Can newly incorporated investment holding company (IHC) enjoy tax rebate RM20,000 x 3 years?

On 12 December 2020, LHDN released Practice Note. 4/2020 to clarify the changes in tax rate from 17% to 24%.

Effective from year assessment 2020 onwards, certain companies (see below) will NOT be entitled to enjoy the SME (17%) tax rate.

The following companies are NOT entitled to enjoy the SME (17%) tax rate:

a) Company without business source of in

I. Investment Holding Company (IHC) (not listed on Bursa Malaysia)

An investment holding company refers to a company that owns investments such as properties and shares for long term investment and derives investment income (''non-trade income'') such as dividend, interest or rental income. The company's principal activity is that of investment holding.

II. Company ceased business operation but has other income such as rental income or interest gain.

Term and condition on tax rebate for company :

Which has a gross income from source or sources consisting of a business not exceeding fifty million ringgits for the basis period for a year of assessment; and
To enjoy the SME (17%) tax rate, the Company need to fulfil the following conditions:

a) Share capital / Total capital contribution ≤ RM2.5 million; and

b) *Must have gross income from source or sources consisting of a business not exceed RM50 million.

Unlisted investment holding company (IHC) …. NO BUSINESS source ! Not SME ! So… IHC cannot enjoy tax rebate RM20,000 x 3 years.

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