Tax

Tax Update on Withholding Tax

Tax Update on Withholding Tax
View Full Size

Tax Update on Withholding Tax

1. Withholding Tax on Payment Made to Agents, Dealers, Distributor - Credit Note

On October 21, 2022, the Frequently Asked Questions (FAQ) on 2% withholding tax on payment made to agents, dealers, or distributors under Section 107D of the Income Tax Act 1967 was updated by the Inland Revenue Board.

Previously FAQ stated payment by way of credit note is not subject to withholding tax.

Under the latest item A6 of FAQ, IRB clarify that the determining factor on credit note which is subject to withholding tax depends on the substance of payment (not the label on the document itself).

If it is proven that the credit note is a commission payment in the form of cash arising from sales, transactions and schemes carried out by agents, dealers and distributors, then the provision of S107D of the Income Tax Act 1967 shall be applied.

Refer to our past blog posting on withholding tax payments to agents.

https://www.ktp.com.my/.../2percent-withholding.../17mar22

https://www.ktp.com.my/.../2percent-withholding.../21apr22

https://www.ktp.com.my/.../2percent-withholding.../12july22

2. Payment of small value withholding tax– new form

On 27 October 2022, IRB has issued a media release on the new form for payment of withholding tax on small values.

Form CP37S on royalties and interest income

Form CP37DS on a special class of income under Section 4A of the ITA 1967

Refer to our past blog posting on small-value withholding tax

https://www.ktp.com.my/.../small-value.../19aug22

https://www.ktp.com.my/.../small-value.../07oct22

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Stoppage Order Malaysia

Stoppage Order Malaysia
View Full Size

Stoppage Order Malaysia

Are you plan to travel overseas for a holiday or business trip abroad? If yes, have you checked the Immigration website for your travel restriction? Why?

The LHDNM has the authority to issue the stoppage order certificate to a Commissioner of Police or a Director of Immigration to prevent you from leaving Malaysia if you fail to pay all taxes to the LHDNM.

Key Takeaways

You will understand:

1.      What is a Stoppage order?

2.      What is the tax liability?

3.      Who is responsible for the tax liability?

4.      What conditions allow taxpayers to leave without full payment of tax liability excluding foreign nationals?

5.      What are the consequences if fail to comply?

6.      What is the responsibility of the taxpayer?

7.      Where to check the travel restriction status?

 

Summary of Learning

1.      What is a Stoppage order?

A stoppage order is an order issued by Director General (DG) to prevent a taxpayer from leaving Malaysia if he fails to pay all the tax liabilities.

2.      What is the tax liability?

(i)               All tax payable is due and payable;

(ii)             All sums payable due by a taxpayer in relation to an increase in tax charged for

  • Late payment of tax;

  • Late payment of tax installment;

  • Late payment of estimate tax installment; or

  • Notice of Installment payment (CP205) issued by LHDNM when failing to submit the prescribed form.

(iii)             All debts payable by taxpayer on withholding tax included：-

  • Contract payment;

  • Interest and royalties;

  • Special classes of income; or

  • Miscellaneous income.

3.      Who is responsible for the tax liability?

  • Individual or a Company director.

  • The meaning of Company director:

o   The person who is involved in the management of the company’s business; and

o   Holds at least 20% of company’s ordinary shares; or

o   Directly or indirectly through other companies holds at least 20% of company’s ordinary share

4.      What conditions allow taxpayers to leave without full payment of tax liability excluding foreign nationals?

  • Make at least 50% of the payment (or a rate as determined by LHDNM) of the total claim in the certificate issued.

  • Proof of documentary such as payment made in cash or bank draft to enable a letter for a temporary release certificate.

  • Arrange the schedule of installment payments on the balance of tax due.

A taxpayer who fails to comply with the schedule of installment payments is not eligible to be considered for a subsequent application for a temporary release letter.

5.      What are the consequences if fail to comply?

Taxpayers who voluntarily or attempt to leave Malaysia without settlement of debt, he/she will be liable to: -

  • a fine of not less than RM200.00 and not more than RM20,000;

  • imprisonment for a period not exceeding six (6) months; or

  • both.

A police officer or an immigration officer may arrest, without a warrant, any person whom he reasonably suspects of committing or is about to commit an offence by not complying with a certificate issued under Section 104 of the Income Tax Act.

6.      What is the responsibility of the taxpayer?

  • To check and settle the tax and debt before leaving.

  • To inform the change of the correspondence address to the IRBM branch who handles the income tax file (if any).

7.      Where to check the travel restriction status?

  • The taxpayer can check the travel restriction status on the official website of the Immigration Department of Malaysia (IDM) at www.imi.gov.my or contact the IRBM call center.

Sources:

Public Ruling 4/2022 - Recovery From Persons Leaving Malaysia

https://www.hasil.gov.my/media/mmcpirll/public-ruling-no-4_2022-recovery-from-persons-leaving-malaysia.pdf

This article is jointly authored by Ms. Ong Xin Ying, Ms. Liu Shi Lee and Ms. Teo Mei Qi with guidance and mentoring from our Assistant Manager Ms. Chong Chee Ling and Ms. Yew Jia Chong from KTP Group of Companies.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Tax Deduction on Software

Tax Deduction on Software
View Full Size

Is the Purchase of Software Tax Deductible?

The tax treatment on purchasing / licensing software has been subject to many discussions due to uncertainty from the many legislative changes over the years.

Find out Thannees Tax Consulting Services Sdn Bhd managing director Thanneermalai Somasundaram's view on the matter in the blog of Thannees Tax Consulting Services Sdn Bhd here -> https://lnkd.in/gynAxDXN

PS : This article was contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

tax treatment on advance to director

tax treatment on advance to director
View Full Size

Loan or Advance to Director by A Company - Tax Impact

On 30 November 2015, IRB issued Public Ruling (PR) No.8/2015 - Loan or advances to director by a company. Generally, this PR has elaborated the tax treatment of:

1.      Loan or advances provided to the director by company without interest or with interest rate lower than arm’s length rate; and

2.      Company is deemed to receive the interest income from the loan or advances.

Key takeaways:

You will understand: -

1.     What is the tax treatment?

2.     What are the sources of funding?

3.     Treatment for other circumstances.

4.     How to determine the deemed interest income?

5.     What is the circumstance if a dormant company makes loan or advances to directors?

Summary of learnings:

1.    What is the tax treatment?

If the loan or advances to directors was wholly raised from internal funds, then an interest income will deem to be received by the company, and subject to tax under [Section 140B of Income Tax Act (ITA)].

However, no tax will be charged on the loan or advances which are raised from external funds.

2.      What are the sources of funding?

3 categories of funds:

(i) Internal

Mainly arise from the injection of capital, retained earnings, and reserves.

(ii) External

Loan from bank or third parties.

(iii) Mixed (Internal + External)

Only interest income generated from internal funds will be subject to tax. For external funds, all the supporting and proof must be kept properly.

Interest restriction [Subsection 33(2) of ITA] may come in if part of the loan is from external funds used for investment purposes.

3.      Treatment for other circumstances

(i) If the loan or advances from external funds to directors who are also employees of a company, a perquisite (interest expense incurred from the loan facility) needs to be reported as part of the employee’s gross income under [paragraph 13(1)(a) of

the ITA].

(ii) For a partnership, if the director is also a partner of the company, the loan or advances provided will also be subject to Section 140B of ITA, considering partnership is not a separate legal entity from the business owner. 

4.      How to determine the deemed interest income?

(i) Interest-free loan

Interest will be computed based on prescribed formula in subsection 140B (2) of ITA, using Average Lending Rate (ALR) published by Bank Negara Malaysia (BNM).

(ii) With interest

Interest will be determined by comparing the interest rate charged by the company and the rate computed from the prescribed formula.

Whichever lower will be disregarded, while the higher amount will be reported as interest income of the company.

5.      What is the circumstance if a dormant company makes loan or advances to directors?

The company will be treated as an active company, whose business will be deemed to commence operations under subsection 21A (8) of the ITA. The loan or advances granted will still be subject to Section 140B of ITA.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Real Property Gain Tax Penalty

Real Property Gain Tax Penalty
View Full Size

Real Property Gain Tax Penalty

The consequences of non-compliance with the RPGT Act 1976 are costly. Are you aware of that?

3 Types of Penalties

There are 3 types of penalties and increments for 3 different scenarios.

1. Subsection 30(2) (RPGT ACT 1976)

• Action: Disposer makes incorrect return or incorrect information on disposal of the asset.

• Consequence: Penalty amount equal to the amount of tax under-declared.

2. Subsection 29(3) (RPGT ACT 1976)

• Action: Disposer/acquirer fails to submit CKHT 1A or CKHT 1B within 60 days from the date of disposal of property or out of the extension period. OR

• Action: Disposer fails to declare the disposal of property

• Consequence: Penalty will be charged up to 3 times the tax charged (Subsection 29(3a))

3. Subsection 14(5) (RPGT ACT 1976)

• Action: The acquirer remitted the payment wrongly because the disposer made an incorrect return.

• Consequence: An additional surcharge of 10% on the amount of tax charged will be imposed on the disposer.

How to avoid such penalties?

1. Disposers are required to:

• Submit the form CKHT 1A or CKHT 1B within 60 days from the date of disposal.

• Submit tax exemption form and supporting documents (eg: water bills, rental agreement, etc).

• Submit form CKHT 3 together with CKHT 1A or CKHT 1B.

• Submit a copy version of CKHT 3 to acquirer.

2. Acquirers are required to:

• Submit form CKHT 2A within 60 days from the date of acquisition.

• Submit supporting documents such as sale and purchase agreement and CKHT 502 payment receipt/payment slip/completed form CKHT 3.

• Receive a copy of completed form CKHT 3 from disposer.

Reference:

Real Property Gains Tax Act 1976

https://www.lowpartners.com/real-property-gains-tax-act-1976/

Imposition Of Penalties And Increases Of Tax

https://www.hasil.gov.my/en/rpgt/imposition-of-penalties-and-increases-of-tax/

Responsibility Of Disposer And Acquirer

https://www.hasil.gov.my/en/rpgt/responsibility-of-disposer-and-acquirer/

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Can a Pioneer Status (PS) taxpayer claim Reinvestment Allowance (RA) on non-promoted product concurr

Can a Pioneer Status (PS) taxpayer claim Reinvestment Allowance (RA) on non-promoted product concurr
View Full Size

Can a Pioneer Status (PS) taxpayer claim Reinvestment Allowance (RA) on non-promoted product concurrently?

Why are taxpayers unable to enjoy pioneer status and reinvestment allowance at the same time? What should we take note of?

Lesson from Tax Case : Syarikat Kion Hoong Cooking Oil Mills Sdn Bhd vs Ketua Pengarah Hasil Dalam Negeri

The Company has been granted a pioneer certificate for promoted activity/product. Besides that, the tax relief period has not ended and ceased. Therefore, the Company is not eligible to claim reinvestment allowance (RA).

Background information

The Company is involved in the manufacturing of promoted products (ie, margarine and shortening) and non-promoted products (eg, cooking oil, coconut oil, refined oil, soap, animal and poultry feed).

The Company is exempted 85% of its statutory income in respect of the promoted products in which the Company has been granted pioneer status.

Besides, the Company also claims RA on capital expenditure incurred on plant and machinery used in the manufacture of these non-promoted products.

Tax Issue

Whether incentives of pioneer status and reinvestment allowance are mutually exclusive?

The Company’s opinion

The pioneer certificate granted to the Company was in relation to the promoted product/activity, it is not attached to the Company's status as a pioneer company.

 According to the paragraph of interpretation of exclusion from reinvestment allowance, Schedule 7A para 7(a)(ii), it did not expressly exclude a company from claiming RA.

 IRB argument

Pioneer certificate does not refer to the status of the products manufactured, it is referring to the status of the Company.

Under the interpretation of exclusion from reinvestment allowance, taking the position that pioneer companies were excluded from qualifying for RA during the pioneer period.

 The decision by The Court (Court of Appeal)

The incentives of reinvestment allowance and pioneer relief are not mutually exclusive. The RA granted is to promote productivity through the use of new and efficient plants and machinery.

However, if the Company was granted pioneer status, regardless of whether it also had non-promoted activities/products, it was not entitled to claim RA. The exclusion from claiming RA does not apply to a company with a pioneer certificate that manufactures non-promoted goods.

Source: https://phl.hasil.gov.my/pdf/pdfam/Syarikat_Kion_Hoong_Cooking_Oil_Mills_Sdn_Bhd.pdf

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Buy car under company or personal

Buy car under company or personal
View Full Size

Tax Opinion of Chai Shi Qing (Audit Semi-Senior of KTP)

It is advised to purchase the passenger car (say Proton X70) under personal name after taking the following considerations.

Contentions: -

(i) Tax perspective:

• Allowable expenses

According to Section 33(1) of Income Tax Act 1967, the expenses which are incurred for business purpose is generally allowable for tax deduction.

Therefore , the related expenses of motor vehicle( such as petrol, road tax and insurance, repair and maintenance) incurred for business purpose is deductible although it is registered under personal name.

• Benefit-in-kind

On the other hand, Section 39 (1)(a) of Income Tax Act 1967 provided that, the expenses incurred for personal use (private element) is not allowed for tax deduction.

However, Public Ruling No.11/2019 clarified that, the private expenses is deductible provided the expenses are treated as benefit-in-kind and reported as gross income of the person that is using the motor vehicle.

• Capital allowance claims

Public Ruling No. 5/2014 stated that the eligibility for capital allowance claims is not restricted to legal owner only, if the entity/person can be proven as the beneficial owner of the asset.

To qualify as a beneficial owner, the following conditions must be fulfilled:

(a) Incurred the qualifying expenditure (QE)

(b) Made the payment for the motor vehicle (Eg: Hire purchases installment, maintenance fee, and etc)

(c) The asset is utilized for his/her business

(ii) Commercial view:

• Lower cost

Based on practical experience, the purchase cost, hire purchase interest rate, insurance and road tax charges will be lower if the motor vehicle registered under personal name.

Sources: -

  • Public Ruling No. 5/2014 Ownership and use of asset for the purpose of claiming capital allowances

  • Section 33(1) of Income Tax Act 1967

  • Section 39 (1)(a) of Income Tax Act 1967

  • Public Ruling No. 11/2019 Benefits in Kind

Authored by Chai Shi Qing (Audit Semi-Senior of KTP).

Source: Chai Shi Qing LinkedIn post

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Should You Buy A Property Under My Personal Name or Sdn Bhd?

Should You Buy A Property Under My Personal Name or Sdn Bhd?
View Full Size

Should You Buy A Property Under My Personal Name or Sdn Bhd?

Buying property under a personal name or Sdn Bhd has its own advantages or disadvantages, depending on the management decision.

There are a few factors to be considered before a decision is made: -

1) Tax

a) Rental Income

Effective from 18/05/2022, LHDN has made clarification on the Investment Holding Company (IHC). IHC is not considered as Small and Medium Enterprise (SME) due to there is not gross income generated, even though the company received rental income, interest income, and etc.

This means the company is a non-SME and the rental income will be directly taxed at 24%, not eligible to enjoy the preferential tax rate under paragraph 2A, Schedule 1 of ITA 1967.

b) Real Property Gain Tax (RPGT)

There is no RPGT imposed from the sixth year onwards for individuals who are Malaysian citizens and permanent residents, effective from 01 January 2022.

On the other hand, when the company disposes of the property, the RPGT will be taxed at between 10% to 30%, depending on the period for the disposal of the chargeable asset.

c) Tax Audit

A high-risk-profile individual or company will be selected by LHDN for a tax audit. This is due to LHDN's wondering where the deposit came from when you paid the deposit for the property you purchased. Has it reported tax?

d) Investment Building Allowance (IBA)

The building owner is eligible to claim the IBA under paragraph 63(c) Schedule 3 of the ITA 1967 when the property purchased and used it as industrial building by the tenant.

This means the owner of the building is eligible to claim the IBA, thereby reducing the tax payable.

2) Loan

The loan can be obtained by the financial institution up to 90% for the first and second residential properties purchased under the personal name. However, if the company purchases the residential properties under Sdn Bhd, the loan obtained will only be 60% for the company.

Therefore, there is an advantage for the person who buys the residential property under their own name.

Furthermore, you must obtain a 10% to 20% upfront deposit to the financial institution, regardless of whether it is under your personal name or under Sdn Bhd.

3) Administrative Expenses

Basically, the administration costs incurred for IHC and a Sdn Bhd are almost the same. The cost of setting up a Sdn Bhd runs into the thousands of dollars.

Otherwise, there is no extra cost incurred for buying property under your personal name.

In conclusion, there is no absolute answer. You should think twice before you make the decision by considering the factors above mentioned. Before you invest in property under your personal name or Sdn Bhd, you should be aware of your own motivation for purchasing the property, period of ownership, frequency of transaction, and etc.

Authored by Teo Mei Qi, a semi-senior associate with the Firm KTP & Company PLT

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Budget 2023 Tax Seminar Postponed

Budget 2023 Tax Seminar Postponed
View Full Size
Due to the dissolution of the Parliament, all matters from webinar, internal training, newsletter & social media relating to Budget 2023 is postponed until further notice.

We will inform you in due course most likely when a new government is formed. Stay tuned.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

Service Tax Refund for Companies operating in the Joint Venture Development

Service Tax Refund for Companies operating in the Joint Venture Development
View Full Size

Service Tax Refund for Companies operating in the Joint Venture Development

Who is Eligible?

  • Joint Venture Development (JDA) operate companies who have been paid on all taxable services.  

When is the effective date?

  • 15ᵗʰ AUGUST 2022.  

What are the 5 Requirements?? 

  • Services are fully used for official purposes and it is the main activities of the JDA operation. 

  • JDA companies need to furnish a declaration for Malaysia-Thailand and joint Authority (MTJA) to proof the service is for official purpose. 

  • JDA had paid for the acquisition. 

  • Comply all the conditions and procedures. 

  • Application of refund must make every three months (quarterly basis). 

Refund policy

Refund requests should be submitted no later than the last day of the month following the end of 3 months period, for example:  

  • Service Acquisition Period : 15 August 2022 – 30 September 2022 (Last date for service tax refund claim application 31 October 2022)

  • Service Acquisition Period : 1 October 2022 – 31 December 2022 (Last date for service tax refund claim application 31 January 2023)

Important points

  • After the period for submission of claims any refund will not be processed. 

  • Service tax exemption is not entitled for importation of taxable service including digital services tax.  

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Thk

#KTP

 

Small Value Withholding Tax Payment

Small Value Withholding Tax Payment
View Full Size

Small Value Withholding Tax Payment (update)

IRB released a media release on 27/09/22 in respect of deferment of small value WHT.

An individual/body resident in Malaysia or doing business in Malaysia that is required to pay WHT under S.109 or S.109B of the Income Tax Act 1967 that do not exceed RM500 per transaction for transactions that recur may submit the WHT form and pay the WHT as follows:

S.109 or S.109B of the Income Tax Act 1967

  • S.109 = Royalty and Interest earned by non-resident

  • S.109B = Special class of income under Section 4A of the ITA including service and rental of moveable property

Others Operational Issue

The above will take effect from 1st August 2022.

The WHT form (CP37 & CP37A) and WHT payment of small value for transactions that recur can be submitted once on or before 31 December for payment transactions made to non-residents between 1 June to 30 November in the current year.

Payers are advised to keep a list of recipients in respect of the small value WHT.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

Sales Tax (Exemption from Registration) (Amendment) Order 2022

Sales Tax (Exemption from Registration) (Amendment) Order 2022
View Full Size

Sales Tax (Exemption from Registration) (Amendment) Order 2022

The Royal Malaysian Customs Department has issued the Sales Tax (Exemption From Registration) (Amendment) Order 2022 on 1st September 2022 to replace the 2018 Order. 

Don’t worry, let us summarize it for you. 

Amendment # 1: Definition on Paragraph 2 

2018 Order

  • Whose only have one of the manufacturing operations listed in Schedule A are exempted from registration. 

2022 Order 

  • Whose only have one of the manufacturing operations out of several operations in a manufacturing chain to produce a good and that operation is specified in Schedule A is exempt from registration.; and

  • The person who operates more than one manufacturing operation in Schedule A and manufacturing operations that do not relate in producing a goods is exempt from registration.  

Amendment # 2: Schedule A

Removed Order

  • The incorporation of goods into buildings. 

  • The installation of air conditioners in motor vehicles. 

  • The manufacture of jewellery and goldsmiths wares. 

  • The extraction of gold from mineral ores. 

  • The recovery of gold from jewellery and / or the refining of gold. 

New Order  

  • A cleaning operation by removing dirt or dust without any further operation. 

Amendment Order

  • The developing, printing of photograph, production of film slides or any forms or combination of any of those activities.  

  • Engraving, printing, drawing, writing, embossing or any other similar activities on taxable goods with a description relating to the sports record or other circumstances under which the taxable goods was donated or awarded.  

  • The preparation of foods or drinks by —  

(i) any person who provide services under Group B, First Schedule, Service Tax Regulations 2018 or

(ii) central kitchen for distribution to its premises which provide services under Group B, First Schedule, Service Tax Regulations 2018 

  • Printing, sewing or pasting of logo, knitting, crocheting or embroidering on ready made garments.  

Sources:  

  1. Sales Tax (Exemption from Registration) (Amendment) 2022 [PUA277]

  2. Sales Tax (Exemption From Registration) Order 2018

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Ktp #Thks

RMCD Special Voluntary Disclosure & Amnesty Program (VA) - Update

RMCD Special Voluntary Disclosure & Amnesty Program (VA) - Update
View Full Size

RMCD Special Voluntary Disclosure & Amnesty Program (VA) - Update

Background of VA

Under the proposed indirect tax amnesty program, taxpayers will be encouraged to voluntarily disclose underpaid or unpaid indirect taxes arising from errors or mistakes made in indirect tax filings or submissions, in exchange for reduced penalties.

Taxpayers who have failed to register and comply with indirect tax filing requirements are also expected to be eligible for the VA.

Key summary of VA

Special Voluntary Disclosure and Amnesty Program (VA) will be implemented with effect from 1 January 2022.

The VA program will be introduced in two (2) phases with penalty remission (with full payment during the said period) :

  • 1 January 2022 to 30 June 2022 : 100% penalty remission

  • 1 July 2022 to 31 December 2022 : 50% penalty remission

What is VA?

The VA program will involve two (2) distinct programs :

1. Voluntary disclosure program : Taxpayers can voluntarily disclose any unpaid or under-reported indirect tax/duty not known or discovered by RMCD under this program.

2. Amnesty program – Taxpayers with any outstanding Bill of Demand (“BOD”) or who have been audited by the RMCD Compliance Division and received audit findings on non-compliance areas can enjoy penalty and tax/duty remissions under this program.

The VA program will cover all indirect taxes administered by RMCD, including Sales Tax, Service Tax, GST, Tourism Tax, Departure Levy, Import Duty, Export Duty and Excise Duty.

Good faith

Voluntary disclosure submitted in good faith will be accepted. No audit will be conducted on the activities and periods involved.

Once the VA period is over, RMDC will enhance enforcement with hefty penalties.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Ktp #Thks

 

 

Covid test tax deduction (update)

Covid test tax deduction (update)
View Full Size

Covid test tax deduction (update)

Current requirements (remained)

An employer who claims the deduction of the Cost of Detection Test of COVID-19 shall produce: -

A receipt and certification of its employees issued by: -

  •  a registered medical practitioner; or

  •  a medical practitioner registered outside Malaysia; or

Addition requirements (updated)

A receipt and result of the detection test of Covid-19 of its employees issued by a health facility listed by the Ministry of Health Malaysia for the costs of the RT-PCR detection test incurred by its employee.

Where to check the registered medical practitioner?

Visit the official website of Malaysian Medical Council https://meritsmmc.moh.gov.my/search

What can I claim on tax 2023 Malaysia?

What can I claim on tax 2023 Malaysia?
View Full Size

What can I claim on tax 2023 Malaysia?

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

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

This message was brought to you by KTP

 

Tax Incentive for Organising Conferences in Malaysia

Tax Incentive for Organising Conferences in Malaysia
View Full Size

Tax Incentive for Organising Conferences in Malaysia

Overview

On 29 July 2022, IRB issued Public Ruling (PR) No.2/2022 - Tax incentive for organising conferences in Malaysia. Generally, this PR has explained the tax incentive are available to:

1. Conference promoter promoting and organising conferences in Malaysia as its main activity; and

2. Qualifying person whose main activities are other than promoting and organising conferences in Malaysia. In simple words, the nature of business is not related to promoting and organising conferences. For instance, a manufacturing company.

Key takeaways:

You will understand: -

1. What is the tax incentive?

2. How to become an eligible conference promoter and qualifying person?

3. Differences between conference promoter and qualifying person?

4. Requirement of separate account?

Summary of learnings:

1. What is the tax incentive?

The tax incentive is given to eligible conference promoter and qualifying person.

The exemption is on 100% of the statutory income derived from organising conferences held in Malaysia in the relevant year of assessment.

2. How to become an eligible conferences promoter and qualifying person?

Brought in at least 500 foreign participants to attend conferences held in Malaysia in the year assessment.

3. Differences between conferences promoter and qualifying person

i) Under Income Tax (Exemption) (No.53) Order 2000 [P.U. (A) 500/2000], an eligible conference promoter must be a resident company, an association, or an organisation whose main activities are promoting and organizing conferences in Malaysia.

The period of exemption is effective from the year of assessment 1997 onwards.

ii) Whereas under Income Tax (Exemption) (No.4) Order 2021 [P.U. (A) 195/2021], a qualifying person which is a resident company, an association, or an organisation that carries on business not related to the activity of promoting and organizing conference is also eligible to enjoy the tax incentive.

The period of exemption is effective from the year of assessment 2020 until 2025.

4. Separate accounts

A separate account is required to be maintained for the income exempt under both P.U.(A) 500/2000 or P.U.(A) 195/2021.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

#Ktp #Thks

 

 

Tax on digital currency Malaysia

Tax on digital currency Malaysia
View Full Size

Tax on cryptocurrency Malaysia Part 2

IRB has issued the Guideline on Tax Treatment of Digital Currency Transactions dated 26 August 2022.

Key issues in the guideline include :

Taxability

Crypto transactions fall under the scope of Malaysia income tax if

  • the key activities and operation business operations are performed in Malaysia or

  • where there is a business presence in Malaysia

Summary of Tax on Digital Currency

  • Trading of digital currencies - Profit from the business of trading is taxable .

  • Mining of digital currencies- Profits from the mining of digital currencies are subject to income tax if the mining activity is carried out with a profit-seeking motive.

  • Business transactions carried out using digital currency- Record based on the open market value of the underlying goods or services in RM.

  • Realisation of digital currencies from business transaction- The tax treatment of the subsequent disposal of the digital currency received will depend on the analysis of the capital and revenue (ie badge of trade)

  • Realisation of digital currencies investment-The tax treatment will depend on the analysis of the capital and revenue (ie badge of trade).

  • Free distribution - The mere purchase of digital currencies as a result of free distribution/spitting is not taxable.

  • Exchange of digital currencies -The tax treatment will depend on the analysis of the capital and revenue (ie badge of trade)

Past Blog on tax on cryptocurrency Malaysia

https://www.ktp.com.my/blog/tax-on-cryptocurrency-malaysia/05sept2022

This message was brought to you by KTP

What is Automation Capital Allowance (ACA) ?

What is Automation Capital Allowance (ACA) ?
View Full Size

What is Automation Capital Allowance (ACA) ?

Overview of ACA :

After the opening of international borders, Malaysia is facing a serious manpower situation, thus, Automation machines may become one of the solutions for manufacturing companies to overcome the workforce issue.

The Automation Capital Allowance (Automation CA) was introduced to encourage the adoption of automation among manufacturing companies. In budget 2020, the Government extended the period for the incentive in both categories. The effective date of application is from 1 Jan 2015 until 31 Dec 2023.

Key takeaways:

1. How does the incentive work?

2. Who is eligible to claim?

3. Application procedures

4. Thing to take note

Summary of learnings:

1. What type of incentive?

A. Labour-intensive industries (rubber products, plastics, wood, furniture, and textiles)

- Automation Capital Allowance of 200% on the first RM4 million expenditure incurred within assessment from 2015 to 2023

B. Other Industries

- Automation Capital Allowance of 200% on the first RM2 million expenditure incurred within assessment from 2015 to 2023

2. Who is eligible to claim?

I. Manufacturing companies incorporated under the Companies Act, 1965 / 2016

II. Resident in Malaysia

III. Valid Business License and Manufacturing License

IV. The Company has been in operation as manufacturing activities for 36 months

V. Automation machine/equipment is used directly in the manufacturing activities

3. Application process:

I. Submit the ‘Automation CA Form’ to MIDA

II. MIDA evaluation and SIRIM site visits regarding technical verifications

III. MIDA issues a ‘Consideration Letter’ as approval

4. Things to take note:

A. The incentive is mutually exclusive to other incentives; thus, Company can only enjoy one of the incentives including Automation CA, Reinvestment Allowance (RA), Pioneer Status (PS), Investment Tax Allowance (ITA), or Allowance for Increased Exports (AIE)

B. If Company is claiming RA, it also can opt to claim Automation CA. However, the company must utilize the full amount of Automation CA before it continues to claim RA and the period of RA will continue even if the Company has opted for Automation CA.

Sources:

- Guidelines and Procedures for the application of Automation Capital Allowance

https://www.mida.gov.my/wp-content/uploads/2021/01/GD_ACA_14012021.pdf

 

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

This message was brought to you by KTP

Tax Incentives in Agriculture Industry

Tax Incentives in Agriculture Industry
View Full Size

Tax Incentives in Agriculture Industry

Under the Promotion of Investments Act 1986, the term ''company” in relation to agriculture includes:

  • agro-based cooperative societies and associations

  • sole proprietorships and partnerships engaged in agriculture.

Companies producing promoted products or engaged in promoted activities are eligible to apply for the following incentives:

Pioneer Status

As in the manufacturing sector, companies producing promoted products or engaged in promoted activities are eligible for Pioneer Status.

Investment Tax Allowance (ITA)

Companies producing promoted products or engaged in promoted activities can apply for Investment Tax Allowance (ITA). To enable agricultural projects to enjoy greater benefits, the Government has broadened the definition of qualifying capital expenditure to include the following:

  • the clearing and preparation of land;

  • the planting of crops;

  • the provision of plant and machinery used in Malaysia for the purposes of crop cultivation, animal farming, aquaculture, inland or deep-sea fishing and other agricultural or pastoral pursuits;

  • the construction of access roads including bridges, the construction or purchase of buildings (including those provided for the welfare of persons or as living accommodation for persons) and structural improvements on land or other structures which are used for the purposes of crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits.

In view of the time lag between start-up of the agricultural project and processing of the produce, integrated agricultural projects are eligible for ITA for an additional five years for expenditure incurred for processing or manufacturing operations.

Visit Us

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

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

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

This message was brought to you by KTP

Tax on cryptocurrency Malaysia

Tax on cryptocurrency Malaysia
View Full Size

Tax on cryptocurrency Malaysia

Badge of trade

Determining the existence of trade The general tax treatment for transaction gain / loss from the disposal of digital currencies is based on whether it is capital or revenue in nature.

The badges of trade such as profit seeking motive, nature of asset and changes to the asset are considered when determining if such gains are taxable. The followings are considerations in deciding whether elements of trade exist for transactions involving digital currencies:

1. Nature of subject matter

This refers to the nature of the digital currencies that is being bought and sold. The digital currencies could be regarded as the subject of trading when they are bought in large quantities.

2. Length of ownership

This refers to the holding period of the digital currencies. The shorter the holding period, the more likely it would be regarded as held for trading.

3. Frequency of transactions

High frequency of similar transactions of digital currencies is more indicative of trading than an isolated transaction.

4. Supplementary work

This refers to additional work done on digital currencies to make it more marketable or extra effort made to find or attract purchasers. If this is done, it is more likely that the subsequent disposal would be regarded as trading.

5. Circumstances of the realization

Some circumstances are less likely to indicate trading (e.g. company is forced to sell the digital currencies due to compulsory acquisition, sudden urgent need of cash or threat of foreclosure by creditors).

6. Motive

This refers to whether there was an intention to trade at the time of the acquisition of the digital currencies. If a person undertake the activities in a business-lime manners such as developing a business plan, preparing accounting records and advertising the digital currencies business, the intention is definitely to do a business of digital currencies.

7. Mode of financing

This refers to how the purchase of the digital currencies is being financed. Short term financing is more indicative of trading than long term financing. The company’s financial position and ability to hold on to the digital currencies will also be taken into consideration.

Source

IRB Guideline on tax treatment on digital currency transactions @ 26/8/2022

This message was brought to you by KTP

234567891011

 

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

QUICK LINK

 
© 2020 - 2024 THK Management Advisory Sdn Bhd      200401000220 (638723-X) | Privacy Policy
Visitors: 730819
Powered by NEWPAGES
Switch to Mobile Version
Subscribe Newsletter