Tax

DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD

DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD
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DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD

Lesson from Tax Case:

Director General of Inland Revenue (DGIR) had the authority to charge the gain from disposal based on the market value if the taxpayer selling the property at equal to the purchase price to a connected person.

Background information

Kayusar Sdn Bhd is a reputable timber company.

The Company entered into a sale and purchase agreement by selling a condominium unit at RM398,000.00 which was equal to the purchase price.

Tax Issue:

Does transfer of ownership of property between connected persons stated under Para 23 Schedule 2 RPGTA required to be arm’s length price?

IRB opinion:

a) Section 25(2) of RPGT Act 1976 empowers DGIR to disregard and/or vary the transaction as the transaction has a direct effect on the chargeability of the tax.

b) DGIR charged the gain from the disposal of the condominium to the RPGT based on the market value determined by the Jabatan Penilaian dan Perkhidmatan Harta (JPPH).

The decision by The Court of Appeal

a) The Court of Appeal consistently found the Special Commission of Income Tax (SCIT) and High Court did not commit any error of law in their decision.

b) The responsibility was on the Company to prove that the market value determined by JPPH was inaccurate. However, the Company has failed to prove it.

c) The Company failed to discharge its obligation under its own name on 15 May 2014.

Therefore, the Company appeal is terminated with cost.

Source:

https://www.hasil.gov.my/media/rofh2uyb/20220427-revenews-kayusar.pdf

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MSC Malaysia - Tax Benefits

MSC Malaysia - Tax Benefits
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MSC Malaysia - Tax Benefits

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

MSC Tax Benefits

Overall incentive

  • 100% pioneer status exemption of statutory income (Tier 1 & Tier 2)

  • 5 + 5 years (if extension approved) (Tier 1 & Tier 2)

  • 70% pioneer status exemption of statutory income (Tier 3)

  • 5 + 5 years (if extension approved) (Tier 3)

Category of Tier

  • Tier 1 = Designated premises within MSC Malaysia Cybercities or Cybercentres

  • Tier 2 = Other commercial premises within MSC Malaysia Cybercities or Cybercentres

  • Tier 3 = Not applicable

Other incentives

  • 100% Investment Tax Allowance on new investments from the date on which the first qualifying capital expenditure.

  • Eligible for R&D grants.

  • Freedom to source capital globally.

  • Freedom of ownership by exempting companies from local ownership requirements.

  • Unrestricted employment of foreign knowledge workers

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MSC Malaysia - Promoted Activities

MSC Malaysia - Promoted Activities
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MSC Malaysia - Promoted Activities

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

MSC Promoted Activities

PU(A) 389 2018 which comes into operation on 1 January 2019, the following activities are promoted activities for income tax exemption purpose under the MSC tax incentives.

  • Big data analytics

  • Artificial intelligence (AI)

  • Financial technology (FinTech)

  • Internet of things (IOT)

  • Cybersecurity

  • Data centre and cloud

  • Blockchain

  • Creative media technology

  • Sharing economy platform

  • User interface and user experience (UI/UX)

  • Integrated circuit (IC) design and software

  • 3D printing

  • Robotics

  • Autonomous

  • Systems/network architecture design and support

  • Global business services or knowledge process outsourcing

Additional new actitivities under Malaysia Digital

  • Virtual, augmented or extended reality

  • Drone technology

  • Advance telecommunication technology

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10% Sales Tax on Low Value Goods

10% Sales Tax on Low Value Goods
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Sales Tax Low Value Goods

Background

The 10% sales tax on low-value goods (LVG) will be in effect from April 1, according to the Royal Malaysian Customs Department.

Goods imported from overseas that are priced under RM500 will be subject to the tax.

RMCD Announcement

According to a statement on RMCD website, LVG sellers are responsible for acquiring ‘Registered Seller’ (RS) status with the Customs Department.

Registration will be required for both Malaysian citizens and foreigners who deal in low-value goods brought into the country via land, sea or air, and exceeds RM500,000 in total sales value within 12 months.

Key Summary :

1. RMCD Announcement on LVG (Low Value Goods) 1/2023

The Royal Malaysian Customs Department (RMCD) has issued an Announcement on LVG (Low Value Goods) 1/2023 (Announcement) dated 6 January 2023.

The Announcement states the following: -

a. The legislation related to sales tax on LVG have come into force on 1 January 2023.

b. The effective date for charging and levying sales tax on LVG will be from 1 April 2023.

c. In accordance with the legislations related to sales tax on LVG:-

i) any person whether in Malaysia or a foreigner;

ii) who sell LVG;

iii) brought into Malaysia by land, sea or air mode; and

vi) the total sales value of LVG into Malaysia exceeds RM500,000 within 12 months,

is responsible for being registered as a Registered Seller (RS).

d. Applicants can start applying to be registered from 1 January 2023.

e. More information regarding registration can be accessed via https://lvg.customs.gov.my

f. Any queries or feedback regarding Sales Tax on LVG can be emailed to mylvg@customs.gov.my

PS : Online shoppers should note that the tax will apply only to the actual value of the goods regardless of shipping fees.

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MSC Tax Incentive : Eligibility Criteria

MSC Tax Incentive : Eligibility Criteria
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MSC Malaysia

Background

Since its introduction in 1996, MSC Malaysia has catalysed and transformed Malaysia into a knowledge-based economy. The strategic initiative was created to foster a conducive ecosystem driven by high-end infrastructure development and ICT companies’ catchment within the identified corridors.

MSC Malaysia, driven by the Malaysia Digital Economy Corporation (MDEC) as

the nation’s lead digital economy agency, has contributed immensely towards the growth of the nation’s digital economy.

Since 1996 Malaysia has attracted 2,794 active MSC-status companies.

What is Multimedia Super Corridor Status?

In 1996, Malaysia launched the Multimedia Super Corridor (''MSC'') initiative, aimed to promote and boost Malaysia's digital economy by offering a range of incentives, including tax exemptions to companies who are eligible to attain MSC status.

Stay tune for more MSC in coming days.

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Amend Borang BE LHDN

Amend Borang BE LHDN
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Amend Borang BE

If you have over-declared your income or under-claimed the tax reliefs in your e-BE submission, you can amend the information via the e-Application for Amended BE.

Online amendment can be made via e-Filing under the following circumstances:

  • Over-declared of income

  • Under-claim for tax relief or tax rebates

Terms & Conditions

1. The original tax return form is submitted via e-Filing (e-BE Form).

2. e-BE Form must be submitted within the stipulated period (not a late submission)

3. e-Application for Amended BE can be submitted once only, within a year of assessment

4. Supporting documents should be uploaded using the format required in the column provided.

Source

e-Application for Amended BE can be accessed starting April 1st 2022.

The e-Application for Amended BE via https://mytax.hasil.gov.my/ > e-Filing

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Amend Borang BE LHDN

Amend Borang BE LHDN
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If you have over-declared your income or under-claimed the tax reliefs in your e-BE submission, you can amend the information via the e-Application for Amended BE.

Online amendment can be made via e-Filing under the following circumstances:

  • Over-declared of income

  • Under-claim for tax relief or tax rebates

e-Application for Amended BE can be accessed starting April 1st 2022.

The e-Application for Amended BE via https://mytax.hasil.gov.my/ > e-Filing

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(update) IRB Byhasil

(update) IRB Byhasil
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(update) IRB Byhasil

Latest development on ByHasil

Recent tax questions from clients :

1. Byrhasil is not working

2. What is E-TT?

3. What is virtual tax number in E-TT?

IBR Byrhasil is not working. However, our client can choose to make the tax payment with e-TT.

E-TT tax payment

e-TT method is to generate the Virtual Account Number (VA No.) and is unique for each transaction.

The client still needs to pay the tax with e-banking and the VA no. will be the bank account number.

Read more story on e-TT on our blog

https://ktp.com.my/.../e-telegraphic-transfer.../08apr22

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Tax Filing Program 2023

Tax Filing Program 2023
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Tax Filing Program 2023

The Inland Revenue Board (IRB) Return Form (RF) Filing Programme for 2023 is now available on HASiL official portal as a reference for taxpayers to submit their return form this year.

In a statement on Sunday (Jan 1), the IRB said taxpayers dan employers are encouraged to use the e-Filing facility for the submission of RF which will be the primary method for submission of tax returns in the future.

It also encouraged tax agents to use the Tax Agent e-Filing (TaeF) (https://taef.hasil.gov.my/) service to submit RF.

Source

It can be accessed through www.hasil.gov.my or via quick access at https://www.hasil.gov.my/media/mpofkuqz/programmemfailbn_2023.pdf.

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Nombor Bill LHDN FAQ

Nombor Bill LHDN FAQ
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Use of reference number (nombor bill) for IRB tax payment Part 2

This “Nombor Bill” is the “reference number” when making payment for LHDN online or counter.

FAQ

IRB has released FAQ for the “Nombor Bill” and “System E-biliing”

You can scroll down to the bottom through myTax link https://mytax.hasil.gov.my/ and click the ''User Manual'' to download.

Summary Information for the Nombor Bill:-

1. Start from 01.01.2023, taxpayer need to obtain the Nombor bill through ''MyTax'' (but currently unable to login)

2. All payments to LHDN need the Nombor Bill except for PCB and stamp duty

3. Transition period: Currently taxpayer still can use the Income Tax File Number as reference number until 30.06.2023.

Source

Enclosed is the Media Release for “Nombor Bill” from LHDN for your reference.

https://bit.ly/3WBDOgI

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Use of nombor bill for tax payment

Use of nombor bill for tax payment
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Use of reference number (nombor bill) for IRB tax payment

This “Nombor Bill” is the “reference number” when making payment for LHDN online or counter.

Below is the summary information for the Nombor Bill:-

1. Start from 01.01.2023, taxpayer need to obtain the Nombor bill through ''MyTax'' (but currently unable to login)

2. All payments to LHDN need the Nombor Bill except for PCB and stamp duty

3. Transition period: Currently taxpayer still can use the Income Tax File Number as reference number until 30.06.2023.

Source

Enclosed is the Media Release for “Nombor Bill” from LHDN for your reference.

https://bit.ly/3WBDOgI

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Personal Tax Relief 2022

Personal Tax Relief 2022
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Personal Tax Relief 2022

Overview

Year 2022 is approaching to its end and now is the time for you to keep and plan on your personal tax.

Do you know what personal deduction can be claimed for year 2022?

With that, here’s the full list of tax reliefs for YA 2022.

Key takeaways:

You will know the Tax Relief and consequences for non-compliance as follows:

1. What types of Personal Tax Relief for YA 2022?

2. What types of donation allowed for deduction?

3. What types of documents are required to be kept?

4. How many years to keep the documents?

5. What are the consequences of non-keeping proper records?

Summary of learning

1. What types of Personal Tax Relief for YA 2022?

- Please refer to the link https://bit.ly/3R1Y6fU to get the full listing.

2. What types of donation allowed for deduction?

  • Gift of money to the Government/ approved institutions;

  • Contribution in fighting against the COVID-19 pandemic; or

  • Gift of money / cost / value of gift of medical equipment to any healthcare facility approved by the Ministry of Health or etc

  • For full information on tax allowable donation for deduction, please refer to the link https://bit.ly/3R1Y6fU.

3. What types of documents are required to be kept?

Receipts and supporting documents for the tax deduction claimed must be kept for future reference and inspection if required from LHDNM.

4. How many years to keep documents?

Must be kept for a period of seven (7) years after the end of the year in which the return form is furnished to LHDNM.

5. What are the consequences of non-keeping proper records?

A RM300.00 – RM10,000.00 fine or imprisonment for a term not exceeding twelve months of both.

Source

a) Public Ruling No. 5/2021 – Taxation of A Resident Individual Part I - Gifts Or Contributions And Allowable Deductions

https://phl.hasil.gov.my/pdf/pdfam/PR_05_2021.pdf

b) Public Ruling No. 5/2000 – Keeping Sufficient Records for Individuals & Partnerships

https://phl.hasil.gov.my/pdf/pdfam/PR5_2000_Rev.pdf

c) Public Ruling No. 6/2000 – Keeping Sufficient Records for Persons Other Than Companies Or Individuals

https://phl.hasil.gov.my/pdf/pdfam/PR6_2000_Rev.pdf

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Common Mistakes in Reinvestment Allowance

Common Mistakes in Reinvestment Allowance
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Common Mistakes in Reinvestment Allowance

Reinvestment Allowance is a red flag to IRBM so Reinvestment Allowance is always scrutinized by our IRBM during tax audit/investigation.

What is reinvestment allowance?

Reinvestment allowance (RA), as the name suggests, is an incentive to encourage companies to reinvest and expand their businesses. It is only granted after the company has been in business for a certain period of time, and only to companies resident in Malaysia.

How good is reinvestment allowance?

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

Latest development in reinvestment allowance

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

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

Common mistakes in claiming reinvestment allowance

  • The purchase invoice is the only supporting document available. The absence of a project paper, feasibility study, business plans, budgets, directors resolutions, and other relevant documents supporting the project;

  • Mismatch between the company incurring the investments and the company using the plant and machinery;

  • Claim RA on assets incurred for the benefits of related companies/directors.

  • Claim RA on non-qualifying activities.

  • Claim RA on the transfer of assets from related parties who have previously claimed RA on the same assets.

  • The absence of payment records to support the qualified assets.

  • Supporting documents are not kept for at least 7 years.

  • Clain RA concurrently with other tax incentives (like PS, ITA & etc).

  • No written/ pictorial production flow on the qualifying project

     

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Reinvestment Allowance Excluded List

Reinvestment Allowance Excluded List
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Reinvestment Allowance Excluded List

Why my ex-tax agent can claim Reinvestment Allowance on my bakery business in a shopping mall?

A incoming new client, a bakery in shopping mall, challenge us to follow their ex-tax agent past practice on claiming reinvestment allowance recently.

We are stunned but show them PU (A) 23 2012 on the excluded activities and a tax case Lavender Confectionery and Bakery.

Excluded List

The following activities are excluded from the definition of “manufacturing” as per PU (A) 23 2012

  • Ice making

  • Herb or spice-related activities

  • Folding and shaping papers box, cardboard, plastic bag & envelop

  • Laminating

  • Quarrying, Mining, and Extraction of mineral

  • Processing of photograph, picture, slide and film

  • Baking except in a factory

  • Distillation of filtration of water

  • Treatment of waste water and solid waste

  • Mixing and blending of petroleum product

What can taxpayer do now?

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How to pass the SIRIM verification requirement of the machine for Automation Capital Allowance (ACA)

How to pass the SIRIM verification requirement of the machine for Automation Capital Allowance (ACA)
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How to pass the SIRIM verification requirement of the machine for Automation Capital Allowance (ACA)?

Overview

Under the National Budget 2015, the Automation Capital Allowance (ACA) incentive was released to encourage the quick adoption of automation in the manufacturing sector.
The application for the ACA is jointly assessed by both MIDA (non-technical assessment) and SIRIM (technical assessment). The Company that needs to claim the incentive must meet both requirements from MIDA and SIRIM.
On this topic, we will mainly focus on the requirement of the SIRIM for the verification of machines for ACA.

Key takeaways:
You will understand: -
1. What is the general eligibility of the machine?
2. What type of machine is considered automated?
3. What is the productivity enhancement need to be achieved?
4. Other contributing factors for productivity enhancement?

Summary of learnings:
1. What is the general eligibility of the machine?

(I) The machine is used directly in the process of carrying out the services.
(II) The machine is more advanced than the current technology used by the company.
(III) The machine should be used at least 1 month after installation/commissioning.
(IV) The machine is consisting at least one of the:
-Areas of automation / automated system and,
-Automation components

Note: the details of the automated system and components can be found in the next paragraph.

2. What type of machine is considered automated?

The machine shall consist of at least one of the following areas of automation / automated system:

(I) Material handling system
(II) Warehousing
(III) Processing equipment
(IV) Testing equipment
(V) Measurement system
(VI) Packaging equipment
(VII) Others (to specify)

The machine shall also consist of at least one of the following Automation components:

(I) Motion Controllers
(II) Pneumatic / Hydraulics
(III) Programmable Logic Controller (PLC)/Programmable Automation Controller (PAC)
(IV) Computer/Industrial Software including CAD/CAM/CAE/PLM
(V) Computer Numerical Control (CNC), High Speed, Multi Axes
(VI) Robot and Robotic System
(VII) Industrial Networking & Communication
(VIII) Visual system
(IX) Others (to specify)

3. What is the productivity enhancement need to be achieved?

(I) Reduction in the number of manpower involved in the operation
(II) Reduction in the number of man-hours
(III) Increase in efficiency by reducing human errors or reducing the time taken to complete tasks;
(IV) Reduction in accident/complaint rate

4. Other contributing factors for productivity enhancement?

(I) Possibility of upgrading in future
(II) Possibility of integrating into other processes
(III) Worker Safety & Environment Improvement
(IV) Energy Efficiency

Source:
SIRIM verification of machine/equipment for ACA

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What are the criteria for an individual to become a tax resident in Malaysia?

What are the criteria for an individual to become a tax resident in Malaysia?
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What are the criteria for an individual to become a tax resident in Malaysia?

There are 4 criteria for the basis year of assessment to determine an individual’s residency status in Malaysia.

If he falls into any of these criteria, he will be a resident, if not, he will be a non-resident.

Let's start to understand the following 4 criteria:

In Malaysia for ≥ 182 days in a basis year

The number of days does not have to be consecutive.

In Malaysia for ≤ 182 days in basis year

A period of less than 182 days can be linked to another period of 182 consecutive days or more during which he was in Malaysia before or after the current basic year.

In calculating the period, temporary absence is allowed as following: -

1. Attending conference or seminar abroad

2. Ill-heath involving the individual or immediate family member

3. Social visit not more than 14 days

In Malaysia for ≥ 90 days

The number of days does not have to be consecutive. 3 out of 4 years of assessment before/after the current year assessment

  1. He is a resident; OR

  2. He is in Malaysia for 90 days or more

Not in Malaysia or in Malaysia for ≤ 90 days

  1. The individual is resident for 3 consecutive year assessment prior to the current basic year assessment; AND

  2. The individual is a resident for the next year of assessment.

Source:

Public Ruling No 11/2017 - Residence Status of Individuals

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Avoiding Pitfalls When Claiming Tax Incentives

Avoiding Pitfalls When Claiming Tax Incentives
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Avoiding Pitfalls When Claiming Tax Incentives

How one seminar amazed me!

On 30 November 2022, I attend Ms Yong Mei Sim webinar ''Avoiding Pitfalls When Claiming Tax Incentives'' conducted by the Chartered Tax Institute of Malaysia.

When it comes to tax incentives, I thought to myself ''What else can tax incentives changes since I have been doing for more than 20 years? Now what?''

Nevertheless, I am truly surprised to realise there are some insights or changes from MIDA or IRBM relating to tax incentives policy.

The key takeaways from the webinar can be summarised as follow :

1. Intellectual property (IP) income is excluded from tax incentives due to ''compliance'' with the OEDC ruling on preferential tax treatment!

2. The use of tax incentives to attract foreign investment is considered ''harmful tax competition'' under the current global tax environment-BEPS (not K-Pop boy band).

3. Taxpayers are to comply MIDA annual declaration as duly certified by the external auditor on pre-determined operating/capital expenditure and employment, local value add %, preparation of transfer pricing documentation & etc.

4. IRBM shall ''tarik balik''/revoke tax incentive shall those conditions from MIDA are not met.

5. Discuss with MIDA the relaxation of terms and conditions with relevant facts and documentary justification ASAP.

6. With effect from 7 July 2019, a Malaysian company with corporate shareholders is no longer eligible for the Allowance of Increased Export.

7. Trading of agriculture products is not eligible for the Allowance of Increased Export.

8. ''Contract R&D company'' and ''R&D company'' must be approved by MITI under the new Section 4H of the Promotion of Investment Act 1986.

9. Full documentation from the project paper, feasibility study, board resolution, and other documents (engineering report, cost-saving report, financing report & etc) to support the Reinvestment Allowance claim.

Maybe it is a good time to conduct a risk assessment review before IRBM knock on your door for a tax audit.

In short, don't play play with tax incentives.

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Tax Incentive for Employers Who Provide Child Care Centre

Tax Incentive for Employers Who Provide Child Care Centre
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Tax Incentive for Employers Who Provide Child Care Centre

Definition of childcare centre

A centre to take care of:

• At least 4 or more children;

• Aged below 4 years old;

• From more than one household

Qualifying childcare centre

• Registered with the Department of Social Welfare (DSW);

• Subjected to Child Care Centre Act 1984 (Act 308);

• Governed by the Ministry of Women, Family and Community Development

Existing Tax Treatment

(i) Provision and maintenance of childcare centre

Expenses incurred for the provision and maintenance of a child care centre are allowed for tax deduction. [Paragraph 34(6)(i) of the ITA 1967]

Examples:

  •  Rental

• Salaries

• Food and beverage

• Cleaning fee

(ii) Child care allowances

Employer – Provider

• The child care allowance paid to employees who have children is allowable for tax deduction under Section 33(1) of the ITA 1967.

Employee – Receiver

• Employee has to declare the allowances received as part of gross income, which subjects to tax. [Paragraph 13(1)(a) of the ITA 1967]

• Enjoy tax exemption up to RM2,400.

Additional Tax Incentives

A 100% further deduction will be given in respect of:

• The provision and maintenance of child care centre; and

• Child care allowances paid to employees

Industrial Building Allowance (IBA)

An employer is entitled to claim a 10% IBA of the capital expenditure of the building, where it is:

• Built or purchased by the employer;

• Served as a child care centre for his employees' children; and

• In operation

Qualifying Capital Expenditure (QCE)

Only cost attributable to the building is entitled, which include:

• Purchase price

• Legal fee

• Stamp duty

• Other incidental expenditure

Sources:

Public Ruling No. 5/2016: Tax Incentives For Employers Who Provide Child Care Centres

https://phl.hasil.gov.my/pdf/pdfam/PR_5_2016.pdf

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Minimum Transfer Pricing Documentation LHDN

Minimum Transfer Pricing Documentation LHDN
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Minimum Transfer Pricing Documentation LHDN

On 11.11.2022 LHDN has published a new document for transfer pricing which is Minimum Transfer Pricing Documentation.

The Minimum Transfer Pricing Documentation is to replace the Limited Transfer Pricing Documentation.

Key takeaways:

You will understand the:

1. Requirement to use this documentation.

2. Differences between Minimum Transfer Pricing Documentation and Limited Transfer Pricing Documentation.

Requirement to use the documentation

According to Section 3.1 of Transfer Pricing Guidelines 2012, there are two criteria to be determined:

i. gross income and total related party transactions must be greater than RM25 million and RM15 million respectively; or

ii. financial assistance must be greater than RM50 million.

If tax payer fulfils one of the criteria as above, Full Transfer Pricing Documentation should require to be prepared.

On the other hand, Minimum Transfer Pricing Documentation is required for those falls outside the transfer pricing guidelines 2012 section 3.1.

Differences between Minimum Transfer Pricing Documentation and Limited Transfer Pricing Documentation.

The major difference between these two documentations is comparability study. In previous Limited Transfer Pricing Documentation, we do not perform any comparable working and causing there is a limitation to justify the reasonableness of pricing policy.

Minimum Transfer Pricing Documentation has implemented a new section to resolve this limitation.

New Requirements

Under section D of Minimum Transfer Pricing Documentation, there are 6 columns need to fill in to justify the transfer price is reasonable, which are:

• What is the element of costs

• What is the anticipated profit mark-up

• Who determine the pricing policy

• How often is the policy being revised

• Sample of documents to support the pricing policy

• Comparability study Source Minimum Transfer Pricing Documentation

Source:

https://www.hasil.gov.my/media/gesbb4yx/template-minimum-tp-doc-1_2022.pdf

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Service Tax on Customs Agent Services

Service Tax on Customs Agent Services
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Service Tax on Customs Agent Services

On 09 August 2022, RMCD issued a Guide on Customs Agent Services. Generally, this guide is to let us know about the service tax treatment on customs agent services.

Key takeaways:

You will understand 5W:

1. Who is Customs Agent?

2. What is the threshold for registration under Service Tax?

3. What types of services are subject to service tax?

4. What types of services are not subject to service tax?

5. What are the responsibilities of the registrant?

Who is “Customs Agent”?

Who acts on behalf of importers and exporters to carry out the business to relieve goods from customs control.

What is the threshold for registration under Service Tax?

  1. ·There is no threshold for Customs Agent.

  2. All customs agent must apply for service tax registration within 14 days from the date of approval as a customs agent.

What types of services are subject to service tax?

1. Preparing or amending customs declaration

2. Presenting goods for customs declaration

3. Documentation

4. Handling / forwarding

5. Examination / attendance to examination

6. Sealing

7. Electronic Data Interchange (EDI)

8. Overtime (relating to clearance of goods only)

What types of services are not subject to service tax?

1. Haulage services

2. Services provided by shipping agents and freight forwarders

What are the responsibilities of the registrant?

1. Charge service tax on taxable services

2. Issue an invoice and receipt to customers

3. Submit SST-02 Form and pay service tax before the deadline

4. Keep proper record

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