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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!
𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
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An internal community for our colleagues on work and leisure.
𝐊𝐓𝐏 𝐂𝐚𝐫𝐞𝐞𝐫
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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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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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A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

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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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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Account, Payroll, Advisory)

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

KTP Lifestyle

An internal community for our colleagues on work and leisure.

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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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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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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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Company director gets RM2.4 million penalty for failure to file a tax return

Company director gets RM2.4 million penalty for failure to file a tax return
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Company director gets RM2.4 million penalty for failure to file a tax return

Background

A recycling company director incurred a penalty of RM2,437,433 in addition to a fine of RM18,000 at the Magistrates Court here today, for her failure to file tax returns for the assessment years of 2021 and 2022 involving a taxable income of more than RM3.3 million.

She failed to file the returns for the taxable income of RM1,827,149 for the assessment year 2021 and RM1,558,176 for 2022, which meant she should have paid a tax of RM812,478 for both the years combined.

Law of Income Tax Act 1976

The taxpayer was charged under Section 77A(1) of the Income Tax Act 1967 which requires her to furnish a tax return in the prescribed form C for years of assessment 2021 to 2022 to the Director General of Inland Revenue.

Under section 112(1A) of the Income Tax Act 1967, the offense was punishable by a fine not exceeding RM20,000 or imprisonment up to six months or both, in addition to a special penalty of triple the tax payable, upon conviction.

Our Tips to Avoid Hefty Tax Penalty

  • First, get familiar with the tax rules that apply to you. The laws can change, so it's good to stay updated. You could use online resources, attend talks on tax, or hire a tax professional to help you.

  • Second, keep accurate records of your money - what you earn and what you spend. This is important when you're filling in your tax forms and it's helpful if tax officials need to check your details.

  • Third, always pay your taxes and submit your tax return on time. Late payments and late filing can lead to fines. You can set reminders or even automate payments and filing so you don't miss deadlines.

  • Fourth, find out about tax reductions and credits you can get. These can lower how much tax you need to pay.

  • Then, if taxes are too complicated for you, consider hiring a professional and responsible tax professional. They can guide you, help you save on your taxes, and avoid costly mistakes. Consider a tax lawyer when IRB brings you to court.

  • Lastly, take advantage of the Special Voluntary Disclosure Program 2.0 offered by the Ministry of Finance with a 0% penalty.

Source :

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Depression in Workplace

Depression in Workplace
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Depression in Workplace

#depression in the workplace often presents subtly and quietly.

Here are those signs of depression in the workplace :

1. Constant fatigue.

2. Lack of focus.

3. Decreased productivity.

4. Becoming withdrawn or irritable.

5. Less interest in tasks once enjoyed.

6. Persistent lateness.

7. Frequent sick days or extended breaks.

8. Inability to make decisions.

9. Excessive worry about minor issues.

10. Changes in appetite or weight.

11. Discussing feelings of worthlessness or hopelessness.

Final Words

While each symptom alone might not suggest #depression, a combination of these could be an indication that you are are battling this mental health condition.

If you feel not comfortable, discuss your situation with your manager, HR or me. #depressionsupport

RIP Coco Lee.

PS : Authored by Mr Koh Teck Peng, the principal of KTP Group, in his personal LinkedIn https://bit.ly/44dU1fN

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Stamp Duty Order 2023

Stamp Duty Order 2023
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Stamp Duty Order 2023

Stamp duty relief for first-time home buyers

Malaysian Budget 2023 Speech on 24 February 2023 to encourage home ownership was to grant to first-time home owners full stamp duty exemption for the instrument of transfer and loan agreement for homes valued at RM500,000 and below until end-2025, and 75% stamp duty remission for the instrument of transfer and loan agreement for homes valued from RM500,001 to RM1,000,000 until 31 December 2023.1

Gazetted Order

The following subsidiary legislation in respect of Malaysian Home Ownership Initiative (iMiliki) under the Home Ownership Programme 2022/2023 (‘iMiliki Initiative 2022/2023’) were gazetted on 9 June 2023 to give effect to the foregoing initiatives:

1. Stamp Duty (Exemption) Order 2023 [P.U.(A) 176/2023] (‘E.O. 1/2023’);

2. Stamp Duty (Exemption) (No. 2) Order 2023 [P.U.(A) 177/2023] (‘E.O. 2/2023’);

3. Stamp Duty (Remission) Order 2023 [P.U.(A) 179/2023] (‘R.O. 1/2023’); and

4. Stamp Duty (Remission) (No. 2) Order 2023 [P.U.(A) 180/2023] (‘R.O. 2/2023’).

All of the above-referred subsidiary legislation (‘Orders’) are deemed to have come into operation on 1 June 2023.

The exemptions and remissions

  • E.O. 1/2023 exempts from stamp duty any loan agreement to finance the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is not more than RM500,000, executed between an individual named in the sale and purchase agreement for the purchase of a residential property (‘SPA’) and any of the financial institutions listed in sub-paragraphs (1)(a) to (1)(i) of Paragraph 2 of E.O. 1/2023.

  • E.O. 2/2023 exempts from stamp duty any instrument of transfer for the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is not more than RM500,000, executed by an individual.

  • R.O. 1/2023 remits 75% of the stamp duty chargeable on any loan agreement to finance the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is more than RM500,000 but not more than RM1,000,000, executed between an individual named in the SPA and any of the financial institutions listed in sub-paragraphs (1)(a) to (1)(i) of Paragraph 2 of R.O. 1/2023.

  • R.O. 2/2023 remits 75% of the stamp duty chargeable on any instrument of transfer for the purchase of a residential property through the iMiliki Initiative 2022/2023, the value of which is more than RM500,000 but not more than RM1,000,000, executed by an individual.

Common conditions

The exemptions and remissions under the Orders shall only apply if the following conditions are satisfied:

  • the SPA is between an individual and a property developer;

  • the purchase price in the SPA is a price after a discount of at least 10% from the original price offered by the property developer as approved in the Advertising and Sales Permit under the Housing Development (Control and Licensing) Act 1966, the Housing Development (Control and Licensing) Enactment 1978 of Sabah or Housing Development (Control and Licensing) Ordinance 2013 of Sarawak (severally the ‘relevant housing development law’), except where the residential property is subject to controlled pricing;

  • the SPA is executed on or after 1 June 2022 but not later than 31 December 2023 and is duly stamped no later than 31 January 2024; and

  • the individual has never owned any residential property, including a residential property which is obtained by inheritance or gift, which is held either individually or jointly.

Supporting documents

The application for stamp duty relief under the Orders must be accompanied by a statutory declaration by:

  • the property developer confirming the grant of a discount of at least 10% from the original price offered by the property developer as approved in the Advertising and Sales Permit under the relevant housing development law, except for a residential property which is subject to controlled pricing; and

  • the individual named in the SPA confirming that he or she has never owned any residential property including a residential property which is obtained by way of inheritance or gift, which is held either individually or jointly.

Common terminology

For the purposes of the Orders:

‘individual’ means a purchaser who is a Malaysian citizen or co-purchasers who are Malaysian citizens;

‘residential property’ means a house, condominium unit, an apartment or a flat purchased or obtained solely to be used as a dwelling house and includes a service apartment and small office home office (SOHO) for which the property developer has obtained an approval for a Developer’s Licence and Advertising and Sales Permit under the relevant housing development law,

and for the purposes of E.O. 2/2023 and R.O. 2/2023, the value of the residential property shall be based on the market value.

Source :

Skrine - Stamp duty relief for first-time home buyers gazetted

https://www.skrine.com/insights/alerts/june-2023/stamp-duty-relief-for-first-time-home-buyers-gazet

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Form E-107D : 2% Tax Deduction For Commission to Agents, Dealers or Distributors

Form E-107D : 2% Tax Deduction For Commission to Agents, Dealers or Distributors
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(Tax Update) Form E-107D : 2% Tax Deduction For Commission to Agents, Dealers or Distributors

Tax Latest Development

The Inland Revenue Board of Malaysia (HASiL) recently made an announcement on their website, dated 27th June 2023, to inform the public about a new development.

IRB has introduced a new form, called Form e-107D, which is now available for online submission. This form is specifically designed for companies to declare and claim a 2% tax deduction on commission payments made to agents, distributors, or dealers, as outlined in Section 107D of the Income Tax Act 1967.

Key Salient Points

According to HASiL Media Release, the Form e-107D includes functions such as:

a. Online filling in the information of the payer and payee of the commission payments for the

purpose of S.107D;

b. Downloading the CP107D Appendix;

c. Uploading the CP107D Appendix; and

d. Bill Number generation for the purpose of S.107D tax payment via ByrHASiL after the Form CP107D has been submitted.

How to Form E-107D

The Form e-107D can be accessed through the MyTax application at https://mytax.hasil.gov.my/. The MyTax user needs to log in and select the role of Director or Director’s representative to use the Form e-107D.

Taxpayers can also refer to the User Manual of the Form e-107D on HASiL’s website as follows:

HASiL website > MyTax > User Manual > User Manual CP107D

Penalty

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

• Commission is not allowed for tax deduction

Further Reference From on 2% Tax Deduction For Commission

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

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

https://bit.ly/3uFIQNj

2. Withholding Tax on Payments to Agents dated on 17.03.2022

https://bit.ly/3L3JzOB

3. 2% withholding tax on commission dated on 30.12.2021

https://bit.ly/3hRrk20

4. 预算案 2022 dated 19.11.2021

https://bit.ly/3tKU7dM

5. Budget 2022 - SME edition dated on 18.11.2021

https://bit.ly/3IWhAiR

Source :

HASiL Media Release - E-107D https://bit.ly/3PBZrNs

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Accrual Accounting Concept

Accrual Accounting Concept
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Accrual Accounting Concept

What is 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 the uniformity and consistency in preparing and recording financial reports.

What is the importance of accounting concepts?

• Serves as a uniform set of rules for each step in recording a financial transaction of a company.

• Provides quality management reports and financial statements.

• Helps users to make financial decision by making the reports reliable, relevance, understandable and comparable.

The 5 commonly used accounting concepts:

• Accrual Concept

• Consistency Concept

• Matching Concept

• Going Concern Concept

• Prudence Concept

What is Accrual Concept?

Revenue is booked when it is earned, NOT when cash is received.

Expenses are recorded when they are incurred, NOT when cash is paid out. Accruals can be passed by journal entries at the month/year end.

Example 1:

Goods delivered on 25 May 2023 and Sales Invoice of RM 1,000 issued on 26 May 2023, but money received from customer on 10 June 2023.

To recognize sales on 26 May 2023:

DR Accounts Receivables RM 1,000

(Balance Sheet)

CR Sales RM 1,000

(Income Statement)

Example 2:

Salary of RM 3,000 incurred in May 2023 but payment to staff only made in early June 2023.

To record expenses on 31 May 2023:

DR Salaries RM 3,000

(Income Statement)

CR Accruals RM 3,000

(Balance Sheet)

More accounting concepts to be continued in the next posting…

 

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THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723­X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

Wisma THK, No. 41, 41-01, 41-02, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru, Johor, Malaysia.
+6012-771 7903 (Secretary Department)
+6012-771 7803 (Account Department)
+607-361 3443
 
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