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What is tax corporate governance framework LHDN?

What is tax corporate governance framework LHDN?
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What is tax corporate governance framework?

A strong tax governance framework establishes the techniques and processes within the organisation to identify tax risks, assess risks and sets out the appropriate actions to mitigate the impact of those tax risks.

Objective of TCGF

The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company. Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies.

Background

The Inland Revenue Board (IRB) has launched the Tax Corporate Governance (TCG) Framework during the opening ceremony of the IRB's 26th Hari HASiL celebration and has recently published the TCG Framework and the TCG Guidelines. The introduction of the TCG Framework is part of the IRB’s initiative towards adopting a co-operative tax compliance that is both fair and effective in Malaysia.

Benefits of TCGF

Organisations will be able to enjoy the following benefits upon their participation in the TCG Programme :

I. Reduced scrutinization of compliance activities.

  •  Lesser tax audits will be conducted.

  •  Higher materiality or reduced sample size.

II. Expedite tax refunds.

 Accelerate tax refund process for compliant participants, provided no anomalies are

noted the best endeavour will be given to expedite refunds.

III. Appointment of a dedicated tax officer.

 A single point of contact between the taxpayer and the IRBM.

IV. Expedite any ongoing dialogue on technical matters.

  •  Priority consideration

  •  Eligible to be granted priority consideration for compliant participants, which are:

- Consideration will be given accordingly in respect of tax penalty rates.

- Step down of compliance activities.

TCGF at a glance

TCG is suitable for all sizes and types of businesses that give priorities and resources to corporate governance matters.

TCG Programme is currently being implemented as a pilot project. However, the interested organisations are advised to adopt and execute the framework.

TCG in Malaysia is currently being implemented as a pilot project. Therefore, selected organisation will receive an invitation from IRBM to join the programme.

Other interested organisations may contact IRBM via tcg@hasil.gov.my to communicate their interest.

Once an organisation is accepted into the programme, the TCG status will be valid for 3 years subject to terms and conditions stated in the offer.

There will be no fees charged to participate in the programme.

These expenses are capital in nature and not allowable for tax deduction under subsection 33(1) ITA 1967.

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 

Benefits of Malaysia Digital

Benefits of Malaysia Digital
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MSC Malaysia is now rebranded to Malaysia Digital (MD) Part 3

Benefits of MD

MD Status companies are eligible to access orapply for, amongst others:

1. Foreign knowledge worker quota and passes;

2. Tax incentives (income tax exemption or investment tax

allowance);

3. Multimedia/ICT equipment import duty and sales tax exemption;

4. Competitive and ready infrastructure for business available at

MD Cybercities/Cybercentres;

5. Freedom of ownership by exempting from local ownership

requirements;

6. Flexibility to source capital and funds globally; and/or

7. MDEC as the one-stop agency for MD Status companies.

Other Benefits

MD Status companies are also eligible to access facilitation of other benefits

such as:

1. Access to local and international market and ecosystem;

2. Business matching and partnership;

3. Grant and funding facilitation; and/or

4. Participation in MD catalytic programmes.

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 

MSC Malaysia is now rebranded to Malaysia Digital (MD) Part 2

MSC Malaysia is now rebranded to Malaysia Digital (MD) Part 2
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MSC Malaysia is now rebranded to Malaysia Digital (MD) Part 2

Eligibility Criteria

To be eligible to apply for the award of MD Status, a company is required to

meet the following criteria:

(a) Incorporated under the Companies Act 2016 and resident in Malaysia; and

(b) Proposing to carry out or is currently carrying out one or more of the

MD activities.

Approved Activities

MD activities are listed as below. The activities, upon approval of MD Status, will be known as “MD Approved Activities”

Research, development and commercialization of solution and/or provision of services in relation to any of the following technologies or areas:

1. big data analytics (BDA);

2. artificial intelligence (AI);

3. financial technology (Fintech);

4. internet of things (IoT);

5. cybersecurity (technology/software/design and support);

6. data centre and cloud;

7. blockchain;

8. creative media technology;

9. sharing economy platform;

10. user interface and user experience (UI/UX);

11. integrated circuit (IC) design and embedded software;

12. 3D printing (technology/software/design and support);

13. robotics (technology/software/design);

14. autonomous technologies;

15. systems/network architecture design and support;

16. global business services or knowledge process outsourcing;

17. virtual, augmented and/or extended reality;

18. drone technology;

19. advance telecommunication technology ; or

20. other emerging technologies deemed significant for the digital ecosystem subject to approval by the Approval Committee.

Conditions

Conditions to be complied within 12 months from date of award of MD Status:

1. Commencement of operation and undertaking of the MD Approved Activities in Malaysia.

2. Minimum 2 full-time employees (comprising knowledge workers) with minimum average monthly base salary of RM5,000.00, employed for the MD Approved Activities.

3. Minimum annual operating expenditure of RM50,000.00 incurred for the MD Approved Activities

4. Paid-up Capital Minimum of RM1,000.00

To be continued…benefits of MD

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 

MSC Malaysia is now rebranded to Malaysia Digital (MD)

MSC Malaysia is now rebranded to Malaysia Digital (MD)
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MSC Malaysia is now rebranded to Malaysia Digital (MD)

This new enhanced initiative serves to accelerate the sustainable growth of Malaysia’s digital economy and create substantial digital economic spill-over through equitable access to digital tools, knowledge, and income opportunities. Malaysia Digital will drive the digital transformation of focus areas that present high growth potential, opportunities and importance.

The Government of Malaysia, through Malaysia Digital Economy Corporation

(MDEC), awards MD Status to eligible companies that participate in and undertake any of the MD activities.

The grant of MD Status entitles eligible companies to a set of incentives, rights and privileges from the Government of Malaysia.

MSC Malaysia

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.

Transition from MSC to MD

The existing MSC status and benefits would continue to subsist, subject to compliance of existing conditions by the companies, institutes of higher learning or incubators.

MD companies would soon have the flexibility to choose the benefits (with or without tax incentives) with applicable conditions with further details to be announced soon.

The existing companies are not required to reapply, but MD would be implied to existing MSC companies.

What new under MD

  • The bill of guarantees,

  • Non-location-based incentives

  • An expansion of locations for promoted activities.

To be continued…Conditions, status and benefits of MD

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 


Service Tax on the Goods Delivery Service

Service Tax on the Goods Delivery Service
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The service tax on the Goods Delivery Service

Royal Customs Malaysia Department announced on 30 June 2022 that Service Tax on Delivery Services Providers (including E-Commence Platform) which be effective on 1st July 2022 postpone to a later date.

Background Information

Budget 2022 announced that the scope of service tax be expanded to include goods delivery services regardless of the status of the service providers (licensed or not) but exclude delivery services for food and beverages as well as logistic services.

Source

Royal Custom Malaysia Department Announcement 30/6/2022

https://mysst.customs.gov.my/News#section14

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 

LHDN foreign source income

LHDN foreign source income
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Update taxability of foreign source income

On 31st December 2022, our government has agreed to exempt taxation on foreign source income (FSI) for resident taxpayers to ensure the smooth implementation of the tax initiative, said the Ministry of Finance (MoF).

The tax exemption is effective from Jan 1, 2022 to Dec 31, 2026.

Finally the following orders has been gazetted recently :

  • Income Tax (Exemption) (No. 5) Order 2022 - Exemption of FSI received by resident individuals.

  • Income Tax (Exemption) (No. 6) Order 2022 - Exemption of foreign-sourced dividends received by resident companies, limited liability partnerships (LLPs) and individuals in relation to a partnership business in Malaysia.

 

Key Salient Points on The Order

  • Exemption period 1/1/2022 to 31/12/2026 for resident individual

  • All sources of income under Section 4 of ICA 1967 for resident individual on FSI received in Malaysia from outside Malaysia.

  • Income arising from outside Malaysia which is bought into Malaysia.

  • FSI except for dividend income that is received in Malaysia from outside Malaysia for companies and LLPs will subject to :

    • Amounts received from 1/1/2022 to 30/6/2022 – 3%

    • Amounts received after 30/6/2022 – prevailing income tax rate

Past Blog

Read our past blog posting from FSI :

1. Confusion on the exemption of foreign source income dated on 30/05/2022

https://bit.ly/3yVOooj

2. 马来西亚对海外收入征税政策 dated on 18/03/2022

https://bit.ly/3csapUe

3. Foreign source income taxable in Malaysia 2022 dated on 11/01/2022

https://bit.ly/3KL1NUx

4. (u-turn update) foreign source income budget 2022 dated on 31/12/2021

https://bit.ly/3tXbici

5. FAQ on Special Income Remittance Programme (PKPP) dated on 27/12/2021

https://bit.ly/3CFoNBq

6. Special Income Remittance Programme (PKPP) to Malaysian Residents dated on 8/12/2021

https://bit.ly/35ObF0Z

7. 预算案 2022 dated on 19/11/2021

https://bit.ly/3tYpdPz

8. Budget 2022 - SME edition dated on 18/11/2021

https://bit.ly/3tRcq1i

9. Foreign source income taxable in Malaysia dated on 10/11/2021

https://bit.ly/3w5BG6y

10. Foreign Income Remitted Into Malaysia Taxable 2022 on 2/11/2021

https://bit.ly/3tTfJVI

11. 海外收入汇回大马时将被征税 dated on 2/11/2021

https://bit.ly/3Imb8k9

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

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

KTP (Audit, Tax, Advisory)

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

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.

#Ktp #Thks


 


 

马来西亚 所得税 的 违法行为与刑罚

马来西亚 所得税 的 违法行为与刑罚
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马来西亚 所得税 的 违法行为与刑罚

  • 没有交 “所得税申报表” - RM200.00至RM20,000.00 /监禁不超过6个月/两者

  • 纳税人未通知所得税- RM200.00至RM20,000.00 /监禁不超过6个月/两者

  • 省略或低估收入来作不正确的所得税申报表- RM1,000.00 至RM10,000.00 / 200%的少收税款

  • 提供任何不正确信息 - RM1,000.00 至RM10,000.00 / 200%的少收税款

  • 逃避或协助任何他人逃税RM1,000.00 至RM20,000.00 /监禁不超过36个月/两者/300%的少收税款

  • 协助其他人低估收入 - RM2,000.00 至RM20,000.00 /监禁不超过36个月/两者

  • 尝试不缴税就离开国家 - RM200.00 至RM20,000.00 /监禁不超过6个月/两者

  • 阻碍IRBM官员执行其职责 - RM1,000.00至RM10,000.00 /监禁不超过1年/两者

  • 无法保留正确的记录和文档 - RM300.00至RM10,000.00 /监禁不超过1年/两者

  • 无法遵守IRBM要求提供某些信息的通知 - RM200.00至RM20,000.00 /监禁不超过6个月/两者

  • 在3个月内未通知地址更改 - RM200.00至RM20,000.00 /监禁不超过6个月/两者

  • 4月30日之后交税 (non business) -10%罚款应纳税额

  • 6月30日之后交税 (business)- 10%罚款应纳税额

  • 在截止日期的30天后分期付款 - 10%罚款应纳税额

  • 实际税款比修订后的税款估算高出30% - 实际税收余额和估计税收的差额的10%

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

KTP (Audit, Tax, Advisory)

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𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫 (Our external community for interns, graduates & experienced candidates )

𝐓𝐇𝐊 (Secretarial, Account/Payroll, Advisory)

We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

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PERKESO:6月1日起取缔未登记或投保的雇主

PERKESO:6月1日起取缔未登记或投保的雇主
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PERKESO:6月1日起取缔未登记或投保的雇主

我国社会保险机构将从6月1日起,在全国各地展开侦查行动,取缔未遵守社险法令的雇主。

社险法令

Section 95A of Employees’ Social Security Act 1969 规定了, 可以对任何犯有雇员 under Regulation 2 of the Employees’ Social Security (Compounding of Offences) Regulations 2006.

Regulation 2 of the Employees’ Social Security (Compounding of Offences) Regulations 2006 已于 2006 年 3 月 1 日刊宪并生效。

罚单

SOCSO 在收到有关已犯下雇主罪行,会发出通知。

罪行通知的提议有效期为 14 天。如果在 14 天内全额支付了报价金额,则不会采取进一步行动。

但是,如果在发出罪行通知后 14 天或未付款,则将启动进一步的起诉行动,恕不另行通知。

罪行种类

  • 雇主没有注册社险 - 罚款最高 4000 令吉

  • 雇主没有为员工注册社险 - 罚款最高 3000 令吉 (一名工人)

  • 未能出示或没有员工登记册 - 罚款最高 600 令吉

  • 迟于通知 Accident 事故 - 罚款最高 1500 令吉

  • 未能缴纳 correct 社险 - 罚款最高 600 令吉

雇主或雇员如因以上罪行被判有罪,可被罚款不超过 10,000 令吉或监禁 2 年或两者兼施

雇主强制需帮员工注册和缴纳社险

  • 就算只聘请1位员工

  • 就算雇主和员工是亲戚关系

  • 就算学徒合约 or 合约形式受聘的雇员

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

KTP (Audit, Tax, Advisory)

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞 (Our internal community for our colleagues)

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫 (Our external community for interns, graduates & experienced candidates )

𝐓𝐇𝐊 (Secretarial, Account/Payroll, Advisory)

We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

#Thk

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amended return form lhdn

amended return form lhdn
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Overview

Taxpayers are allowed to make amendment on the information or assessment for the submitted Tax Return Form(TRF) under Section 77B of the Income Tax Act 1967 (ITA 1967) or Section 30B of Petroleum (Income Tax) Act 1967 (PITA 1967) by using the Amended Return Form (ARF).

Key takeaway

You will understand:

  • Rules of submission

  • Terms for submission

  • Rate of increase in tax

  • Method of submission

Summary of learning

Taxpayers are allowed to make amendment when there is:

  • Understate of income / unreported income

  • Expenses over claimed

  • Capital allowances / incentives/ relief over claimed

The amendment limit to once for a year of assessment.

The amendment is disallowed if the Director General of Inland Revenue (DGIR) has made amended assessment for the submitted TRF.

What are the terms for submission ARF?

ARF must be submitted within 6 months from the due date of TRF

A duly completed ARF must state:

  • the amount / additional amount of chargeable income

  • the additional tax payables

  • the amount of tax payable on the tax which has or would have been wrongly repaid;

  • the increased sum ascertained in accordance with subsection 77B (4) of ITA 1967 or subsection 30B(4) of ITA 1967;

  • other contains required by the DGIR.

What is the rate of increase in tax?

The additional tax payable amount in ARF is subject to an increase in tax of 10%.

The formula = the amount of such tax payable or additional tax payable x 10%.

The total tax payable amount must be paid at the same date of ARF is submitted.

What are the methods for submission ARF?

ARF can be submitted in the following ways:

  • Online e-filing (only for corporate taxpayer: Form C)

To visit https://mytax.hasil.gov.my > click e-Filing > click e-Form > choose e-BNT C

  • Manual filing

    - download ARF on Lembaga Hasil Dalam Negeri (LHDN) website:

    To visit http://www.hasil.gov.my > Forms > Download Forms (in Malay Version) > Handle the completed ARF to LHDN branch

Sources

GPHDN 1/2020: - Procedure on submission of Amended Return Form

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KTP (Audit, Tax, Advisory)

𝐊𝐓𝐏 𝐋𝐢𝐟𝐞𝐬𝐭𝐲𝐥𝐞 (Our internal community for our colleagues)

𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫 (Our external community for interns, graduates & experienced candidates )

𝐓𝐇𝐊 (Secretarial, Account/Payroll, Advisory)

We are one-stop (20 years+ history) audit, tax, secretarial, accounting and payroll firms which commit to help and grow our clients business.

#Thk

#KTP

#KTP lifestyle

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CP204 Deferment 2022

CP204 Deferment 2022
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CP204 Deferment 2022 is Over

The deferment is over. Taxpayers continue CP204 monthly tax payment before 15th every month with effect from July 2022.

KTP have emailed & whatsapped our clients on the tax instalment notification recently. Please check your email/whatsapp otherwise contact KTP on urgent basis.

Background

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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  • 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

 

 

Intercompany Management Fee

Intercompany Management Fee
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Common Tax Mistakes -Intragroup Services on Management Fee

Intragroup Services

Intragroup services are services provided by one or more members of a multinational group for the benefit of the other members within the group. In general, the types of services that members of a multinational group can provide to each other include, but are not limited to, management services, administrative services, technical and support services, purchasing, marketing and distribution services and other commercial services that typically can be provided with regard to the nature of the group's business.

The costs of such services, initially borne by the parent or other service companies within the multinational group, are eventually recovered from other associated persons through intragroup arrangements.

Non Chargeable Intragroup Services

Shareholder activities

Shareholder activity refers to an activity that one group member (usually the parent company) performs solely because of its responsibility as a shareholder due to its ownership interest in one or more members of the group.

Examples of non-chargeable shareholder activities include:

  • Costs pertaining to the juridical structure of the parent company such as meetings of shareholders of the parent company, issuing of shares in the parent company and costs of the supervisory board;

  • Costs relating to the reporting and legal requirements of the parent company such as producing consolidated accounts or other reports for shareholders, filing of prospectuses; and

  • Costs of raising funds for the acquisition of new companies to be held by the parent company (distinct from fund raising on behalf of its existing subsidiaries).

Duplicative services

Duplicative services are services performed by a group member that merely duplicates a service that another group member is already performing in-house, or that is being performed by a third party.

In such instances, any duplicative claim will be automatically disallowed. The ability of a group member to independently perform the service (for instance in terms of qualification, expertise and availability of personnel) shall be taken into account when evaluating the duplication of services performed.

Example 1

A subsidiary has qualified personnel to analyse its capital and operational budget. This analysis is then reviewed by the parent company's financial personnel. The review by the parent company is considered duplicative.

However, there are exceptions in which duplication of services can be charged such as:

  • Special circumstances where duplication is only temporary. For example in implementing a new system, a company may simultaneously continue to operate an existing system for a short period, in order to deal with any unforeseen circumstances that may arise during the initial implementation; or

  • To reduce the risk of a wrong business decision such as by getting a second legal opinion on a particular project

Services that provide incidental/passive association benefits

This refers to services performed by one member of a multinational group, such as a shareholder or coordinating centre, which relates only to specific group members but incidentally provides a benefit to other members of the group.

Incidental benefit may also arise as a consequence of an associated person being part of a larger concern and not because of a service that has actually been provided. Such incidental benefits would not warrant a charge to the incidental recipient because the perceived benefit is so indirect, and remote, that an independent person would not be willing to pay for the activities giving rise to the benefit and therefore should not be considered as intragroup service to the incidental recipient.

Example 2

An enterprise that had obtained a higher credit rating due to it being a member of a multinational group should not be charged for its mere association with the group. However, if the higher credit rating is due to a guarantee provided by another group member, then an intragroup service can be considered to have been rendered

On-call services

An on-call service is where a parent company or a group service centre is on-hand to provide services such as financial, managerial, technical, legal or tax advice to members of the group at any time.

This service is considered non-chargeable under the following circumstances:

  • Service is easily and promptly available even without any standby arrangement;

  • The potential need for such service is remote;

  • Where there is no/negligible benefits derived from the service.

If there are exceptional circumstances which require on- call services to be considered as chargeable services, it must be proven that an independent person in comparable circumstances would incur such charges to ensure availability of the services when the need for them arises

Source : IRBM Chapter VI-Intragroup Services

CHAPTER VI - Intragroup Services | Lembaga Hasil Dalam Negeri Malaysia

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(Update) 2% Withholding Tax on Commission to Agents

(Update) 2% Withholding Tax on Commission to Agents
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(Update) 2% Withholding Tax on Commission to Agents

Payer:

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

• Company remits the withholding tax to IRB w̴i̴t̴h̴i̴n̴ ̴3̴0̴ ̴d̴a̴y̴s̴ ̴f̴r̴o̴m̴ ̴p̴a̴y̴m̴e̴n̴t̴ ̴d̴a̴t̴e̴ by end of following month

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

Payments of Withholding Tax

The payments must submit

1. Form CP107D — Pin 2/2022 in PDF form and

2. Appendix CP107D(2) in Excel format via email to the payment centres before making the payments.

This email submission is compulsory for payments via payment counters or post.

  • Kuala Lumpur Payment Counter

    pbkl-cp107d@hasil.gov.my

  • Kuching Branch

    pbkc-cp107d@hasil.gov.my

  • Kota Kinabalu Branch

    pbkk-cp107d@hasil.gov.my

Penalty:

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

• Commission is not allowed for tax deduction

Further Reference

Read our past post on withholding tax on commission to agents :

1. (Latest update) Withholding Tax on Payments to Agents dated on 21.04.2022

https://bit.ly/3uFIQNj

2. Withholding Tax on Payments to Agents dated on 17.03.2022

https://bit.ly/3L3JzOB

3. 2% withholding tax on commission dated on 30.12.2021

https://bit.ly/3hRrk20

4. 预算案 2022 dated 19.11.2021

https://bit.ly/3tKU7dM

5. Budget 2022 - SME edition dated on 18.11.2021

https://bit.ly/3IWhAiR

Source

IRBM PEMAKLUMAN PINDAAN PENGOPERASIAN POTONGAN CUKAI 2%

OLEH SYARIKAT PEMBAYAR KEPADA EJEN, PENGEDAR ATAU

PENGAGIH (INDIVIDU PEMASTAUTIN) MULAI JULAI 2022 Dated 9/7/2022

https://bit.ly/3apJqrL

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director duties company law

director duties company law
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Can a director be sued in Malaysia?

Corporate Veil

When a company is incorporated, it is deemed to be a separate legal entity that is distinct and separate from its members such that a 'corporate veil' is said to be drawn to separate the company and its members or directors.

In other words, the company’s rights and liabilities are their own and not that of the individual business owner. This principle has long been established in the English case of Salomon v Salomon & Co Ltd and has been adopted within the Malaysian jurisdiction as well.

Duties of Director under Common Law

The directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day affairs.

As a director of the company, you own

  • Duty to act bona fide in the interest of the company.

  • Duty to use power for a proper purpose.

  • Duty not to fetter discretions.

  • Duty to avoid actual and potential conflict of interest.

  • Duty to ensure the integrity of financial information.

Remedy Action under Company Act 2016

Section 346 of the Companies Act 2016 provides the courts with wide powers to grant remedies as they deem necessary to bring an end to the matters complained of in an oppression action.

Any member of a company may apply to the Court for an order :

(a) The affairs of the company are being conducted or the power of the director are being exercise in oppressive manner.

(b) Some act of the company has been passed which unfairly discriminate.

RDS Bina Sdn Bhd v Ong Chin Hoe & Anor

The Plaintiff filed a claim against the directors of a company in order to enforce payment due under a settlement agreement entered with the company that subsequently ceased operations and dissolved. The Plaintiff presented evidence of fraudulent acts by the directors to deregister their company to evade paying the monies owed to the Plaintiff. The Court allowed the Plaintiff to lift the corporate veil and found the directors to be personally liable for the debts owing to the Plaintiff.

Keller (M) Sdn Bhd v Ong Leong Chiou & Ors

The Plaintiff roped in several parties including a director of a company for the amount due to them as the appointed sub-contractor for work done in the construction of a shopping mall project. Upon close examination of the relationship between the parties, it was discovered that the 1st Defendant (Director) had orchestrated a complex plan to hide under the corporate veil in order to escape liability.

The 1st Defendant used a company (2nd Defendant) under his control and command to shield another company (3rd Defendant) from liability for fraud engineered by him.

Shortly after the project was completed, the 1st Defendant and other directors from the 2nd Defendant resigned and transferred their shares to other parties. In furtherance of the fraud, the 1st Defendant had also actively concealed vital information from the Plaintiff. These actions allowed the Court to pierce the corporate veil and have the Defendants jointly liable to pay the Plaintiff.

Final Word

In conclusion, the law generally provides a safe haven for directors through the separation of entity principle.

However, directors should not abuse their position by taking advantage of it as the new Company Act 2016 provide remedy actions for shareholders.

Source :

Ask Legal https://bit.ly/3OUzpBR

Donovan & Ho https://bit.ly/3nPSSHX

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unabsorbed business loss carried forward 10 years

unabsorbed business loss carried forward 10 years
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How many years can unabsorbed business losses can be carried forward?

Public Ruling 1/2022 - Time limit on unabsorbed adjusted business losses carry forward

IRB has produced the first public ruling of 2022 !

The objective of this Public Ruling (PR) is to provide an explanation on the time limit for unutilised or unabsorbed adjusted business losses arising from a business of a person to be carried forward.

Background

Effective year of assessment 2019, unabsorbed adjusted business losses carried forward for a period of 7 consecutive years of assessment.

But…subsequently.

The time limit for unabsorbed adjusted business losses carried forward arising from a relevant year of assessment change from a 7 consecutive years of assessment to 10 consecutive years of assessment through the Finance Act 2021 [Act 833] effective year of assessment 2019.

Tax Implication

Any balance of unabsorbed adjusted business losses after the

end of the period of 10 consecutive years of assessment is to be disregarded (ie lost).

T & C on Dormant Companies Solely

There has been no substantial change in the company’s shareholding.

By shareholding, Compare the last day of last YA and the first day of next YA on shareholding.

  • More than 50% of the paid-up capital.

  • More than 50% of the nominal value of the allotted shares.

Sections 44(5A) to (5D) – shareholder continuity rules

In a nutshell, where the shareholding of a company was changed substantially during a basis period, any unabsorbed loss and capital allowance brought forward were disregarded – ie were effectively lost forever.

These provisions have been somewhat suspended or deferred as it has been confirmed by the tax authorities that these rules are only applicable in the case of a substantial change of shareholding in dormant companies.

This is further validated via

  • Form C guidebook page 8

  • Post budget technical

  • LHDN dasar dan garis panduan untuk menbenarkan kerugian terkumpul dan elaun modal yang tidak diserap dibawa ke hadapan

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

Source

Public Ruling 1/2022 Time limit on unabsorbed adjusted business losses carry forward

https://phl.hasil.gov.my/pdf/pdfam/PR_01_2022.pdf

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UN Sustainable Development Goals Part 2

UN Sustainable Development Goals Part 2
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UN Sustainable Development Goals Part 2

UN SDG 17

The UN Sustainable Development Goals were launched in 2012 and finalised in 2015. They represent an international consensus on conditions under which humanity can thrive.

The UN SDGs set out a path to end extreme poverty, fight inequality and injustice, and protect the planet.

The United Nations 17 SDGs are a globally agreed framework for all countries to achieve by 2030 that sets out the building blocks of a new type of inclusive prosperity creation.

SDG 7 : Affordable and Clean Energy

Sustainable Development Goal 7 (SDG7) calls for “affordable, reliable, sustainable and modern energy for all” by 2030. It's three core targets are the foundation for our work: Ensure universal access to affordable, reliable and modern energy services.

 

SDG 8 : Decent Work and Economic Growth

SDG 8 recognises the importance of sustained economic growth and high levels of economic productivity for the creation of well-paid quality jobs, as well as resource efficiency in consumption and production.

 

SDG 9 : Industry Innovation and Infrastructure

Goal: Support domestic technology development, research and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities by 2030.

 

SDG 10 : Reduced Inequalities

Sustainable Development Goal 10 aims at reducing inequality within and among countries. This SDG calls for reducing inequalities in income as well as those based on age, sex, disability, race, ethnicity, origin, religion or economic or other status within a country.


SDG 11 : Sustain Cities and Communities

SDG 11 aims to renew and plan cities and other human settlements in a way that offers opportunities for all, with access to basic services, energy, housing, transportation and green public spaces, while reducing resource use and environmental impact.

SDG 12 : Responsible Consumption and Production

Sustainable Development Goal 12 encourages more sustainable consumption and production patterns through various measures, including specific policies and international agreements on the management of materials that are toxic to the environment.

SDG 13 : Climate Action

SDG 13 intends to take urgent action in order to combat climate change and its impacts. The contributing countries to this SDG are making plans to prioritize food security and production, terrestrial and wetland ecosystems, freshwater resources, human health, and key economic sectors and services.

SDG 14 : Life Below Water

SDG 14 targets seek to prevent and reduce marine pollution; further the sustainable management and protection of marine and coastal ecosystems; address the impacts of ocean acidification; regulate harvesting and end overfishing, illegal, unreported and unregulated fishing and destructive fishing practices.

SDG 15 : Life On Land

Goal 15 focuses specifically on managing forests sustainably, halting and reversing land and natural habitat degradation, successfully combating desertification and stopping biodiversity loss.

SDG 16 : Peace, Justice and Strong Institutions

Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. Significantly reduce all forms of violence and related death rates everywhere.

SDG 17 : Partnership for the Goals

SDG 17 calls for a global partnership for sustainable development. The goal highlights the importance of global macroeconomic stability and the need to mobilise financial resources for developing countries from international sources, as well as through strengthened domestic capacities for revenue collection.

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UN Sustainable Development Goals Part 1

UN Sustainable Development Goals Part 1
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UN Sustainable Development Goals

Why is it important to talk about sustainability?

The fundamental fact underlying the whole topic is this: over the last century the population of the Earth increased from 1.5 to 7 billion people. Thus, building an inclusive, sustainable and resilient future for all people and our planet has become a big challenge for humanity.

What is sustainability?

It is defined as “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

UN SDG 17

The UN SDGs set out a path to end extreme poverty, fight inequality and injustice, and protect the planet. Achieving the goals will require an unprecedented effort by all sectors in society, including businesses.

SDG 1 : No Poverty

SDG 1 is to: ''End poverty in all its forms everywhere''. Achieving SDG 1 would end extreme poverty globally by 2030. The goal has seven targets and 13 indicators to measure progress.

 

SDG 2 : Zero Hunger

Goal 2 seeks sustainable solutions to end hunger in all its forms by 2030 and to achieve food security. The aim is to ensure that everyone everywhere has enough good-quality food to lead a healthy life. Achieving this Goal will require better access to food and the widespread promotion of sustainable agriculture

 

SDG 3 : Good Health and Well Being

SDG 3 aims to prevent needless suffering from preventable diseases and premature death by focusing on key targets that boost the health of a country's overall population. Regions with the highest burden of disease and neglected population groups and regions are priority areas.

 

SDG 4 : Quality Education

Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.


SDG 5 : Gender Equation

Achieve gender equality and empower all women and girls. Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world.

SDG 6 : Clean Water & Sanitation

Ensure access to water and sanitation for all. While substantial progress has been made in increasing access to clean drinking water and sanitation, billions of people—mostly in rural areas—still lack these basic services.

To be continue

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EPF return to 11%

EPF return to 11%
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EPF back to 11%

Background

With effective 1st January 2021 after the Budget 2021, employees have the option to reduce their EPF statutory contribution rate from 11% to 9%. This rate for employees will be in effect from January 2021 wages (February 2021 contribution) up to June 2022 (July 2022 Contribution) wages.

Why 9%

“The government understands the challenges faced by the people due to prolonged lockdowns and to increase cash in hand, EPF will extend the minimum contribution rate from 11% to 9% until June 2022.'' says Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

Borang KWSP 17A for 11% contribution

The reduced rate is default for all employees under 60 years old.

Should an employee choose to remain at 11% contribution rate, they'll need to fill up Borang KWSP 17A (Khas 2022) which will then be submitted to EPF by their respective employer. For those aged 60 and above, the statutory contribution remains at the existing rate.

Upon receiving the completed Borang KWSP 17A (Khas 2022) form from the employees, employers will need to register the application via the i-Akaun (Employer) and keep the completed Borang KWSP 17A (Khas 2022) form as a record.

Back to EPF 11%

The minimum statutory EPF contribution rate for employees returns to 11% from July 2022 wages onwards (August 2022 contribution)

Source:

https://www.kwsp.gov.my/en/belanjawan-2021#Reduction-Statutory-Contribution-Rate

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Accounting for government grants

Accounting for government grants
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MPERS vs MFRS : Government Grants

In this article, we share the main differences in the accounting requirements for associates under MFRS 120 and Section 24 of MPERS.

Government Grants

Government grants are assistance by the government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity.

They exclude those forms of government assistance which cannot reasonably have a value placed upon them and transactions with the government which cannot be distinguished from the normal trading transactions of the entity.

Section 24 of MPERS - Government Grants

Use income approach as all government grants are income transactions.

If there is no specified future performance condition imposed, the grant is recognized upon receivable.

If there is a specified future performance condition imposed, the grant is recognized when the condition is met.

Government grants are measured at the fair value of the assets received or receivable.

MFRS 120 Government Grants

Use income approach as all government grants.

Conditions :

1. The entity will comply with the conditions imposed.

2. The grants will be received.

Recognise grants in P/L on a systematic basis over periods in which the entity recognise the related costs.

Non-monetary grants is measured by

  1. The fair value of assets received.

  2. Nominal amount paid

 

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Accounting for intangible assets

Accounting for intangible assets
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MPERS vs MFRS : Intangible Assets

In this article, we share the main differences in the accounting requirements for associates under MFRS 138 and Section 18 of MPERS.

Intangible Assets

An item meets the definition of intangible asset if it poses the three criteria:

  • Identifiability.

  • Control over resources.

  • Existence of future economic benefits (or service potential).

An intangible asset is an identifiable non-monetary asset without physical substance. Such an asset is identifiable when it is separable, or when it arises from contractual or other legal rights. Separable assets can be sold, transferred, licensed, etc.

Examples of intangible assets include computer software, licences, trademarks, patents, films, copyrights and import quotas.

Section 18 of MPERS - Intangible Assets

Research and development expenditures should be recognized as expenses.

All internally generated intellectual property should be recognized as an expense.

MFRS 138 - Intangible Assets

Development expenditure of R&D activities that meet the recognition criteria must be capitalize.

All research and other development expenditure are recognized as an expense.

Internally generated intellectual property should not be recognized as an asset.

An entity is to recognise an intangible asset only if the two criteria are met:

1. It is probable that the expected future economic benefits (or service potential) will flow to the entity; and

2. It can measure the cost or fair value of the asset reliably.

MFRS 138 allow an entity to capitalise expenditure from the development phase if it can demonstrate all of the following conditions:

  • The technical feasibility of completing the intangible asset so that it will be available for use or sale.

  • Its intention to complete the asset and use or sell it.

  • Its ability to use or sell the intangible asset.

  • How the intangible asset will generate probable future economic benefits or service potential.

  • The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

  • Its ability to measure reliably the expenditure attributable to the intangible asset during its development.

MFRS 138 provide an accounting policy choice to subsequently measure an intangible asset either using the cost model or the revaluation model.

MFRS 138 states that intangible assets may have a finite or indefinite useful life. This requires an entity to assess and determine useful life. An intangible asset with indefinite useful life is not amortised but must be tested for impairment annually.

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Accounting in Associates

Accounting in Associates
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MPERS vs MFRS : Associates

In this article, we share the main differences in the accounting requirements for associates under MFRS 128 and Section 14 of MPERS.

Associates

Investment in associate refers to the investment in an entity in which the investor has significant influence but does not have full control like a parent and a subsidiary relationship. Usually, the investor has a significant impact when it has 20% to 50% of shares of another entity.

Section 14 of MPERS - Associates

Measure investment in associates

  • The cost model

    Investment is measured at cost less impairment. The quoted associate must be measured at fair value.

  • The equity method

    No exception for temporary investment and for conditions of severe restriction.

  • The fair value model

    Investment is measured at fair value through profit and loss. Any investment which is impracticable to measure fair value must be measured using the cost model.

When an associate becomes a subsidiary or joint venture, a remeasurement is required with gain or loss recognized in P/L account

MFRS 128 - Associates

Measure investment in associates under the equity method in the consolidated financial statements.

No exception for temporary investment and for conditions of severe restriction.

When an associate becomes a subsidiary (not joint venture), a remeasurement is required.

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