

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Foreign source income taxable in Malaysia 2022

Foreign source income taxable in Malaysia 2022
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Foreign source income taxable in Malaysia 2022

THE government has made a surprising U-turn on Dec 30, 2021 after announcing that foreign-sourced income received in Malaysia by Malaysian tax residents will be taxed.

Current Ruling

The following foreign-sourced income received will continue to be exempted from Malaysian income tax from 1 January 2022 to 31 December 2026 (5 years)

  • Dividend income received by resident companies and limited liability partnerships will be exempted to 2026.

  • All classes of income received by resident individuals will be exempted by 2026.

Why Partnership not Exempted?

Resident partnerships which carry on business will not be exempted. But partnerships as a general rule are not taxed. It is the individual partners who are taxed.

Final Words

Let’s wait for IRB further clarification on partnership matter

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Tax Filing Deadline 2022 Malaysia

Tax Filing Deadline 2022 Malaysia
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Tax Filing Deadline 2022 Malaysia

Return Form (RF) Filing Programme For The Year 2022 is now available on the IRBM official portal as a reference for taxpayers to submit their return form this year.

Key summary of the filling schedule

  • Form E : 31/3 (manual) 30/4 (E-filing)

  • Form BE : 30/4 (manual) 15/5 (E-filing)

  • Form B : 30/6 (manual) 15/7 (E-filing)

  • Form P : 30/6 (manual) 15/7 (E-filing)

  • Form M (employee): 30/4 (manual) 15/5 (E-filing)

  • Form M (business): 30/6 (manual) 15/7 (E-filing)

Source :

IRB official statement

https://phl.hasil.gov.my/.../ProgramMemfailBN_2022_2.pdf

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Tax Rebate for New Incorporated Company Malaysia with new T&C

Tax Rebate for New Incorporated Company Malaysia with new T&C
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Tax Rebate for New Incorporated Company Malaysia with new T&C

Income Tax (Conditions for the Grant of Rebate under Subsection 6D(4) Order 2021 @ 31/12/21

This order has effect from the year of assessment 2021.

Conditions for the grant of rebate

  1. Own by the company with paid-up share capital not more than RM2.5 million.

  2. Different premises from its related company.

  3. Shall not use the plant, equipment & facility of the related company.

  4. Employee (except CEO & director) is different from related company.

  5. Business is different from related company.

  6. Business is different from sole proprietorship.

  7. Not M&A with paid up share capital more than RM2.5m or revenue RM50m.

Other pertaining key information

Related company refer as more than 50% of paid up share capital.

A rebate may be granted for YA 2021 and 2022 on company commence business operation after 1/7/2020 with basis period ended 31/12/2020.

Source :

PU Order 504_2021 Income Tax (Conditions for the grant of rebate under subsection 6D(4) order 2021 on 31.12.2021.

https://lom.agc.gov.my/.../outputp/1719408/PUA504_2021.pdf

Update on our past blog on tax rebate

a. 有限公司或有限合伙企业的回扣 (RM20,000 x 3 years) – Post on 19.11.2020

https://www.ktp.com.my/blog/ns9lfg2j36acs7w-bphe6-pbtm3-k6mng-gzk5f-taxrebateenglish-bg3t3

b. 𝐓𝐚𝐱 𝐑𝐞𝐛𝐚𝐭𝐞 (𝐑𝐌𝟐𝟎,𝟎𝟎𝟎 𝐱 𝟑 𝐲𝐞𝐚𝐫𝐬) 𝐨𝐧 𝐟𝐨𝐫 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐨𝐫 𝐥𝐢𝐦𝐢𝐭𝐞𝐝 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐩𝐚𝐫𝐭𝐧𝐞𝐫𝐬𝐡𝐢𝐩. – Post on 19.11.2020

https://www.ktp.com.my/blog/ns9lfg2j36acs7w-bphe6-pbtm3-k6mng-gzk5f-taxrebateenglish

c. The advantages of buying property via Sdn Bhd? Posting on 16 April 2021

https://www.ktp.com.my/blog/buy-property-via-sdn-bhd/16april2021

d. The disadvantages of buying property via Sdn Bhd (Copy) Part 2 Posting on 19 April 2021

https://www.ktp.com.my/blog/buy-property-via-sdn-bhd-part2/19april2021

e. Investment holding company enjoy tax rebate RM20,000 x 3 years ? Part 3 Posting on 20 April 2021

https://www.ktp.com.my/blog/buy-property-via-sdn-bhd-part3/20april2021-hgpza

f. Can unlisted investment holding company (IHC) enjoy tax rebate RM20,000 x 3 years? Part 4 Posting on 21 April 2021

https://www.ktp.com.my/blog/buy-property-via-sdn-bhd-part4/21april2021

g. 预算案 2022 Posting on 19 November 2021

https://www.ktp.com.my/blog/tax-budget-2022-sme-edition-chinese/19nov21?rq=20%2C000

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Is interest rate tax-deductible?

Is interest rate tax-deductible?
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Is interest rate tax-deductible?

Interest expense

The Malaysian Income Tax Act 1967 (“Act”) specifically singles out interest expenses incurred under some circumstances to be deductible. Typically, interest expense arising from borrowing used for general working capital or purchase of fixed assets would qualify for this prescribed deduction.

A key summary of relevant sections under the Income Tax Act on interest expenses in Malaysia

Section 33 (1) the Income Tax Act 1967

Subject to this Act, the adjusted income of a person from a source for the basis period for a year of assessment shall be an amount ascertained by deducting from the gross income of that person from that source for that period all outgoings and expenses wholly and exclusively incurred during that period by that person in the production of gross income from that source.

Section 33 (4) the Income Tax Act 1967

For the purposes of paragraph (1)(a) and subsection (2), where any sum payable for a basis period for a year of assessment is not due to be paid in that period, the sum shall when it is due to be paid be deducted in arriving at the adjusted income of a person for that period.

Section 109 the Income Tax Act 1967

Where any person (in this section referred to as the payer) is liable to pay interest or royalty derived from Malaysia to any other person not known to him to be resident in Malaysia, other than interest or royalty attributable to a business carried on by such other person in Malaysia, he shall upon paying or crediting the interest (other than interest on an approved loan or interest of the kind referred to in paragraph 33, 33A, 33B, 35 or 35A of Part I, Schedule 6) or royalty deduct therefrom tax at the rate applicable to such interest or royalty, and (whether or not that tax is so deducted) shall within one month after paying or crediting the interest or royalty render an account and pay the amount of that tax to the Director General...

Section 140C the Income Tax Act 1967

(1) This section shall apply without prejudice to section 140 or 140A and subject to any rules made under this Act.

(2) In ascertaining the adjusted income of a person from each of his sources consisting of a business for the basis period for a year of assessment, no deduction from the gross income from that source for that period shall be allowed in respect of any interest expense in connection with or on any financial assistance in a controlled transaction granted directly or indirectly to that person which is in excess of the maximum amount of interest as determined under any rules made under this Act.

Section 140A the Income Tax Act 1967

(1) This section shall apply notwithstanding section 140 and subject to any rules prescribed under this Act.

(2) Subject to subsection (3), where a person in the basis period for a year of assessment enters into a transaction with an associated person for that year for the acquisition or supply of property or services, then, for all purposes of this Act, that person shall determine and apply the arm’s length price for such acquisition or supply.

Section 33(2) the Income Tax Act 1967

Where a person, being a person to whom paragraph (1)(a) applies in relation to gross income from a business of his for the basis period for a year of assessment and in relation to borrowed money, has made (otherwise than for the purpose of producing that gross income)any loan of money or any investment in movable or immovable property, and the loan or any part thereof is outstanding at any time in that period or the investment or any part thereof is held by him at any time in that period and it appears to the Director General that the loan or any part thereof or the investment or any part thereof has been financed wholly or partly or directly or indirectly out of the borrowed

money—

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Is rental income a business income?

Is rental income a business income?
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Is rental income a business income?

Tax Case - BCSB v. DIRECTOR GENERAL OF INCOME TAX

Income is received from the letting of the properties. Taxpayer declared and taxed under section 4(a) ITA 1967 as a business income from YA 2001 to 2011.

Tax audit finding

Income received from letting the properties from YA 2011 is to be taxed under section 4(d) of the ITA as rental income pursuant to Public Ruling No. 4/2011.

Tax audit action

1. Withdrew Capital Allowance for the properties

2. Capital Allowance for the properties

3. Added back the same in the tax computation for YA 2011.

4. Raised the Notices of Additional Assessment for YA 2010 and 2011.

The Company’s opinion

1. The rental income is the business income under section 4(a) of the ITA since its commencement in 2001.

2. The Public Ruling No 4/2011 has no force of law.

IRB argument

1. The Company had failed to provide comprehensive & active maintenance to the properties.

2. The Company only provided maintenance upon request by the tenants.

3. Public Ruling 4/2011 offers guidelines for the tax treatment of the rental income.

4. The Company is disallowed to claim the administration expenses and capital allowance for this non-business income.

5. The interest expenditure for the term loan and bank overdraft claimed by the Company are also not permitted.

6. Section 4 does not determine whether an income falls under subsection (a),(b),(c), (d),(e) or (f).

7. Therefore, the DGIR is authorized under s.138A of the ITA to issue a public ruling.

Decision

The Special Commissioners of Income Tax'' (SCIT) agreed with the IRB submission and totally dismissed the Company appeal.

The assessment and penalty imposed by the IRB for YA 2010 and 2011 are confirmed and maintained.

Source:

https://phl.hasil.gov.my/pdf/pdfam/BCSB_v_KPHDN.pdf

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(u-turn update) foreign-source income budget 2022

(u-turn update) foreign-source income budget 2022
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(u-turn update) foreign-source income budget 2022

Background information from Budget 2022

Under the Budget 2022 proposal, the exemption of foreign-sourced income received by any person (other than a resident company carrying on the business of banking, insurance or sea or air transport) which is provided under Paragraph 28, Schedule 6 of the Income Tax Act 1967 is proposed to be removed for Malaysian residents.

The proposed removal is to take effect from 1 January 2022. The amendment to the law is to be made through the Finance Bill 2021 which has been passed by both houses of Parliament.

Last minutes u-turn

The Ministry of Finance has announced today that subject to conditions, which will be set out in guidelines to be issued by the Inland Revenue Board, the following foreign-sourced income received from 1 January 2022 to 31 December 2026 (5 years) will continue to be exempted from Malaysian income tax:

• Dividend income received by resident companies and limited liability partnerships.

• All classes of income received by resident individuals, except for resident individuals who carry on business through a partnership.

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2% withholding tax on commission

2% withholding tax on commission
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2% withholding tax on commission

Overview

Recent Budget 2022 proposed the Company needs to pay 2% withholding tax on commission paid to the individual agent, dealer, and distributor to IRB.

Effective date

With effective from 1/1/2022 under Section 107D

Key takeaway

You will understand:

(a) Payer who needs to withhold 2% of commission and remit to IRB

(b) Payee who is subject to withholding tax

(c) Penalty for not remitting the 2% withholding tax

Summary of learning

Payer:

• Company pays monetary commission to the individual agent, dealer and distributor

• Company remits the withholding tax to IRB within 30 days from payment date

Payee:

• Individual resident

• Received more than RM100k of commission whether in monetary or otherwise (such as accrual) from the same company in the calendar year 2021

• Exclude the commission of employees reported in Form E

• Income tax payable can be deducted by withholding tax

Penalty:

• 10% penalty if the payer fails to remit 2% to IRB within 30 days

• Commission is not allowed for tax deduction

Scenario

Company A paid RM120,000 commission to individual agent B in the calendar year 2021.

So, agent B is subject to withholding tax.

From 1/1/2022, Company A needs to withhold 2% of the commission paid to agent B and remit it to IRB within 30 days.

Agent B individual tax return:

Tax payable x

(-) Tax instalments xx

(-) Withholding tax xxx_

Balance tax payable/ refund xxxx

Sources

https://bit.ly/3HkBGSr

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CP 21 CP22 CP22A CP22B LHDN

CP 21 CP22 CP22A CP22B LHDN
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CP 21 CP22 CP22A CP22B LHDN

IRB concession to enforce?

Calling HR/Account Do it before 31 December 2021 on your newly recruited & resigned employees in your company as IRBM ….

The IRBM, under the Covid 19 pandemic, has agreed to give employers to use and submit paper forms for Forms CP21, CP22, CP22 and CP22B until 31 December 2021.

The IRBM will only enforce the method submission of Forms CP21 CP22, CP22 and CP22B (version of the form prescribed under section 152 ACP1967) from 1 January 2022.

Effective from 1 January 2022 Forms CP21, CP22, CP22 and CP22B shall be submitted according to the prescribed method.

Penalty

Delay or failure to submit Form CP21, CP22, CP22 & CP22B is an offense and if convicted, is liable to a fine of not less than RM200 or not more than RM20,000 or imprisonment not exceeding six (6) months or both under subsection 120 (1) of ITA 1967.

Effective from 1 January 2021, Form CP21, CP22, CP22A and CP22B must be submitted using the form prescribed by the IRBM.

Type of CP Form

CP 21 (Notification of employee leaving Malaysia)

Not less than 30 days before the date the employee is expected to leave Malaysia

i. Online via e-SPC ii. Handover iii. Through post

CP 22 (Notification of new employees)

Within 30 days after employment commence

i. Hand in hand ii. Through post

CP 22A (Notification of Cessation of employment for private sector)

Not less than 30 days before cessation

i. Online via e-SPC ii. Handover iii. Through post

CP 22B (Notification of Cessation of employment for public sector)

Not less than 30 days before cessation

i. Online via e-SPC ii. Handover iii. Through post

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2022 Major Tax Changes on LLP

2022 Major Tax Changes on LLP
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2022 Major Tax Changes on LLP

Does an LLP need to be audited in Malaysia?

In the past, a Limited Liability Partnership is not required to prepare an audited financial statement.

Effective from Year of Assessment 2022, under Section 77A(4) of the Income Tax Act 1967, A LLP is required to furnish tax returns based on the accounts are true and fair.

Tax estimation for LLP

10% penalty on tax payable will be imposed on LLP when there is no estimation furnished under Section 107C (10A) of the Income Tax Act 1967.

Such penalty shall be due and payable upon furnishing the tax return of that LLP.

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FAQ on Special Income Remittance Programme (PKPP)

FAQ on Special Income Remittance Programme (PKPP)
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FAQ on Special Income Remittance Programme (PKPP)

IIRBM has issued the frequently asked questions (FAQ) on the PKPP on 17 December 2021 following the media release on - Special Program (PKPP) on remittance of foreign income dated 16/11/21.

IRBM encourages taxpayers to participate in this special program that is offered to update their tax position.

Key summary of the FAQ on PKPP :

  • The implementation period of PKPP is from 1 January 2022 to 30 June 2022 (PKPP period).

  • Individuals, companies, LLP & etc which are Malaysia tax residents are eligible for PKPP.

  • Foreign income from business, employment, dividend, rental, interest, royalty or others are covered under PKPP.

  • Foreign income is “received” when the income is remitted, brought in, transferred into Malaysia physically or via banking methods.

  • A tax rate of 3% (gross) on income brought into Malaysia during the said period.

  • There is no audit review, investigation or penalty on income brought into Malaysia during the PKPP period.

  • All income brought into Malaysia will be accepted in good faith by IRBM.

  • Income must be brought into / remitted into Malaysia within the PKPP period.

  • Taxpayers must make a declaration to join the PKPP not later than 30 days after the expiry of the PKPP period.

  • Tax payments shall be made in accordance with the normal payment arrangements prescribed for the year of assessment 2022 or 2023 whichever is applicable.

  • PKPP does not involve income derived from Malaysia which is subject to tax for the year of assessment 2021 and subsequent years of assessment and is remitted into or brought back to Malaysia during the PKPP period.

  • Taxpayers can claim foreign tax credit (either foreign income tax or withholding tax). The claim must be supported with documentary proof.

  • Taxpayers can make an online declaration with Borang PKPP which can be accessed through MyTax from 1 January 2022 onwards.

  • Taxpayers are required to report the foreign income remitted in the tax return form for YA 2022 - 2023.

KTP takeaways

IRBM will review and examine the information on income of the Malaysian tax residents kept overseas that has been received through the tax information exchange agreements with other countries after 30/6/22.

Based on the review, if IRBM found that Malaysian source income kept overseas has not been reported, additional assessment can be raised together with penalties.

IRBM will issue frequently asked questions (FAQs) as well as guidelines relating to the PKPP to the public in due course.

Source

IRB FAQ on PKPP (in Bahasa)

https://phl.hasil.gov.my/pdf/pdfam/FAQ_PKPP_1.pdf

IRBM media release on PKPP

https://phl.hasil.gov.my/pdf/pdfam/KM_LHDNM_16112021_PROGRAM_KHAS_PEREMITAN_PENDAPATAN_YANG_DISIMPAN_DI_LUAR_NEGARA.pdf

Update on the tax on remittance of foreign source income into Malaysia

1. IRBM Media Release on PKPP 7/12/2021

https://www.ktp.com.my/blog/irbm-special-remittance-program-pkpp/08dec21

2. Finance Bill on foreign source income remitted into Malaysia 10/11/2021

https://www.ktp.com.my/blog/foreign-source-income-malaysia-taxable/10nov21

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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

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