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(Tax Update) Tax Incentives on Child Care and Kindergartens
(Tax Update) Investing in Kids' Future: Tax Incentives on Child Care and Kindergartens
Investing in child care and kindergartens isn't just good for kids; it's a smart choice for investors too. With more parents working, there's a growing need for quality places where children can learn and grow.
The government is stepping up, offering tax breaks to encourage investment in this important area. This means investing in child care and kindergartens can be financially rewarding and help shape the future of our children.
Let's dive into why putting your money into early education is a win-win for everyone involved.
Public Ruling 4/2016 Tax Incentive for Child Care Centre and Kindergarten Operators
Public Ruling No. 4/2016 by the Inland Revenue Board of Malaysia, we draft out a compelling case study highlighting the significant tax incentives and their impact on the financial performance and sustainability of child care centres and kindergartens.
This case study aims to provide potential investors with a comprehensive understanding of the financial benefits of investing in these operations, underscored by real-world examples and legislative support.
Tax Incentives Overview:
Registration Requirement
Must be registered with the relevant authority: Department of Social Welfare for child care centres or the State Education Department under the Ministry of Education for kindergartens.
Exemption of Statutory Income
The tax exemption applies to business statutory income for a period of five consecutive years.
For existing operators, the exemption commences from the Year of Assessment (YA) 2013.
For new operators, the exemption starts from the YA during which the first invoice is issued.
Industrial Building Allowance
Operators who incur qualifying building expenditure on construction or purchase of a building used in their operations can claim a 10% industrial building allowance annually for ten years.
This incentive is aimed at reducing operating costs and enhancing service quality.
Non-Applicability
The tax incentives do not apply to operators of private pre-schools whose activities are integrated with private primary schools.
Separate Business Sources
If an operator of a child care centre or kindergarten carries on another business, the income from that other business must be treated as a separate source of income, and separate accounts must be maintained.
Adjusted Losses
Adjusted losses incurred from the start of the business until the year before the exemption period, and during the exemption period, can be carried forward and deducted from the statutory income of the business in the post-exempt YAs until fully utilized.
Discontinuation
If the business ceases operation, any unutilized brought forward adjusted loss will be disregarded.
Real-Case Examples:
Situation
ABC is an established child care centre that has been operating since 2020.
For the year of assessment 2020, ABC reported an adjusted income of RM80,000.
Impact of Tax Incentives
Under the tax exemption incentive, ABCs' statutory income of RM80,000 is exempt from tax for five consecutive years, starting from the year of assessment 2020.
This exemption translates into direct tax savings, enhancing the centre's cash flow and providing additional funds that could be redirected towards improving facilities, staff training, or further expansion.
Benefit Analysis
The immediate financial benefit is the preservation of cash that would otherwise be paid as tax. Assuming a corporate tax rate of 15% (concessionary SME rate), the savings amount to approximately RM12,000 for that year alone.
Over the five-year exemption period, assuming steady income, the total tax savings could be significant, providing a substantial financial cushion that can be reinvested into the business.
Conclusion
The government's tax incentives for child care centre and kindergarten operators present a lucrative opportunity for potential investors. By reducing tax liabilities and aiding in the recovery of capital expenditures, these incentives enhance the financial attractiveness and sustainability of investments in the early childhood education sector.
Investors are encouraged to leverage these benefits to contribute to the development of quality child care and education facilities, supporting societal needs and generating substantial returns on investment.
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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
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(Tax Update) Buy Property Under Company or Individual
(Tax Update) Buy Property Under Company or Individual
Buying property under your personal name or through a Sdn Bhd (Sendirian Berhad, which is similar to a Private Limited Company) in Malaysia involves several considerations, including tax implications, liability, financing, and estate planning.
As an approved tax agent, we would guide you through the pros and cons of each approach, tailored to your specific circumstances. It's important to remember that the right choice depends on your financial situation, investment goals, and personal preferences.
Personal Name Purchase
Pros:
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Simpler process: Generally more straightforward than company purchase.
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Tax Benefits: Eligible for RPGT exemptions and potentially lower stamp duties, especially for first-time buyers.
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Better Financing Rates: Often lower mortgage interest rates than those available to companies.
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Stamp duty : Residential properties purchased worth between RM500,001 to RM1 million will get a 75% stamp duty exemption only up until 31st December 2023.
Cons:
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Personal Liability: You're personally liable for debts and legal issues.
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Limited Tax Deductions: Fewer opportunities for deductions on rental income-related expenses.
Sdn Bhd Purchase
Pros:
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Limited Liability: Shareholders' liability is capped, protecting personal assets.
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Tax Advantages: Can benefit from tax deductions on property expenses and potentially favorable corporate tax rates. Eligible for Investment Building Allowance (IBA) when leasing as industrial buildings. Watch out S60F Income Tax Act 1967 tax restriction on expenses.
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Estate Planning: Easier transfer of ownership through shares.
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Asset Management: Suited for managing multiple properties.
Cons:
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Higher Costs: Involves setup, annual compliance, and accounting fees.
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Complex Tax Filings: Must file audited accounts and annual returns.
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Less Favorable Financing: Lower loan margins compared to individual purchases.
Tax Considerations
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Rental Income: Non-SME Investment Holding Companies face a 24% tax on rental income.
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RPGT: Individuals benefit from no RPGT from the sixth year, whereas companies face up to 30% depending on the sale timing.
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Tax Audit Risks: High-risk profiles may trigger LHDN audits.
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Industry Building Allowance: Potential tax reduction for property used as industrial buildings.
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Capital Gain Tax : Be cautious of the new tax implications associated with the transfer of shares.
Loan Considerations
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Financing: Individuals can secure up to 90% financing for residential properties, while Sdn Bhds may only get up to 60%.
Administrative Expenses
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Setup and Maintenance: Sdn Bhd entails initial and ongoing costs, whereas personal purchases incur no extra administrative expenses.
Conclusion
Your decision should be informed by a comprehensive analysis considering your financial situation, investment strategy, and goals.
While personal purchases offer simplicity and certain tax benefits, Sdn Bhds provide liability protection and estate planning advantages but come with higher costs and stricter tax treatment on rental income.
Consulting a tax professional or financial advisor is crucial for personalized advice, ensuring your choice aligns with financial goals and legal requirements.
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
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Website www.ktp.com.my
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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
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Website www.thks.com.my
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(Tax Update) Is bad debt tax deductible?
(Tax Update) Is bad debt tax deductible?
Non-trade debts that are written off as bad, or provisions made in respect of non-trade debts that are doubtful, either specific or general, are not deductible in the computation of adjusted income. Similarly, recoveries relating to non- trade debts written off earlier are not taxable.
This tax question has become increasingly common “Should taxpayers use legal action to recover any debts for tax purposes?”.
Let’s talk about the bad debts written off in a tax perspective :
What Is Bad Debts
Debts that are allowed as a deduction in ascertaining the adjusted income of a business is a trade debt that is irrecoverable either wholly or partly. Such debt is written off as bad. Trade debt is a debt that arises from the sales of goods or services and has been included in the gross income of the business.
1. Issue
What is the tax treatment for bad debts?
2. Conclusion
If reasonable steps have been taken to recover the irrecoverable debts but showing there is no
way to recover the debt, the amount of irrecoverable debts is tax deductible.
However, if there are still any other reasonable steps for recovery, such debt cannot be written off
as irrecoverable. Thus, it is not tax deductible.
3. Reasons
For a trade debt to be written off as bad and allowed as a deduction, generally two conditions
are to be fulfilled.
1. The debt shall be an amount that has been included in the gross income of a person for the
basis period for a YA before the relevant YA.
2. The debt is irrecoverable.
To support a claim for deduction of a bad debt written off for tax purposes, there should be
sufficient evidence of such steps taken, including one or more of the following:
a) issuing reminder notices;
b) debt restructuring scheme;
c) rescheduling of debt settlement;
d) negotiation or arbitration of a disputed debt; or
e) legal action (filing of a civil suit, obtaining judgement from the court, and execution of the judgement).
After reasonable steps for recovery have been taken, debt can be considered wholly irrecoverable on the occurrence of any one of the following :
a) the debtor has died without leaving any assets from which the debt can be recovered;
b) the debtor is bankrupt or under liquidation and there are no assets from which the debt can be recovered;
c) the debt is statute-barred;
d) the debtor cannot be traced despite various attempts and there are no known assets from which the debt can be recovered;
e) attempts at negotiation or arbitration of a disputed debt have failed and the anticipated cost of litigation is prohibitive; or
f) any other circumstances where there is no likelihood of cost-effective recovery.
4. Sources
Public ruling no. 4/2019 Tax treatment of wholly & partly irrecoverable debts and bad debts
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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
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Website www.ktp.com.my
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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
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Website www.thks.com.my
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Form E 2024 Guidelines
(Tax Update) Form E 2024 Guidelines
What is CP8D?
Form E (also known as Borang E or CP8D ) is a form that allows the employer to all staff particulars to LHDN, this form will have to be submitted to LHDN via the e-Filing method on a yearly basis.
Appointment as Director or Employer or Representative
Effective from Year 2023, Form E and Statement e-C.P.8D are mandatory to submit through e-Filing.
To submit Form E, statement e-C.P.8D and e-CP22 through e-filing is only allowed for the individual who is Employer or Employer Representative only.
The role of Employer or Employer Representative can be added in MyTax for individuals who have a digital certificate.
1. Director (Private Sector , Private Sector other than Company)
This role needs to submit through MyTax include a supporting document
2. Deputy director (Private Sector, Private Sector other than Company)
• Individuals who have role as Director can appoint any individual under the same organization to be appointed as Director representative.
• No need any supporting document
• Approvals are automatic
• Director can terminate the director representative at any time
3. Employer (Private Sector + Private Sector other than Company)
• This role will be given automatically if the application of Director have been approved
4. Employer (Sole Proprietorship , Government Sector, Statutory Body, Local authority)
• This role application can submit through MyTax include a supporting document
5. Employer Representative (All category of employer)
• Individuals who have role as employer can appoint any individual under the same organization to be appointed as employer representative.
• No need any supporting document
• Approvals are automatic
• Employer can terminate the employer representative at any time
Retirement Ages in CP8D
Retirement date shall be determined by retirement age in Malaysia which is 60 years old. For example, date of birth of an employee is 1st January 1990. The retirement date of the employee is 1st January 2050.
For those employees which already reached retirement age, then a contract date shall be determined and declared in CP8D.
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
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Logistics Sector Business-to-Business Service Tax Exemption.
(Tax Update) Logistics Sector Business-to-Business Service Tax Exemption.
Key Summary
The Finance Minister announced that taxes for logistics services won’t apply to certain areas to avoid extra taxing at different levels. From March 1, 2024, a 6% tax was planned for these services, but now the government says the following won’t be taxed:
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Services for goods sent abroad.
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Services for moving goods from one ship to another at a port.
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Services for moving goods through a place without staying there.
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Door-to-door delivery services.
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Online delivery of food and drinks.
Businesses in logistics won’t have to pay this tax when they buy the same services from each other.
The government made this change after listening to people’s concerns, including lawmakers, to make sure businesses aren’t paying too much tax when they use different logistics services.
Ministry of Finance Announcement
The expanded scope of exemption was announced by Minister of Finance II Datuk Seri Amir Hamzah Azizan in the Parliament on Monday.
The 6% service tax on the logistics sector was introduced on March 1. Other exemptions on the newly imposed tax include logistics services for transhipment, goods in transit, door-to-door, e-commerce food deliveries, and direct export products.
For newly registered logistics service providers, they will only be imposed the 6% service tax from April onwards, the ministry added.
Source :
Ministry of Finance announcement on SST certain exemption for logistic company
https://www.mof.gov.my/portal/ms/berita/siaran-media/skop-pengecualian-cukai-perkhidmatan-sektor-logistik-diperluas-bagi-mengurangkan-kesan-cukai-berganda
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
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Understanding MFRS 116 : Accounting on Property, Plant, and Equipment
(Acc Update) Understanding MFRS 116 : Accounting on Property, Plant, and Equipment
Let’s learn MFRS 116, a key accounting standard for buildings, machinery, and equipment. Uncover the crucial guidelines it establishes and understand their impact on businesses globally.
What is MFRS 116?
MFRS 116 is a rule from Malaysia on how to account for property, plants, and equipment (PPE), updating the old rule, MFRS 117.
It tells companies how to recognize PPE as assets if they think these assets will bring future benefits and if they can accurately figure out the costs. This includes adding up all costs needed to get the asset ready for use.
Main Points Explained
Recognizing Assets
MFRS 116 focuses on correctly identifying PPE assets, making sure they will likely bring future benefits and that their costs can be accurately measured. This helps keep financial reports trustworthy, letting others understand a company's assets clearly.
Measuring Costs
After an asset is recognized, its cost is calculated by taking the original cost and subtracting any depreciation (value loss over time) and losses in value. All costs directly related to getting or building the asset are included. This careful calculation helps in making smart decisions and keeps financial reports clear.
Depreciation
Depreciation spreads out the cost of an asset over its useful life. Companies must choose a depreciation method that matches how the asset's benefits are used up over time. This makes sure the asset's value in the books matches its real contribution to the business.
Revaluation
MFRS 116 lets companies adjust the book value of an asset to its current market value, but it's not required. If companies choose to do this, they need to update the values regularly. This option lets companies show the true value of their assets.
Telling Others
Companies must share detailed information about their PPE, including values, depreciation methods, and life spans. This openness helps investors and others understand the company's financial health better.
Example: Updating Equipment Value
Imagine a company with a factory that suddenly becomes more valuable because of new technology. MFRS 116 says the company should update the factory's value in their books to show its true current worth. This shows the rule's focus on keeping financial information up-to-date and reliable.
Why It Matters for Businesses
Following MFRS 116 is important for companies because it affects their financial reports, taxes, and decisions. By sticking to these rules, companies make their financial statements more believable, clear, and trustworthy. This also helps compare different companies more easily, improving analysis within and across industries.
To sum up, MFRS 116 guides businesses in accurately and transparently accounting for their buildings, machines, and equipment. Understanding and applying these rules helps businesses deal with accounting challenges confidently, earning trust from those involved.
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
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Guidelines on Capital Gains Tax for Unlisted Shares
(Tax Update) Capital Gain Tax: Guidelines on Capital Gains Tax for Unlisted Shares
The Inland Revenue Board of Malaysia has issued the Guidelines on Capital Gains Tax for Unlisted Shares dated 1 March 2024 on its website.
The CGT Guidelines explain the CGT treatment on the gains or profits from the disposal of:
a. Shares of a company incorporated in Malaysia not listed on the stock exchange; and
b. Shares of a controlled company incorporated outside Malaysia that owns real property situated
in Malaysia or shares of another controlled company or both.
Key Summaries of the Exemption Order
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Introduction of CGT under the Income Tax Act 1967 (ITA) effective from January 1, 2024, with implementation starting March 1, 2024.
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CGT applies to profits from the disposal of capital assets, including unlisted shares of companies incorporated in Malaysia and foreign-controlled companies owning property in Malaysia or shares in other controlled companies.
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The guideline provides explanations for terms such as ''capital asset,'' ''consideration,'' ''disposal,'' ''stock exchange,'' and ''shares.''
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Entities liable for CGT include limited liability partnerships, trusts, cooperatives, including Labuan entities subject to tax under ITA.
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CGT imposition based on the year of assessment in which the disposal transaction occurs.
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Methodology for determining the disposal and acquisition dates and values of capital assets.
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Calculation of profits or gains from the disposal of capital assets and the handling of unabsorbed losses.
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Transfer of capital assets to stock in trade and disposal of shares in relevant companies as per Section 15C of the ITA.
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Claiming foreign tax credits, the CGT rate, and reporting requirements.
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Exemptions and conditions under which CGT may not apply or be calculated differently.
Past Blog on CGT
Read our past blog on CGT
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Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23
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Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24
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Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24
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Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24
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Capital Gain Tax: Unresolved Questions https://www.ktp.com.my/blog/capital-gain-tax-unresolved-questions/23feb24
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Capital Gain Tax : Gains From Disposal Of Capital Asset Arising From Outside Malaysia Received in Malaysia https://www.ktp.com.my/blog/capital-gain-tax-exemption-foreign-source-income/05march24
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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
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Website www.ktp.com.my
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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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
Service Tax Increase To 8%
(Tax Update) Service Tax Increase To 8%
We discuss the service tax rate will increase from 6% to 8% on all taxable services with effect from 1 March 2024, except for F&B, telecommunication services, vehicle parking space services and logistic services.
The scope of service tax will also be widened to include karaoke centre services, delivery services, brokerage and underwriting services, logistics services as well as repair and maintanence, effective 1 March 2024.
Key Summary
Service Tax Rate Increase
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Starting from 1 March 2024, the service tax rate will go up to 8%.
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Some services like food, beverages, telecom, parking, and logistics will still be taxed at 6%.
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Credit card fees will stay at RM25 per card per year.
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Other services like accommodation, clubs, and professional services will be taxed at 8%.
Transition Rules for the Tax Increase
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Services provided before 1 March 2024, will be taxed at 6%, but services after that date will be taxed at 8%.
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If a service spans 1 March 2024, part of it will be taxed at 6% and the rest at 8%.
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Payments made before 1 March 2024, for services after that date will be taxed at 6% if provided within six months, and 8% if provided after six months.
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Special rules will apply to businesses offering services taxed at different rates.
Expansion of Taxable Services
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New services like karaoke centers, brokerage, and logistics will be taxed.
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Logistics services involve managing the movement and storage of goods and information efficiently.
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Some services like food delivery and transshipment won't be taxed.
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Businesses providing logistics services to other businesses will be exempt from tax.
Expansion of Taxable Services - Repair & Maintenance
Royal Malaysian Custom Departments released the Service Tax guidance for maintenance or repair services in Malaysia, as of February 26, 2024. Key points include:
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Introduction of service tax on maintenance or repair services under the Service Tax Act 2018 from September 1, 2018.
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Mandatory registration for providers exceeding a threshold, with a focus on maintenance or repair services.
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Details on taxable and exempt services, including specific examples.
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Clarification on the tax treatment of various maintenance and repair activities.
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Guidelines for service providers on registration, tax imposition, and compliance requirements.The government has unexpectedly decided to expand the scope of the sales and service tax (SST) to include almost all types of repair and maintenance jobs.
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Maintenance management services related to residential land or buildings provided by developers, joint management bodies, management corporations, or residential associations are not subject to service tax.
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Form E FAQ
(Tax Update) Form E FAQ
Form E 常见问题呢
阅读我们过去在 Facebook 上的 E/EA 表格上的分享 :
1) Tax Filing Deadline 2022 Malaysia dated on 10/01/2022
2) E呈报(E Filing)Form E 终极秘籍 dated on 15/03/2021
3) 温馨提示 - Form E 截至日期为31/03/2021 dated on 12/03/2021
4) Form EA 有什么? Dated on 22/02/2021
5) 花红几时需要报进Form EA? Dated on 16/02/2021
6) 公司给员工红包可不可以扣税? Dated on 10/02/2021
7) Deadline for Form E submission is approaching! dated on 09/02/2021
是时候呈报𝐅𝐨𝐫𝐦 𝐄了,让我们为您复习一遍!dated on 28/01/2021 各位雇主与员工请注意!!!
9) 你知不知道 ... IRB不再打印+发E表格(Form E) 给雇主! Dated on 25/01/2021
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
-
Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Capital Gain Tax: Unresolved Questions
(Tax Update) Capital Gain Tax: Unresolved Questions
Introduction
Effective from 1st January 2024, company, limited liability partnership, trust body, and co-operative society which receives gains or profits from the disposal of capital assets consisting of:
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share of a company incorporated in Malaysia not listed on the stock exchange; or
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share of a controlled company incorporated outside Malaysia that owns real property situated in Malaysia or shares of another controlled company or both,
are subject to Capital Gains Tax (CGT) under the Income Tax Act 1967.
Exemption Period
Any disposal for the period of 1st January 2024 to 29th February 2024 is exempted from Capital Gains Tax under The Income Tax (Exemption) (No. 7) Order 2023.
The taxpayer is not required to submit a tax return for the disposal of that capital asset within the above period.
CGT Filing and Tax Payment Deadline
IRBM has published Capital Gains Tax Return Form (CGTRF) Filing Programme on 15 January 2024 with key takeaways is summarised as below :
Taxpayers are to submit CGT tax returns and make tax payments within sixty (60) days of the date of disposal.
For assessments raised under sections 91, 96A, and subsections 90(3), 101(2) of ITA 1967, the tax / balance of tax shall be paid within 30 days from the date of assessment. Nevertheless, a grace period of 7 days is given.
Taxpayers are required to submit tax returns through e-Filing (e-CKM Form). Kindly visit MyTax portal at https://mytax.hasil.gov.my to access e-CKM Form from 1st March 2024.
Taxpayers shall have a Tax Identification Number (TIN) and Digital Certificate to access e-CKM.
Unresolved Questions
On January 15, 2024, the Inland Revenue Board of Malaysia (IRBM) shared the filing process for the Capital Gains Tax Return Form (CGTRF) but didn't provide further guidance.
With the new Capital Gains Tax (CGT) beginning on March 1, 2024, the lack of clear instructions has left taxpayers and businesses unsure about how to proceed.
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The Exemption Order does not change the start date for a lower 2% tax option on unlisted shares bought before 2024. If bought between January and February 2024, future sales are taxed at 10%, not 2%. There might be a ''tax-free'' period due to a technicality, but this wasn't officially announced.
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Redeemable preference shares' redemption isn't clearly defined as a ''disposal'' for CGT, suggesting future clarification.
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The term ''real property'' lacks a clear definition for CGT purposes, and it's unclear how the 75% test for foreign company disposals applies over time.
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Exemptions mentioned previously might be added later. For foreign-sourced gains to be tax-exempt, companies must meet certain economic substance requirements in Malaysia.
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It's uncertain how losses from domestic and foreign asset disposals are treated for tax purposes, indicating a need for further guidance.
Past Blog on CGT
Read our past blog on CGT
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Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23
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Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24
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Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24
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Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Role of Company Secretary Under The AMLD Malaysia
(Sec update) Role of Company Secretary Under the AMLD Malaysia
What is the Role of the Company Secretary’s play as a reporting institution under the Anti-money Laundering, Anti-terrorism Financing and proceeds of Unlawful Activities Act 2001 (AMLA)?
What is Malaysian AMLA regime?
Before we determine our role, we should understand the meaning of money laundering. Money laundering is a process of converting cash, funds or property derived from criminal activities to give it a legitimate appearance. It is a process to clean ‘dirty’ money to disguise its criminal origin.
How about terrorism financing? It is an act of providing financial support to terrorists or terrorist organisations to enable them to carry out terrorist acts or to benefit any terrorist or terrorist organisation.
Like many other countries, Malaysia government is highly concerned about this area, where money laundering, terrorism financing and proliferation financing pose a significant challenge to the financial system and the overall business sector.
What is The Role of Company Secretary Under AML
Company secretaries are required to comply with Bank Negara Malaysia’s (BNM) Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Designated Non-Financial businesses and professions & non-Bank financial institutions policy documents (BNM Policy Document).
Company secretaries are appointed as one of the reporting institutions by Bank Negara Malaysia (BNM), they are playing an important role in this area.
They are required to take the necessary steps to prevent Money laundering / Terrorism Financing and have a system to report suspected transactions to the Financial Intelligence and Enforcement Department (FIED).
Company secretaries have to carry out the following measures to prevent Money Laundering / Terrorism Financing :
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Compliance with laws
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Cooperation with law enforcement agencies
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Establishing internal Control
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Risk-based approach
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Customer Due Diligence
A Company Secretary is mandated to conduct CDD on customers when establishing business relations by overseeing transactions. To identify and verify the customer’s identity using reliable, independent source documents, data or information such as identification card.
Additionally, it is crucial to verify the authorization of any person acting on behalf of the customer and confirm their identity. The company secretary must ensure the beneficial ownership’s identity by using reliable information to ensure confidence in their identification.
AMLA Reporting Entity
There are many appointed Reporting Institutions, both in the financial and non-financial sectors.
For examples:
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Financial Intermediaries,
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Lawyers,
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Accountants,
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Registered Estate Agents, and etc.
All appointed reporting Institutions to work hand in hand with the Malaysian Government and Bank Negara Malaysia to prevent money laundering and terrorism financing, contributing to Malaysia’s brighter future.
PS : Authored by Hui Ting, our secretary associate in THK, in her personal LinkedIn post
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Form E 常见错误
(Tax Update) Form E 常见错误
回顾我们过去在2021年3月16日为 KTP|THK 客户举办的免费网络研讨会 -Form E 常见错误.
这是一次富有成效的活动,为参与者提供了宝贵的见解和知识. 活动由资深专家 Ms. Caroline Lim 担任主持和发言人,她的专业知识和丰富经验为整个研讨会增添了深度和价值.
Ms. Caroline Lim 以其独特的洞察力和精湛的表达能力,深入探讨了 Form E 表格常见的错误和解决方法. 她不仅详细解释了可能导致错误的原因, 还分享了有效的纠正措施和最佳实践, 帮助参与者避免在填写表格时犯下相同的错误.
通过她的专业指导, 参与者们对如何正确地填写Form E表格有了更清晰的理解, 增强了他们的专业能力和信心. 这种开放式的交流氛围使每个人都能从彼此的经验中学习, 并共同探讨解决问题的方法, 进一步丰富了整个研讨会的内容和成果.
总的来说,这次研讨会为KTP|THK客户带来了实质性的帮助和价值.
感谢 Ms. Caroline Lim 及所有参与者的付出和贡献, 期待未来我们能继续举办类似的活动,为客户提供更多优质的服务和支持.
在我们的 YouTube 上观看 15 分钟视频 https://youtu.be/84szaL-0Tok
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Malaysia Service Tax rise to 8% March 2024
(Tax Update) What is the new SST rate in Malaysia 1 March 2024?
In this blog, we discuss the service tax rate will increase from 6% to 8% on all taxable services with effect from 1 March 2024, except for F&B, telecommunication services, vehicle parking space services and logistic services.
The scope of service tax will also be widened to include karaoke centre services, delivery services, brokerage and underwriting services, as well as logistics services, effective 1 March 2024.
Key Summary
Service Tax Rate Increase
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Starting from 1 March 2024, the service tax rate will go up to 8%.
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Some services like food, beverages, telecom, parking, and logistics will still be taxed at 6%.
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Credit card fees will stay at RM25 per card per year.
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Other services like accommodation, clubs, and professional services will be taxed at 8%.
Transition Rules for the Tax Increase:
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Services provided before 1 March 2024, will be taxed at 6%, but services after that date will be taxed at 8%.
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If a service spans 1 March 2024, part of it will be taxed at 6% and the rest at 8%.
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Payments made before 1 March 2024, for services after that date will be taxed at 6% if provided within six months, and 8% if provided after six months.
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Special rules will apply to businesses offering services taxed at different rates.
Expansion of Taxable Services:
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New services like karaoke centers, brokerage, and logistics will be taxed.
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Logistics services involve managing the movement and storage of goods and information efficiently.
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Some services like food delivery and transshipment won't be taxed.
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Businesses providing logistics services to other businesses will be exempt from tax.
Overall, these changes could affect how much tax businesses and consumers pay for certain services in Malaysia.
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
What Directors Should Do After Incorporation
(Sec update) What Directors Should Do After Incorporation
Embarking on the corporate journey in Malaysia involves more than just the initial setup. Directors play a crucial role in steering the company through ongoing responsibilities.
This article outlines key post-incorporation tasks, including filing Annual Returns, submitting Financial Statements, and managing Tax Returns to LHDN. Adhering to these deadlines is essential to avoid penalties and ensure regulatory compliance.
Join us as we explore the vital steps directors must take after incorporation for sustained success in the Malaysian business landscape.
Annual Return
According to the Companies Act 2016 in Malaysia, the Annual Return is a statutory document that companies need to file with the Companies Commission of Malaysia (SSM). This document allows companies to update and confirm their registered information with the SSM, including details about shareholders, directors, registered office address, share capital, and financial position.
Typically, the Company Secretary will prepare the Annual Return for the Director's review, approved via the Directors' Written Resolution. Once approved, the Company Secretary will submit the Annual Return (Section 68) via MBRS.
Companies are required to file the Annual Return within 30 days from the anniversary of their incorporation date.
Financial Statement
The board of directors must ensure that the company's financial statement is submitted within the specified deadline to SSM. The board oversees the financial reporting process, ensuring that management fulfills its responsibilities in preparing accurate and reliable financial statements. After the management account is ready, an approved auditor audits the report to provide assurance in accordance with relevant auditing standards.
The auditor expresses an opinion on whether the financial statements present a true and fair view of the company's financial position, results of operations, and cash flows. This opinion is crucial for stakeholders such as bankers, shareholders, employees, and creditors.
Once the audited report is ready, the director circulates it within 6 months from the financial year-end to shareholders by conducting a meeting. After circulation, the auditor passes the audited report to the secretary to arrange for submission to SSM within 30 days from the circulation date.
Tax Return to the Inland Revenue Board of Malaysia (LHDN):
Form E
Employers must submit Form E annually to report employees' income details, including their name, identification number, employment income, and tax deductions. Employers are responsible for deducting the appropriate amount of income tax from employees' salaries and remitting it to the tax authorities.
The deadline for submitting Form E is typically in March of the following year, done electronically through the e-filing system provided by the Inland Revenue Board.
CP204
Used by companies to declare estimated chargeable income and determine installment payments for the upcoming year, CP204 is part of the corporate tax filing process in Malaysia. Companies must submit CP204 within 7 months from the end of their accounting period.
Based on the estimated chargeable income declared, companies must make installment payments through the e-filing system.
Form C
Form C is used by companies to report actual chargeable income, tax adjustments, and other relevant details to the Inland Revenue Board. The deadline for submitting Form C is usually within seven months from the end of the company's financial year. Companies need to provide details of financial transactions, income, expenses, and other relevant financial information. Form C, along with audited financial statements, is typically submitted electronically through the e-filing system.
Conclusion
Late submission of these crucial documents may result in penalties or compounds imposed by SSM or LHDN. Directors must adhere to these deadlines to maintain compliance and avoid legal repercussions.
Engaging these professionals from company secretaries, auditors, accountants, and tax agents not only ensures compliance with regulatory requirements but also provides valuable insights, allowing directors to navigate the intricacies of corporate governance with confidence and precision.
This collaboration ensures precision in meeting regulatory requirements, offering directors the necessary support to steer their businesses toward sustained success.
PS : Authored by Syazwan, our secretary associate in THK, in her personal LinkedIn post
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
-
Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Tax Treatment on Company Trip
(Tax Update) Tax Treatment on Company Trip
In this blog, we discuss the tax treatment for both local and overseas trips provided by a company to its employees. Here's a key takeaway for your understanding.
Company-Sponsored Employee Trips: Understanding Tax Implications
When a company offers its employees the opportunity to embark on trips, whether within their home country or abroad, it's important to consider the tax implications for both the employer and the employee. In this article, we'll delve into the tax treatment of these trips in detail.
1. Tax Treatment for Employer and Employee for Local and Overseas Trips
Let's break down the tax treatment for both local and overseas company-sponsored trips from the perspective of the employer and the employee:
Local Trips:
For Employers: The costs incurred for airfares, meals, and accommodation related to local trips are eligible for a full deduction when calculating the company's taxable income. This is classified as an entertainment expense according to the Addendum to Public Ruling No.1/2003 Tax Treatment on Leave Passage.
For Employees: Local trips do not impact the employee's taxable income, as there is no leave passage cost associated with these journeys.
Overseas Trips:
For Employers: In the case of overseas trips, the cost of airfares (treated as leave passage cost) is not deductible for the employer. However, the costs related to food and accommodation are deductible as entertainment expenses, with the condition that they are restricted to the amount spent on the employee.
For Employees: For the first overseas trip in a calendar year, employees are eligible for an exemption on the leave passage cost (airfares), limited to a maximum value of RM3,000.00. However, for second overseas trips onwards, the cost of airfares (leave passage cost) becomes assessable as employment income.
2. Key Facts
Local Trip: According to the Addendum to Public Ruling No.1/2003 Tax Treatment on Leave Passage, expenses incurred by an employer to facilitate a yearly event within Malaysia involving the employer, employee, and immediate family members fall under the category of entertainment expenses. As such, local company trips are fully deductible in the company's tax computation. From the employee's perspective, these trips do not affect their taxable income, as no leave passage cost is involved.
Overseas Trip: Paragraph 10 of Public Ruling No.1/2003 states that expenditures related to leave passages, whether within or outside Malaysia, are not deductible in the company's tax computation. However, the ruling further elaborates:
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Only the cost of airfares is treated as leave passage cost and is not allowed for deduction.
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Other costs, such as food and accommodation, are deductible as entertainment expenses but are limited to the amount spent on the employee.
For employees, paragraph 8(ii) of this public ruling outlines that an exemption, limited to a maximum value of RM3,000, is granted on the leave passage cost (airfares) for one overseas trip outside Malaysia in a calendar year. Subsequently, for the second overseas trip onwards, the cost of airfares becomes assessable as employment income.
Source :
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Reference Public Ruling No.1/2003 – Tax Treatment of Leave Passage https://phl.hasil.gov.my/pdf/pdfam/PR1_2003.pdf
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Addendum to Public Ruling No.1/2003 – Tax Treatment of Leave Passage https://phl.hasil.gov.my/pdf/pdfam/PR1_2003_Add1.pdf
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Income Tax Act 1967 https://phl.hasil.gov.my/pdf/pdfam/Act_53_20190101.pdf
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Public Ruling No.4/2015 – Entertainment Expense https://phl.hasil.gov.my/pdf/pdfam/PR_4_2015.pdf
PS : Authored by Bryan Kam Shi Zhen and Gan Yong Chun, our audit associates with KTP, in their personal LinkedIn post.
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
-
Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
We Are Hiring Now
We Are Hiring Now
Are you curious about the KTP experience?
In this enlightening session conducted in English on the Zoom platform, we invite you to dive deep into the diverse experiences at KTP as shared by our dynamic team members:
1. Ain, an enthusiastic intern.
2. Aiman, a motivated fresh graduate.
3. Fatira, an experienced professional.
They'll be candidly sharing their personal journeys and insights gained during their first six months at KTP.
Don't miss this opportunity to gain insider perspectives and valuable insights into life at KTP!
Watch the full (40 minutes) interview in our YouTube
https://youtu.be/GHEiCH0-3MQ
Send in your full resume to careers@ktp.com.my
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3jZuZuI
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
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Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
Public Ruling 10/2023 Pioneer Status Incentive
(Tax Update) Unlocking the Benefits of Pioneer Status Tax Incentive
Public Ruling 10/2023 Pioneer Status Incentive
The publication of Public Ruling 10/2023 on the Pioneer Status Incentive by IRBM on December 29, 2023, is particularly relevant. As tax agents, we consistently recommend that our taxpayers and investors consult official publications from MIDA.
This incentive is designed to attract and facilitate investment in key sectors, offering substantial tax benefits to qualifying companies. As an investor, understanding these details is critical for making informed decisions about potential investments in Malaysia
Pioneer Status is, in general, given by way of exemption from tax on 70% of the statutory income for five years and the remaining 30% is taxed at the prevailing tax rate.
For a comprehensive understanding of the Pioneer Status tax incentive, we invite you to explore our case study, available on our KTP website at https://www.ktp.com.my/pioneer-status.
Here's a summary of key points of Public Ruling 10/2023 :
Objective
This incentive aims to explain the pioneer status available to companies engaged in promoted activities or producing promoted products in Malaysia.
Pioneer Status
It's a tax incentive under the Promotion of Investments Act (PIA), providing tax relief on statutory business income for companies in certain sectors.
Qualifying Companies
Pioneer status is granted to companies undertaking promoted activities or producing promoted products. This includes sectors like manufacturing, agriculture, hotels, tourism, etc.
Promoted Activities and Products
These are determined by the Minister of International Trade and Industry, in concurrence with the Minister of Finance, and are updated periodically.
Application Process
Applications for pioneer status are handled by the Malaysian Investment Development Authority (MIDA). Companies can apply for pioneer status for multiple activities or products.
Grant of Pioneer Status
The status is granted based on the fulfillment of certain criteria and is subject to conditions specified in the approval letter.
Pioneer Certificate
Companies must apply for this within 24 months of pioneer status approval. It certifies the company as a pioneer company, identifies the pioneer factory, and states the production day.
Withdrawal and Cancellation
Pioneer status can be withdrawn or canceled if the company fails to comply with terms and conditions.
Tax Relief Period
Typically five years from the production day, during which part or all of the statutory income from the pioneer business is exempt from tax. Extension of Tax Relief Period: Companies can apply for an extension of another five years.
Tax Treatment
The ruling details the tax treatment of pioneer companies, including basis periods, computation of pioneer income, and capital allowances.
Pioneer Company Losses
Statutory income of a pioneer business will be fully or partially exempted, but subject to deductions for losses.
Separate Accounts
Companies must keep separate accounts for the pioneer and any other business activities.
Source :
Public Ruling 10/2023 Pioneer Status Incentive https://www.hasil.gov.my/media/wrqhhbta/pr-10-2023-pioneer-status-incentive.pdf
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
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Website www.thks.com.my
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Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
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Tiktok http://bit.ly/3u9LR6Q
-
Youtube http://bit.ly/3ppmjyE
-
Facebook http://bit.ly/3ateoMz
-
Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
What is the capital gains tax in 2024 Malaysia?
(Tax Update) Capital Gain Tax: Filing Deadline
Introduction
Effective from 1st January 2024, company, limited liability partnership, trust body, and co-operative society which receives gains or profits from the disposal of capital assets consisting of:
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share of a company incorporated in Malaysia not listed on the stock exchange; or
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share of a controlled company incorporated outside Malaysia that owns real property situated in Malaysia or shares of another controlled company or both,
are subject to Capital Gains Tax (CGT) under the Income Tax Act 1967.
Exemption Period
Any disposal for the period of 1st January 2024 to 29th February 2024 is exempted from Capital Gains Tax under The Income Tax (Exemption) (No. 7) Order 2023.
The taxpayer is not required to submit a tax return for the disposal of that capital asset within the above period.
Responsibility of Taxpayers on CGT
Chargeable persons according to the provisions of section 66 to section 75B are responsible for submitting CGT tax returns.
The appointed representatives are responsible for submitting CGT tax returns on behalf of the taxpayer. The representatives are assessable and chargeable to tax and the payment of tax charged.
A licensed tax agent under section 153 of the ITA 1967 can be appointed to submit CGT tax returns.
CGT Filing and Tax Payment Deadline
Taxpayers are to submit CGT tax returns and make tax payments within sixty days of the date of disposal.
For assessments raised under sections 91, 96A, and subsections 90(3), 101(2) of ITA 1967, the tax / balance of tax shall be paid within 30 days from the date of assessment. Nevertheless, a grace period of 7 days is given
Tax Return
Taxpayers are required to submit tax returns through e-Filing (e-CKM Form). Kindly visit MyTax portal at https://mytax.hasil.gov.my to access e-CKM Form from 1st March 2024.
Taxpayers shall have a Tax Identification Number (TIN) and Digital Certificate to access e-CKM.
Past Blog on CGT
Read our past blog on CGT
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Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23
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Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24
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Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
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Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
-
Tiktok http://bit.ly/3u9LR6Q
-
Youtube http://bit.ly/3ppmjyE
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Facebook http://bit.ly/3ateoMz
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Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
What Is The Surcharge For Transfer Pricing (TP) Malaysia?
(Tax update) What Is The Surcharge For Transfer Pricing (TP) Malaysia?
Surcharge 5%
With effect from 1 January 2021, the IRBM may impose a surcharge of up to 5% on any increase in income or reduction of any deduction / loss arising from these adjustments.
A surcharge is imposed on a Transfer Pricing (TP) adjustment made under Section 140A of the Income Tax Act 1967 (ITA) which results in an increase in income or a reduction of any deduction or loss. When any taxpayer does not comply with the arm’s length principles, a surcharge will be imposed on that adjustment regardless of whether the taxpayer is in a loss position or a tax exempt company.
The imposition of surcharge of up to 5% on any transfer pricing adjustment under Section 140A(3C) was released on 18 January 2024 in Frequently Asked Question (FAQ) in IRBM website.
Key Takeaways of the FAQ
Surcharge on incorrect transfer prices
Starting from January 1, 2021, the IRB can impose a surcharge of up to 5% on any transfer pricing adjustments. This applies even if the adjustment doesn’t result in additional tax payable, affecting loss-making or tax-exempt companies.
Application of surcharge
The surcharge applies to tax audits initiated from January 1, 2021, onwards, regardless of the financial year being audited. Only a surcharge will be imposed in cases where transfer pricing adjustments result in additional income, not a penalty for submitting an incorrect return.
Non-appealability of surcharge
The surcharge, which is not a tax, cannot be appealed through legal processes but only to the Director General of Inland Revenue on a case-by-case basis.
Penalties for not furnishing documentation
Failure to provide contemporaneous transfer pricing documentation within 14 days of request can result in penalties ranging from RM20,000 to RM100,000, and potentially a prison term of up to six months.
Mutually Exclusive with Section 113 (2)
The FAQ states that the surcharge is mutually exclusive with the penalty under Section 113(2).
What is the new TP rule in Malaysia?
The documentation must be prepared before the due date for submitting income tax returns and must include the date of completion.
The IRB scrutinizes various aspects like sales/purchase margins, profitability, intragroup services, and intragroup financing. Lack of benchmarks, consistent losses, and insufficient supporting documents are some of the red flags.
Even companies enjoying tax holidays or incurring losses must adhere to transfer pricing rules, as any adjustments by the IRB will attract a surcharge.
Taxpayers are advised to scrutinize their related company transactions to ensure compliance with the arm's length principle to avoid penalties and fines.
Failure to provide contemporaneous transfer pricing documentation within 14 days of request can result in penalties ranging from RM20,000 to RM100,000, and potentially a prison term of up to six months.
The transfer pricing scene in Malaysia is rapidly evolving, and taxpayers are advised to stay informed and compliant to avoid severe penalties and fines.
Sources
IRBM : FAQ on TP 18/1/2024
https://www.hasil.gov.my/media/w0ag5bsp/faq-on-matters-arising-from-subsection-140a-3c-ita-1967.pdf
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
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Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
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Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
-
Tiktok http://bit.ly/3u9LR6Q
-
Youtube http://bit.ly/3ppmjyE
-
Facebook http://bit.ly/3ateoMz
-
Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
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Instagram https://bit.ly/3u2PxHg
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Facebook http://bit.ly/3rPxz9o
What are the most important clauses in a shareholder agreement?
(Sec update) Top 5 Crucial Clauses in Shareholders' Agreement
One or more business partners incorporating a company may seem like a straightforward process that does not require any agreement. However, some of the shareholders may want to consider entering a shareholder’s agreement, especially if you are a minority shareholder in the company.
Although the Companies Act 2016 does provide some protection for shareholders, such as oppression of minority shareholders. When shareholders sign a Shareholders Agreement (SHA), the court typically gives it priority, as the SHA reflects the final intent of the parties' relationship nature.
If “Without” an SHA, it may be more challenging to find legal grounds to make a claim, as the protections provided by the company's constitution may be insufficient.
Leverage our 25 years of unparalleled company secretarial experience to uncover the five (5) indispensable clauses that can make or break your Shareholders' Agreement. Don't embark on your business journey without this invaluable knowledge
Top 5 Clauses in Shareholders’ Agreement
We have pointed out the following five common clauses in a Shareholders' Agreement (SHA) that may help to protect your rights as a minority shareholder:
1. Reserved Matters
In the SHA may state the reserved matters that require unanimous voting by the company. This clause is crucial for minority shareholders, providing protection against the majority shareholders' rights (who are likely to win with a majority vote at company meetings).
Examples of reserved matters such as include changes in the company's business, an increase in the company's share capital (which dilutes everyone's ownership), exercising borrowing powers (such as obtaining substantial loans from banks), or creating security interests (such as registering a charge on company assets).
2. Shareholder Obligations
Each Shareholder's obligations in the company can be clearly defined in the SHA. Such as a common clause states, ''Shareholders shall act in the best interests of the company.'' If each shareholder provides different contributions, this clause helps specify individual obligations.
For example, Mr. A is obligated to invest funds in the company; Mr. B has to contribute his/her expertise in certain areas, maybe in terms of knowledge or skills; and Mr. C, with decades of management experience, oversees and implements various company projects.
3. Directors
Companies usually have an odd number of directors to prevent deadlock situations. For some situations, the majority shareholders may appoint directors count tends to favor them in maintaining control at the executive level.
However, minority shareholders should insist on the right to appoint at least one director by adding this clause in the SHA, ensuring representation on the board allows easy oversight of company operations and protects minority shareholder interests.
4. Equity Transfer
To ensure clear provisions when another shareholder wishes to exit the company, this is preventing potential co-ownership with your competitor. It's crucial to explicitly outline (Exit Conditions) such details in the shareholders' agreement.
Another key provision is the purchase price for the existing shareholder's shares. The Shareholders may state the selling price in the SHA as agreed upon among the Shareholders for whoever exits the company in a certain time. Unless the exiting shareholder agrees to give up shares at the initial investment price (often impractical), some valuation mechanism may be necessary. However, valuing a company can be costly.
Specific clauses like pre-emptive rights, tag-along rights, drag-along rights, and drag-with rights exist and may be included in the SHA but may not be necessary, especially for small to medium-sized enterprises.
5. Dispute Situation
Dispute resolution clauses provide shareholders with options to resolve conflicts among them. For instance, a shareholders' agreement may include an arbitration clause, meaning any disputes must be resolved through arbitration rather than litigation in court.
However, as a minority shareholder, caution should be exercised before agreeing to an arbitration clause unless you fully understand its implications.
In conclusion, shareholders' agreements are common and can effectively protect the interests of all involved shareholders, especially minorities. Even if a company did not initially sign such an agreement, there's nothing stopping shareholders from subsequently doing so.
PS : Authored by Hui Ting, our secretary associates in THK, in her personal LinkedIn post
Visit Us
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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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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
-
Website www.ktp.com.my
-
Instagram https://bit.ly/3Rko5kN
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Linkedin https://bit.ly/3sapf4l
-
Telegram http://bit.ly/3ptmlpn
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
-
Website www.thks.com.my
-
Facebook https://bit.ly/3nQ98rs
KTP Lifestyle
An internal community for our colleagues on work and leisure.
-
Tiktok http://bit.ly/3u9LR6Q
-
Youtube http://bit.ly/3ppmjyE
-
Facebook http://bit.ly/3ateoMz
-
Instagram https://bit.ly/3jZpKLo
KTP Career
An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.
-
Instagram https://bit.ly/3u2PxHg
-
Facebook http://bit.ly/3rPxz9o