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(Tax Update) : The Appointment of Representative for Company Director

(Tax Update) : The Appointment of Representative for Company Director
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(Tax Update) : The Appointment of Representative for Company Director

Overview of Tax Representative

The introduction of these new functions and guidelines emphasizes the importance of adapting to the digital era, ensuring that company representatives are adequately equipped, and maintaining the integrity of tax submissions. It also showcases the commitment to streamline processes while ensuring that appropriate checks and balances are in place for accountability.

Key Takeaways

From 1 January 2023, taxpayers who have the role of Company Director in MyTax can appoint a representative online.

The appointed representative must have a Tax Identification Number (TIN) and an Individual Digital Certificate.

IRBM has the right to obtain a letter of appointment as a Representative using the letterhead of the company or organization signed by the Board of Directors of the company/organization in question.

IRBM has improved the functions of the Director and Representative Director's roles in MyTax as follows:

i. Appointment of representatives by the Director in MyTax is unlimited. However, the Director shall be responsible for the appointment of the representative;

ii. Directors and representatives in the same appointment hierarchy can make data entry and access the e-Form in the same assessment year;

iii. The appointed representative is only allowed to check and make data entry. The system will not allow the representative to send and sign the e-Form;

iv. The submission and signature of the e-Form can only be done by taxpayers who have the role of Company Director in MyTax in accordance with the provisions of Section 75(1) of the ITA 1967;

v. The system will only save the latest data input. Therefore, the Director needs to ensure that the data is in order before submitting and signing the relevant e-Form;

vi. This function applies to e-C and e-PT for Year of Assessment 2022 and 2023. It will be extended to all types of e-Forms for the specified assessment year in stages.

Final Words

In conclusion, the introduction of a framework for appointing representatives in MyTax represents a commendable stride forward in streamlining and modernizing our tax processes.

By clearly outlining the procedures, duties, and responsibilities of representatives, we ensure not only efficiency but also maintain the highest standards of accountability and transparency.

This move undeniably reaffirms our commitment to fostering a user-centric, efficient, and transparent tax system for the benefit of all stakeholders involved.

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Tax Alert: The Risks of One-Page Management Fee Agreement

Tax Alert: The Risks of One-Page Management Fee Agreement
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Tax Alert: The Risks of One-Page Management Fee Agreement

Background of Multi Square case

In the case of Multi Square Sdn Bhd vs. Ketua Pengarah Hasil Dalam Negeri, the High Court determined that management fees aren't tax deductible due to the Management Services Agreements (MSAs) being seen as sham agreements.

Key takeaways include:

  1. Multi Square is a subsidiary of Sersol Berhad and is involved in the production and sale of paints and chemical solvents.

  2. The Inland Revenue Board of Malaysia disallowed the management fees (above RM900k for 2 years of assessment) paid to Sersol, claiming that these were essentially part of Sersol’s responsibility as the holding company.

  3. The Taxpayer’s appeal was dismissed by the Special Commissioners of Income Tax.

  4. The MSAs in question were found to be deficient in several ways including being only a page long, lacking detail, not clarifying the services Sersol provided, not detailing the number of people or hours worked by Sersol, and failing to specify Sersol's liability.

  5. There was a lack of evidence or records showing Sersol provided these services.

  6. The MSAs were seen as false contracts that only appeared to establish legal responsibilities between the two entities.

  7. Therefore, the management fees cannot be deducted from taxes as per Section 33(1) of the Income Tax Act 1967.

Final Words

Lastly, it's essential to clarify that this case doesn't mean all management fees aren't tax deductible. Here, the deduction was denied because of the sham nature of the MSAs and the lack of evidence that Sersol provided services. The case underscores the importance of maintaining clear and detailed management services agreements and proper record-keeping.

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What PCB Audit is searching for and taxpayers often neglect?

What PCB Audit is searching for and taxpayers often neglect?
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(update) PCB Audit - What PCB Audit is searching for and taxpayers often neglect?

What is PCB in LHDN?

PCB stands for ''Potongan Cukai Bulanan'' which is Malay for ''Monthly Tax Deduction''. It is a series of monthly deductions that go towards payment of your taxes in relation to your employment income. These monthly deductions are retained by your employer and paid over to the Inland Revenue Board (LHDN).

Essential Documents for a Successful PCB Audit.

In the process of undergoing a PCB (Potongan Cukai Berjadual) audit with Lembaga Hasil Dalam Negeri (LHDN), it's crucial to have the necessary documentation ready. Here's a rundown of the essential documents to streamline the audit process and ensure compliance.

1. Employee pay slip

A comprehensive document of an employee's earnings and deductions.

2. Payment Vouchers

These reflect transactions not stated in the pay slip, such as car loan installments.

3. CP39

Outlines employee details and monthly PCB deductions for each employee.

4. Certificate of Registration

Reflects the company’s legal standing.

5. Financial Statements

Present a comprehensive overview of the company's financial health.

6. EA Forms

Show the details of total remuneration and benefits provided to each employee.

7. Employee Details List

A listing to establish the composition and history of the workforce.

8. TP 1, TP 2 and TP 3

Salary payouts have taken into account deductions for relief.

9. CP 21, CP 22 and CP 22A

Updates regarding changes in employment.

Final Words

It's essential to maintain accurate records and be prepared for any potential queries or requests that may arise during the audit.

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Sales Tax Exemption For The Manufacturers

Sales Tax Exemption For The Manufacturers
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Sales Tax Exemption For The Manufacturers

If you're an official manufacturer, Schedule C in the Sales Tax Exemptions offers great advantages. It lets manufacturers buy materials tax-free, prevents them from being taxed twice, and makes it easier to get raw and packaging materials. This helps improve and speed up production.

Let’s unveil what Schedule C could offer to manufacturers.

1. What's it all about Schedule C in the Sales Tax Exemption?

Schedule C, a beacon of financial relief, exempts sales tax for registered manufacturers acquiring materials for the production of taxable goods. It also opens doors to tax-free subcontractor processing.

2. Who is eligible?

• Item 1 : Offers a sales tax exemption for raw materials, components, and packaging materials (excluding petroleum). These can be imported or purchased from registered manufacturers, licensed warehouses, or licensed manufacturing warehouses by any registered manufacturer.

• Item 2 : Comes into play for raw materials, components, packaging materials, and petroleum acquired or imported by registered petroleum product manufacturers from other registered manufacturers, licensed warehouses, or licensed manufacturing warehouses.

• Item 3 : Extends the exemption to raw materials, components, and packaging materials (excluding petroleum) purchased or imported by individuals representing registered manufacturers from registered manufacturers, licensed warehouses, or licensed manufacturing warehouses.

• Item 4 : Provides relief for raw materials, components, packaging materials, and petroleum purchased or imported by individuals representing registered petroleum product manufacturers from registered manufacturers or licensed warehouses.

• Item 5 : Ensures no taxation for semi-finished or finished taxable goods returned by subcontractors to registered manufacturers after completing subcontracted work.

3. Qualifying Categories of Materials

• Raw materials and components

These vital elements become integral parts of the finished product, directly contributing to the manufacturing process.

• Packaging materials

This category encompasses materials like boxes, cartons, containers, crates, cases, pallets, and bandages used to package finished goods. It also includes non-returnable transportation-related materials and labels for identifying finished goods.

With Schedule C as your ally, you can navigate the intricate landscape of sales tax exemptions, fostering growth, efficiency, and financial stability within your manufacturing endeavors.

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What are the new TP rules 2023?

What are the new TP rules 2023?
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(Tax Update)Transfer Pricing Rule 2023

The Income Tax (Transfer Pricing) Rules 2023 (“TP Rules 2023”) have been gazetted on 29 May 2023 and will take effect from the year of assessment (“YA”) 2023 and subsequent YAs. TP Rules 2023 replaces the Income Tax (Transfer Pricing) Rules 2012 (“TP Rules 2012”).

Malaysia's New Transfer Pricing Rules 2023: Key Highlights

Introduction and Applicability

  • Effective from the year of assessment (YA) 2023 onwards.

  • Previous 2012 Transfer Pricing Rules are revoked. TP Rules 2012 remains applicable for prior YAs?

Contemporaneous TP Documentation

  • Must be prepared prior to tax return filing due date.

  • The date of preparation must be clearly stated.

  • New schedules (Schedules 1, 2, and 3) are added detailing specific documentation requirements.

  • Taxpayers must indicate when the TP documentation is finished.

  • Documentation must contain foundation documents and supporting materials.

  • Documentation must be submitted to IRB within 14 days upon request.

  • The Director General (DG) of the IRB can issue guidelines to facilitate the new rules.

Arm’s Length Range

  • Defined as figures between 37.5 percentile to 62.5 percentile.

  • If a transaction price is within this range, it's regarded as the arm's length price.

  • The DG can adjust to the median or above due to comparability defects.

  • If outside the range, the median becomes the arm's length price.

  • Up to 5% surcharge can be applied on TP adjustments by DG.

Comparability Analysis

  • Precise delineation of controlled transactions emphasized.

  • Use of prior year data outlined with specific purposes.

  • The DG can change the selected method if deemed more appropriate.

Definitions and Changes

  • Definitions added or amended: ''Multinational Enterprise Group”, “Profit Level Indicator”, “Intangible Property”, “Marketing Intangibles”.

  • Re-characterization of transactions and offsetting adjustments provisions from 2012 rules removed.

Practical Considerations for Taxpayers

  • The new rules provide clarity but have challenges.

  • DG can still adjust to the median, even if within arm's length range.

  • Definition gaps on what constitutes a comparability defect.

  • Additional documentation is required, especially for Multinational Enterprise Groups.

  • The burden on taxpayers to maintain and prove documentation.

  • The use of non-Malaysian benchmarking studies is not clarified.

  • Removal of offsetting adjustments provision from 2012 rules; now discretionary for DG.

Next Steps for Taxpayers

  • Begin preparation to meet Schedule 1 requirements.

  • Assess operational conditions and update the documentation accordingly before tax return filing.

Source:

IRB : Transfer Pricing Rule 2023

https://www.hasil.gov.my/media/bksd1zsm/pua165_2023-tp-rule-2023.pdf

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E-Invoicing Malaysia - Transition Challenges and Strategies

E-Invoicing Malaysia - Transition Challenges and Strategies
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E-Invoicing Malaysia - Transition Challenges and Strategies

Introduction

An e-Invoice is a digital representation of a transaction between a supplier and a buyer. e-Invoice replaces paper or electronic documents such as invoices, credit notes, and debit notes.

An e-Invoice contains the same essential information as a traditional document, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount, which records transaction data for daily business operations.

Transition Challenges and Strategies

Implementing e-invoicing can bring numerous benefits to businesses, such as streamlined operations, improved cash flow, and enhanced compliance. However, the journey to full e-invoicing implementation can be fraught with challenges. Here are some of the most common challenges and considerations when implementing e-invoicing:

Integration with Existing Systems

Many companies use legacy systems for their accounting and invoicing needs. Integrating new e-invoicing solutions with these systems can be complex and require significant IT resources.

Adherence to Local Regulations

E-invoicing regulations vary from country to country. Ensuring compliance with different regulatory environments, especially for multinational corporations, can be a daunting task.

Data Privacy and Security

Protecting sensitive financial data is crucial. Ensuring the e-invoicing solution is secure from cyber threats, and adhering to data privacy regulations, is paramount.

Resistance to Change

Employees accustomed to traditional invoicing methods might resist the change to electronic formats. This can be due to a lack of understanding, fear of job redundancy, or simple inertia.

Training and Education

Ensuring that the staff is well-trained and comfortable with the new system can be time-consuming, especially if the e-invoicing solution is significantly different from the previous system.

Ensuring Data Accuracy

Automated systems rely on accurate data input. If the data entered is incorrect, it can lead to complications like incorrect invoicing, which can disrupt cash flows and client relationships.

Supplier and Customer Adoption

Even if your company is ready for e-invoicing, your suppliers and customers might not be. Encouraging them to shift to e-invoicing and ensuring compatibility can be a challenge.

Cost Implications

There might be initial costs associated with procuring e-invoicing software, integrating it with existing systems, and training employees.

Scalability Concerns

As the business grows, the e-invoicing solution should be able to handle increased volumes without compromising on performance.

Diverse Formats and Standards

Different industries or countries might have varying e-invoicing formats or standards. Ensuring compatibility across these formats can be challenging.

Previous Updates on E-Invoicing

  • Are you ready for e-Invoicing https://www.ktp.com.my/blog/e-invoicing-malaysia-are-you-ready/10aug23

  • The coverage of e-Invoicing https://www.ktp.com.my/blog/e-invoicing-malaysia-coverage/3aug23

  • The timeline of e-Invoicing https://www.ktp.com.my/blog/e-invoicing-malaysia-timeline/2aug23

  • The workflow of e-Invoicing https://www.ktp.com.my/blog/e-invoicing-malaysia-the-workflow/31jul23

Source

IRB E-Invoicing Guide version 1.0 https://www.hasil.gov.my/en/e-invoice/

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Double Tax Deduction on Hiring Interns

Double Tax Deduction on Hiring Interns
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Double Tax Deduction on Hiring Interns

Background of MySIP

The National Structured Internship Programme (MySIP) is developed to encourage companies to provide meaningful practical learning experiences through approved structured internships module for students.

As an employer who hires Malaysian full-time students from local IPTA or IPTS including higher learning institutions abroad and TVET institutions to undergo a structured internship programme endorsed by us, you will be eligible for a double tax deduction incentive for related expenses incurred on the interns throughout the programme.

Key Takeaways

Taxpayers can claim the Structured Internship Programme(SIP) for YA2023 – YA2025 after receiving approval from Talent Corporation Malaysia Berhad.

However, the application portal to apply for SIP will only open at the beginning of January 2024.

In order to qualify for the double deductions, you shall obtain the approval letter from Talent Corporation Malaysia Berhad confirming that the internship programme conducted an approved internship programme.

Effective date:

From the year of assessment 2022 until the year of assessment 2025

PU Order

  • P.U(A) 188 Income Tax (Deduction for expenditure incurred for the provision of approved internship programme) (amendment) rules 2023 made: 26.05.2023

    https://lom.agc.gov.my/.../outputp/1828756/PUA%20188.pdf

  • P.U (A) 398 Income Tax (Deduction for expenditure incurred for the provision of approved internship programme) rules 2019 made: 30.12.2019

    https://lom.agc.gov.my/.../outputp/pua_20191231_PUA398.pdf

Terms and conditions of MySIP

To qualify for the MySIP incentive, your organisation must fulfil the following criteria:

  • Provide a minimum internship period of ten (10) weeks

  • Pay a minimum monthly allowance of RM600 for master’s degree, bachelor’s degree and Professional Certificate or equivalent

  • Pay a minimum monthly allowance of RM500 for diploma/Malaysian Skills Certificate (SKM) Level 1 to Level 5 or equivalent

  • Provide an internship framework that includes practical experience and emphasizes on the development of specific knowledge or skills for students and approved by TalentCorp

  • Registered with the Companies Commission of Malaysia (SSM)

  • Complete your MySIP registration at www.mynext.my

Contact TalentCorp

For more information on the MySIP or to get in touch with the team, you can write to: sip@talentcorp.com.my

Past KTP Blog on the MySIP

Below is the link KTP Blog for the double tax deduction on hiring interns posting: -

  • Structured internship Programme TalentCorp - No Gazette Order dated 17.02.2023

    https://rb.gy/xp29f

  • Structured internship Programme TalentCorp dated 18.10.2022

    https://rb.gy/fpfux

  • A Government Program to Help You Get Interns with Double Tax Deduction dated on 5.10.2020

  • https://shorturl.at/mox03

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Is a bank guarantee fee tax deductible?

Is a bank guarantee fee tax deductible?
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Latest Update Tax Deductible of Bank Guarantee Fee

Persatuan Nelayan Kebangsaan

The Court of Appeal has recently determined that Bank Guarantee fees qualify as tax deductible under Section 33(1) of the Income Tax Act 1967.

The taxpayer, a society founded by the Agriculture Ministry, is principally engaged in providing subsidised diesel to fishermen. In facilitating this mission, the society has entered into contracts with Shell and PETRONAS to secure a consistent diesel supply. The society, in turn, markets this diesel to the fishing community.

In adhering to the terms of a 30-day credit period established by the suppliers, the society sought a Bank Guarantee, periodically renewed, to assure payment to its suppliers. The associated fees paid to the bank were deducted by the society as a business expense for income tax purposes.

Capital in Nature - SC & HC

The Revenue contested this deduction, categorizing the Bank Guarantee fees as capital expenditure rather than a direct expense for purchasing diesel. The High Court sustained the Revenue’s position.

The Court of Appeal

Upon appeal to the Court of Appeal, the society's objection was accepted.

The court highlighted that in the absence of the bank guarantee, the society would need to explore alternative financing methods, such as taking out a loan to purchase the diesel. The court further noted that such a loan would inevitably involve interest, which the Revenue would have permitted as a deductible expense.

As such, the Court of Appeal found no substantive difference between utilizing a bank guarantee or a loan to facilitate diesel acquisition.

Case Summary

A brief summary of the case details:

a. The Taxpayer procured diesel supplies from Shell Malaysia Trading and Petronas Perdagangan Berhad (“Suppliers”).

b. Per the agreement with the Suppliers, the Taxpayer needed to secure a bank guarantee before initiating the agreement.

c. Thus, the Taxpayer obtained a bank guarantee from Bank Islam Malaysia Berhad, incurring a bank guarantee fee in the process.

d. Following a tax audit by the Inland Revenue Board of Malaysia (“IRB”), a notice of additional assessment disallowing said bank guarantee fee was issued.

e. Dissatisfied with this decision, the Taxpayer appealed to the Special Commissioners of Income Tax (“SCIT”), who ruled in the Taxpayer’s favor.

f. The IRB subsequently appealed against the SCIT’s verdict to the High Court.

H. The Taxpayer appealed to the Court of Appeal.

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Are You Ready for E-Invoicing Malaysia?

Are You Ready for E-Invoicing Malaysia?
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E-Invoicing Malaysia - Are You Ready?

Introduction

An e-Invoice is a digital representation of a transaction between a supplier and a buyer. e-Invoice replaces paper or electronic documents such as invoices, credit notes, and debit notes.

An e-Invoice contains the same essential information as a traditional document, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount, which records transaction data for daily business operations.

Is e-invoicing mandatory in Malaysia?

Malaysia will introduce a countrywide e-invoicing mandate in June 2024.

The Malaysian government plans to introduce a Centralized Pre-Clearance CTC model on all transactions to increase efficiency and strengthen the tax administration. A gradual introduction of the obligation will commence in June 2024 and end in 2027.

Assess The Readiness of E-Invoice as per IRB Guide

To ensure that businesses are ready for the implementation of e-Invoice in the upcoming months, here are a few key steps that can be carried out to assess readiness and standardisation:

1. Allocate and equip personnel with the necessary capabilities to adopt and oversee the implementation of e-Invoice;

2. Determine the availability of data sources and structure, current IT capabilities to support system readiness and processes to comply with e-Invoice requirements and obligations; and

3. Review current processes in issuing transaction documents (i.e., invoice, debit note, credit note, refund note).

Our Take for Getting Ready E-Invoicing

Here's a point-form guide to help you :

  1. Understand Legal Requirements

    Research and comply with local e-invoicing regulations and tax laws.

  2. Choose and Set Up an E-Invoicing Platform:

    Select compliant software, integrate with existing systems, and migrate data.

  3. Design and Implement Security Measures:

    Customize invoice templates, secure data transmission, and control access.

  4. Train Staff and Communicate with Stakeholders:

    Educate employees on e-invoicing and notify customers/suppliers.

  5. Automate Processes and Test System:

    Set up automation for generation and tracking, and test for functionality.

  6. Monitor, Maintain, and Record Keeping:

    Regularly review and update the system, and keep electronic copies as required.

  7. Consult Professionals if Needed:

    Engage experts in compliance with local laws.

Previous Updates on E-Invoicing

Source

IRB E-Invoicing Guide version 1.0 https://www.hasil.gov.my/en/e-invoice/

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Instalment Payment for Outstanding Tax Under SVDP 2.0

Instalment Payment for Outstanding Tax Under SVDP 2.0
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Special Voluntary Disclosure Programme (SVDP) 2.0-Instalment Payment for Outstanding Tax

Latest Update

In their media statement from July 26, 2023, the IRB announced that taxpayers can arrange for instalment payments on outstanding income tax and real property gains tax for previous years without incurring an increase in tax.

During the Special Voluntary Disclosure Programme (SVDP 2.0) period, from June 6, 2023, to May 31, 2024, applications can be submitted in writing to the closest IRB branch handling the tax file or through the MyTax portal.

No supporting documents are needed as long as the amounts are settled within the SVDP 2.0 timeframe.

Travel Restriction Uplift

Furthermore, taxpayers adhering to the payment schedule set by the IRB will be granted a temporary lifting of travel restrictions under section 104 of the Income Tax Act 1967 (ITA 1967). This applies to those making consistent instalment payments for outstanding taxes.

Failure to follow the payment terms may lead to an increase in tax.

Source

The IRB's media statement can be found on their website at www.hasil.gov.my (Media Release).

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E-Invoicing Malaysia - Coverage

E-Invoicing Malaysia - Coverage
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E-Invoicing Malaysia - Coverage

Introduction

An e-Invoice is a digital representation of a transaction between a supplier and a buyer. e-Invoice replaces paper or electronic documents such as invoices, credit notes, and debit notes.

An e-Invoice contains the same essential information as a traditional document, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount, which records transaction data for daily business operations.

Is e-invoicing mandatory in Malaysia?

Malaysia will introduce a countrywide e-invoicing mandate in June 2024.

The Malaysian government plans to introduce a Centralized Pre-Clearance CTC model on all transactions to increase efficiency and strengthen the tax administration. A gradual introduction of the obligation will commence in June 2024 and end in 2027.

Transaction Types Subject to E-Invoicing

e-Invoice covers typical transaction types such as

  • Business to Business (B2B),

  • Business to Consumer (B2C), and

  • Business to Government (B2G).

In relation to certain B2C transactions where e-Invoices are not required by the end consumers to support the said transactions for tax purposes, suppliers will be allowed to issue a normal receipt or invoice in accordance with the current practices adopted by suppliers. After a certain period or timeframe, suppliers would be required to aggregate the normal receipts or invoices issued to end

For B2G transactions, the e-Invoice flow will be similar to B2B.

What is the applicability of e-invoicing?

e-Invoice applies to all taxpayers undertaking commercial activities in Malaysia.

This includes businesses engaged in the provision of goods and services and certain non-business transactions between individuals.

Guidance on e-Invoice requirements for certain non-business transactions between individual

taxpayers will be provided in due course.

Who Is Subject to E-Invoicing?

All individuals and legal entities are required to comply with e-Invoice requirement, including:

  • Association;

  • Body of persons;

  • Branch;

  • Business trust;

  • Co-operative societies;

  • Corporations;

  • Limited liability partnership;

  • Partnership;

  • Property trust fund;

  • Property trust;

  • Real estate investment trust;

  • Representative office and regional office;

  • Trust body; and

  • Unit trust.

Previous Updates on E-Invoicing

Source

IRB E-Invoicing Guide version 1.0 https://www.hasil.gov.my/en/e-invoice/

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Timeline on E-Invoicing Malaysia

Timeline on E-Invoicing Malaysia
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E-Invoicing Malaysia - The Timeline

Introduction

 

An e-Invoice is a digital representation of a transaction between a supplier and a buyer. e-Invoice replaces paper or electronic documents such as invoices, credit notes, and debit notes.

An e-Invoice contains the same essential information as a traditional document, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount, which records transaction data for daily business operations.

Is e-invoicing mandatory in Malaysia?

 

Malaysia will introduce a countrywide e-invoicing mandate in June 2024.

The Malaysian government plans to introduce a Centralized Pre-Clearance CTC model on all transactions to increase efficiency and strengthen the tax administration. A gradual introduction of the obligation will commence in June 2024 and end in 2027.

e-Invoice Implementation Timeline:

 

e-Invoice will be implemented in phases to ensure a smooth transition. The roll-out of e-Invoice has been planned with careful consideration, taking into account the turnover or revenue thresholds, providing businesses with sufficient time to adapt.

Below is the e-Invoice implementation timeline:

  • 1 June 2024 : Taxpayers with an annual turnover or revenue of more than RM100 million

  • 1 January 2025 : Taxpayers with an annual turnover or revenue of more than RM50 million and up to RM100 million

  • 1 January 2026 : Taxpayers with an annual turnover or revenue of more than RM25 million and up to RM50 million

  • 1 January 2027 : All taxpayers and certain non-business transactions

Important notes :

  • Taxpayers may volunteer to implement e-Invoice at an earlier date, regardless of annual turnover or revenue.

  • The obligation to implement e-Invoice would be independent of the turnover or revenue amounts in the following FY.

  • Revenue is based on audited financial statements for the financial year ending 2022 on taxpayers with audited financial statements. Otherwise will rely on tax returns for the year assessment 2022.

Previous Update on E-Invoicing

 

Source

 

IRB E-Invoicing Guide version 1.0

https://www.hasil.gov.my/en/e-invoice/

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E-Invoicing Malaysia - The workflow

E-Invoicing Malaysia - The workflow
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E-Invoicing Malaysia - The workflow

Introduction

An e-Invoice is a digital representation of a transaction between a supplier and a buyer. e-Invoice replaces paper or electronic documents such as invoices, credit notes, and debit notes.

An e-Invoice contains the same essential information as a traditional document, for example, supplier’s and buyer’s details, item description, quantity, price excluding tax, tax, and total amount, which records transaction data for daily business operations.

Is e-invoicing mandatory in Malaysia?

Malaysia will introduce a countrywide e-invoicing mandate from June 2024.

The Malaysian government plans to introduce a Centralized Pre-Clearance CTC model on all transactions to increase efficiency and strengthen the tax administration. A gradual introduction of the obligation will commence in June 2024 and end in 2027.

An Overview of Workflow of E-Invoicing

Today we will highlight the workflow of e-invoicing in general.

1. Issuance of e-Invoice

When a sale or transaction is made (including e-Invoice adjustments), the supplier creates an e-Invoice and shares it to IRBM via MyInvois Portal or API for validation.

2. Validation of e-Invoice

IRBM validation is performed in real-time, ensuring that the e-Invoice meets the necessary standards and criteria.

Once validated, the supplier will receive a Unique Identifier Number from IRBM via MyInvois Portal or API.

The Unique Identifier Number will allow traceability by IRBM and will reduce instances of tempering with the e-Invoice.

3. Notification of validated e-Invoice

IRBM will inform both the supplier and buyer once e-Invoice has been validated via MyInvois Portal or APIs.

4. Sharing of e-Invoice

Upon validation, the supplier is obliged to share the cleared e-Invoice (embedded with a QR code) with the buyer.

The QR code can be used to validate the existence and status of the e-Invoice via IRBM’s official portal.

5. Rejection or cancellation of e-Invoice

Upon issuance of e-Invoice, a stipulated period of time is given to:

• Buyer to request for rejection of the e-Invoice

• Supplier to perform cancellation of e-Invoice

Rejection requests or cancellations must be accompanied by justification.

6. MyInvois Portal

Supplier and buyer will able to obtain a summary of the e-Invoice transactions via MyInvois Portal.

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Personal Data Protection Act 2023

Personal Data Protection Act 2023
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Personal Data Protection Act 2023 - Proposed Amendments

What is it Personal Data Protection Act (PDPA)

The PDPA governs data usage and its security in Malaysia. It was tabled in 2010 and gazetted the same year, but only implemented in 2013.

The act is enforced by the Personal Data Protection Department. One of its main functions is to prevent data misuse in commercial transactions.

What it covers

Under the PDPA, data such as your full name, MyKad number, passport number and your email address are considered to be personal and sensitive information.

Other forms of data that fall under this category include photographs, images captured from CCTVs, religious and political beliefs, as well as personal documents like tax records.

Under the Act, a person is entitled to the following rights after sharing their data with an organisation:

  • The right to know if their data is being processed.

  • The right to access their personal data from the organisation’s database

  • The right to amend the data provided

  • The right to withdraw consent given to process one’s data

  • The right to stop any data processing activities that could cause damage or distress

  • The right to stop data processing activities for direct marketing

Proposed Amendments to the PDPA

The draft amendment to the PDPA to curb personal data breaches is expected to be presented in Parliament before the end of this year. It is rumored that it will be enacted by the end of October 2023.

Communications and Digital Minister Fahmi Fadzil said the Personal Data Protection Department (JPDP) was looking at several improvements to the amendments prepared by the previous government before they were submitted to the Attorney-General's Chambers.

The proposed amendments are summarised as follows:

1. Mandatory appointment of a Data Protection Officer

All data users will each be required to appoint a data protection officer.

2. Data portability

Transfers of personal data between data users (upon request from data subjects) will be allowed (if the technical system permits).

3. Mandatory data breach notification

All data users will be required to report data breaches to the Malaysian Personal Data Protection Department (PDPD) within 72 hours.

4. Enhanced obligations for data processors

Data processors will be required to comply with the security principle under the PDPA.

5. Cross-border data transfer requirements

The power of the Minister to issue a whitelist will be replaced with a blacklist. Transfers of personal data to blacklisted countries will be prohibited. 

Impacts On The Proposed Amendments in PDPA

Increase in penalties for misuse of data and non-compliance with PDPA in general.

Designate the Malaysian Personal Data Protection Department as a statutory commission with enforcement power.

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Accounting Concepts

Accounting Concepts
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Accounting Concepts: Consistency, Going Concern & Prudence

What are Accounting Concepts?

It is the basic rules, ideas, and conditions by which companies record their financial transactions and organize their bookkeeping.

What is the objective of Accounting Concepts?

To achieve uniformity and consistency in preparing and recording financial reports.

What is Consistency Concept?

The same accounting method should be used consistently once it has been adopted by the company, unless a change is required by law or other valid reasons to do otherwise.

It will prevent manipulation in accounts and make the financial numbers comparable across different periods or years.

What is Matching Concept?

The matching concept is linked to the accruals concept.

It requires revenue earned and expenses incurred to be matched and recorded during the same accounting period.

Example 1:

Deposit of RM 500 received from the customer on 27 December 2022 for a dinner reservation on 10 January 2023.

No expenses have been incurred yet if the RM 500 deposit is recorded as revenue on 27 December 2022.

Hence, the RM 500 deposit should be booked as “Deposit from Customer (Balance Sheet)” in December 2022 and adjusted as “Sales revenue (Income Statement)” in January 2023 to match the expenses incurred on 10 January 2023.

Example 2:

ABC Sdn Bhd’s financial year ended on 31 December 2022. It only issued invoices to its customers in January 2023 for work carried out in December 2022.

An accounting adjustment needs to be made for the unbilled revenue as “Accrued revenue” on 31 December 2022 to match the expenses incurred during the financial year.

What is Going Concern Concept?

Also known as the continuity assumption, this assumption assumes that a business will continue its operations for the foreseeable future.

It implies that financial statements are prepared with the expectation that the business will continue to exist and not be liquidated.

Examples of situations that may cast doubt on the going concern assumption include:

  • Continuous losses: If a business consistently incurs significant losses, it may raise concerns about its ability to continue operating in the future.

  • Legal or regulatory issues: Legal disputes, loss of key licenses or permits, or significant changes in regulations can impact a business's ability to continue its operations.

What is Prudence Concept?

This is an accounting concept that suggests caution and a conservative approach in preparing financial statements.

The prudence concept suggests that losses such as bad debts, inventory obsolescence, or decline in the value of investments, should be accounted for even if they have not yet occurred.

However, gains should only be recognized when they are realized.

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ACCA Malaysia Virtual Careers Fair 2023

ACCA Malaysia Virtual Careers Fair 2023
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Are you ready to take your career to new heights?
Look no further than KTP, where we're proud to be part of the prestigious ACCA Virtual Careers Fair 2023!
Don't miss out on this incredible opportunity to connect with our representatives and explore the rewarding possibilities of working at KTP.
Register now using the link below and upload your profile to secure your spot:
📝Register here: https://bit.ly/ACCAVCF23
Mark your calendars for July 21, as we eagerly await your presence. Our team will be ready to answer your questions and provide valuable insights into what it's like to be part of the KTP family.
But wait, there's more!
Before the event, we encourage you to watch our exclusive YouTube videos, which shed light on the secrets to success in ACCA and working full time at KTP. Get a head start on your journey by clicking the links below:
✅Discover the secret to passing 4 ACCA papers in 1 sitting with flying colors! Watch now: https://bit.ly/3K37crS
✅Learn how our team conquered all ACCA papers while maintaining a fulfilling career at KTP. Check it out: https://bit.ly/3OhH6UF
✅Join us for an informative ACCA info session with KTP. Gain valuable insights here: https://bit.ly/3XVJq77
Don't miss this chance to set yourself up for success. Prepare yourself for an exciting future with KTP and let us help you unlock your potential!
See you at the ACCA Virtual Careers Fair on July 21st!
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SST Audit Malaysia

SST Audit Malaysia
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Sales and Service Tax (“SST”) Audit

Background

The Royal Malaysian Customs Department (“RMCD”) conducts various types of audits to ensure compliance with sales tax regulations and promote transparency in business operations. These audits play a crucial role in maintaining the integrity of the tax system and safeguarding the interests of both the government and taxpayers.

In this article, we will explore the different types of audits conducted by the RMCD. Understanding these audit types will provide valuable insights into the processes involved and the objectives they aim to achieve.

Type of Custom Audit

1.     Desk audit

A desk audit is a review of the taxpayer's records and documents conducted at the RMCD's office, and normally concerned with more straightforward issues. During this type of audit, the RMCD officers examine the taxpayer's sales tax returns, supporting documents, and other relevant records to ensure compliance with the sales tax regulations.  

2.     Field audit

A field audit involves a physical visit by RMCD officers to the taxpayer's business premises or registered address. The purpose of a field audit is to conduct an on-site examination of the taxpayer's records, accounting systems, and operations. RMCD officers may inspect the inventory, sales records, invoices, purchase orders, contracts, and other relevant documents to verify the accuracy of sales tax reporting and identify any potential non-compliance issues.

3.     Compliance audit

This is a comprehensive audit conducted on all transactions. RMCD officers will examine all the business record, conduct interviews, and perform any necessary inspections to verify that the sales tax reporting is being complied with.

4.     Refund audit

In cases where taxpayers claim refunds for overpaid sales tax, the RMCD may conduct refund verification audits to verify the accuracy and eligibility of the refunds claimed.

5.     Transaction audit

This type of audit focuses on examining the existence of the transactions and are correctly reported. These transactions may be selected based on risk assessment, random sampling, or specific criteria set by RMCD.

6.     Advisory audit

An advisory audit encourages voluntary compliance with tax laws and regulations. This audit allows taxpayers to come forward and correct any errors, omissions, or non-compliance voluntarily.

7.     Cancellation audit

This is a comprehensive audit of all transactions conducted prior to any cancellation. It is performed for companies that intend to cancel their SST registration.

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Internship 2023

Internship 2023
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We are hiring

If you are looking for an exciting work experience?

We are hiring interns! 🎉🎉🎉 Yes, we will pay you!

We believe that your hard work is worth it, and we hope to learn as much from you as you do from us.

You may not have a lot of work experience, but we know that you are ready to learn and grow.

We appreciate your efforts and believe you deserve to be rewarded.

If you like what you're reading, if you want to help people who need it most, if you're curious about what working at KTP is like, and if you're looking for an internship, we should talk more.

We can't wait to welcome you to our team! Drop us an email careers@ktp.com.my or call us 607-3613443

Let's start this exciting journey together!

PS :

Watch our past intern Kllow final video in our KTP YouTube

https://youtu.be/QmZ6DEzzjMU

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Disqualification of Director Malaysia

Disqualification of Director Malaysia
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Disqualification of Director Malaysia

Background

In order to become a director of the company, he must write his consent in writing to become a director and make a declaration that he is not disqualified from being appointed in compliance with Section 201 of the Companies Act 2016.

How to determine if a person is disqualified to become a director?

There are a few ways to determine whether a person is disqualified to become a director of the company. One of the criteria for disqualification of a director includes a committed offence.

What is offence included under this act?

• Bribery;

• Fraud; and

• Dishonesty

Why is a person who committed an offence unable to become a director of the company?

One of the duties of the director require to manage the asset on behalf of the company. If he becomes an undischarged bankrupt person he is not being trusted by the interested party to manage the company.

What will happen if a person failure to comply?

A person who failed to comply under this Section are convicted and be liable :

• to imprisonment for a term not exceeding 5 years; or

• to a fine not exceeding RM1,000,000.00; or

• to both

A person who committed an offence still be able to become a director?

Yes, a person may be re-appointed or hold office to become a director of the company. However, he must apply for leave from the Official Receiver or from the Court.

What is the meaning of the leave?

Leave is permission is granted by the Court

How to apply for leave from the court?

A person intending to apply for leave may follow the below informations :

1. Notice

• Send a notice of intention to apply for leave has been served on the Official Receiver;

• Send a notice of intention to apply for leave has been served on the Registrar not less than 14 days;

2. Heard on application - The official receiver is heard on the application.

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Share Transfer on Death of Shareholder

Share Transfer on Death of Shareholder
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Share Transfer on Death of Shareholder

Background

When a shareholder dies the right to his interest in the shares will pass to whoever inherits them under his will or intestacy. The deceased shareholder's rights will be administered by his or her executors (if there is a will) or administrators of the estate if the shareholder has died intestate.

Two deciding legal considerations

The beneficiary can make a written request to the company to appoint someone registered as the holder of the inherited shares. The very same appointed person can also execute an instrument or transfer in respect of it. However, this can be a complicated and time-consuming process

  • Does the deceased shareholder have a will?

  • Is there any buy-sell agreement? 

The Will

The appointed executor will carry out the following: -

  • Obtain the grant of probate (GOP) from the high court.

  • Notify the Company Secretary regarding the share to be transmitted according to Section 109 of the Companies Act 2016.

What If There Is No Will?

Family members need to obtain a Letter of Administration (LA) by engaging a lawyer for the application process.

  • An administrator will be appointed

  • Once the administrator received the court order,

  • Notify the Company Secretary regarding the shares to be transmitted according to Section 109 of the Companies Act 2016. 

Buy-Sell Agreement

It’s to outline the terms and conditions under which the shares of a deceased shareholder will be purchased by the surviving shareholders or the company itself. 

The agreement includes provisions such as the purchase price, valuation methods, funding mechanisms, and the process for executing the buyout .

The agreement will be presented to the Company’s Secretary to proceed with the transfer of shares under Section 105 of the Companies Act 2016.

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