Malaysia Tax Guide 2012 - PKF · PDF fileI PKF Worldwide Tax Guide 2012 foreword A...

MalaysiaTax Guide

2012

PKF Worldwide Tax Guide 2012I

foreword

A country’s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed?

Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for 100 countries throughout the world.

As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country’s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Kaarji Vaughan, PKF Melbourne for co-ordinating and checking the entries from countries within their regions.

The WWTG continues to expand each year reflecting both the growth of the PKF network and the strength of the tax capability offered by member firms throughout the world.

I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business.

Jon HillsPKF (UK) LLPChairman, PKF International Tax Committee [email protected]

PKF Worldwide Tax Guide 2012 II

important disclaimer

This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication.

This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms.

PKF Worldwide Tax Guide 2012III

preface

The PKF Worldwide Tax Guide 2012 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of 100 of the world’s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current as of 30 September 2011, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country’s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments.

While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice.

In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at www.pkf.com

PKF INTERNATIONAL LIMITEDAPRIL 2012

©PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION

PKF Worldwide Tax Guide 2012 IV

about pKf international limited

PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,200 partners and more than 21,400 staff.

PKFI is the 10th largest global accountancy network and its member firms have $2.6 billion aggregate fee income (year end June 2011). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide.

Services provided by member firms include:

Assurance & AdvisoryCorporate FinanceFinancial PlanningForensic AccountingHotel ConsultancyInsolvency – Corporate & PersonalIT ConsultancyManagement ConsultancyTaxation

PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy, insolvency and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network.

Please visit www.pkf.com for more information.

PKF Worldwide Tax Guide 2012V

structure of country descriptions

a. taXes payable

FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES

b. determination of taXable income

CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates

PKF Worldwide Tax Guide 2012 VI

AAlgeria . . . . . . . . . . . . . . . . . . . .1 pmAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . .9 amAustralia - Melbourne . . . . . . . . . . . . .10 pm Sydney . . . . . . . . . . . . . . .10 pm Adelaide . . . . . . . . . . . . 9.30 pm Perth . . . . . . . . . . . . . . . . . .8 pmAustria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas . . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBelgium . . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 amBrazil. . . . . . . . . . . . . . . . . . . . . .7 amBritish Virgin Islands . . . . . . . . . . .8 am

CCanada - Toronto . . . . . . . . . . . . . . . .7 am Winnipeg . . . . . . . . . . . . . . .6 am Calgary . . . . . . . . . . . . . . . .5 am Vancouver . . . . . . . . . . . . . .4 amCayman Islands . . . . . . . . . . . . . .7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmColombia . . . . . . . . . . . . . . . . . . .7 amCroatia . . . . . . . . . . . . . . . . . . . .1 pmCyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . .1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . .6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFiji . . . . . . . . . . . . . . . . .12 midnightFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

GGambia (The) . . . . . . . . . . . . . 12 noonGeorgia . . . . . . . . . . . . . . . . . . . .3 pmGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala . . . . . . . . . . . . . . . . . .6 am

Guernsey . . . . . . . . . . . . . . . . 12 noonGuyana . . . . . . . . . . . . . . . . . . . .7 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pmIndonesia. . . . . . . . . . . . . . . . . . .7 pmIreland . . . . . . . . . . . . . . . . . . 12 noonIsle of Man . . . . . . . . . . . . . . 12 noonIsrael . . . . . . . . . . . . . . . . . . . . . .2 pmItaly . . . . . . . . . . . . . . . . . . . . . .1 pm

JJamaica . . . . . . . . . . . . . . . . . . .7 amJapan . . . . . . . . . . . . . . . . . . . . .9 pmJersey . . . . . . . . . . . . . . . . . . 12 noonJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKazakhstan . . . . . . . . . . . . . . . . .5 pmKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . .9 pmKuwait . . . . . . . . . . . . . . . . . . . . .3 pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pmLiberia . . . . . . . . . . . . . . . . . . 12 noonLuxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMauritius . . . . . . . . . . . . . . . . . . .4 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noon

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The) . . . . . . . . . . . . .1 pmNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

OOman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPapua New Guinea. . . . . . . . . . .10 pmPeru . . . . . . . . . . . . . . . . . . . . . .7 amPhilippines . . . . . . . . . . . . . . . . . .8 pmPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pmPuerto Rico . . . . . . . . . . . . . . . . .8 am

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE sTANDARD TIME ELsEwHERE Is:

PKF Worldwide Tax Guide 2012VII

QQatar. . . . . . . . . . . . . . . . . . . . . .8 am

RRomania . . . . . . . . . . . . . . . . . . .2 pmRussia - Moscow . . . . . . . . . . . . . . .3 pm St Petersburg . . . . . . . . . . . .3 pm

sSierra Leone . . . . . . . . . . . . . 12 noonSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pmSouth Africa . . . . . . . . . . . . . . . . .2 pmSpain . . . . . . . . . . . . . . . . . . . . .1 pmSweden . . . . . . . . . . . . . . . . . . . .1 pmSwitzerland . . . . . . . . . . . . . . . . .1 pm

TTaiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .8 pmTunisia . . . . . . . . . . . . . . . . . 12 noonTurkey . . . . . . . . . . . . . . . . . . . . .2 pmTurks and Caicos Islands . . . . . . .7 am

UUganda . . . . . . . . . . . . . . . . . . . .3 pmUkraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States of America - New York City . . . . . . . . . . . .7 am Washington, D.C. . . . . . . . . .7 am Chicago . . . . . . . . . . . . . . . .6 am Houston . . . . . . . . . . . . . . . .6 am Denver . . . . . . . . . . . . . . . .5 am Los Angeles . . . . . . . . . . . . .4 am San Francisco . . . . . . . . . . .4 amUruguay . . . . . . . . . . . . . . . . . . .9 am

VVenezuela . . . . . . . . . . . . . . . . . .8 amVietnam . . . . . . . . . . . . . . . . . . . .7 pm

PKF Worldwide Tax Guide 2012 1

Malaysia

malaysia

Currency: Ringgit Dial Code To: 60 Dial Code Out: 00 (RM)

Member Firm:City: Name: Contact Information:Kuala Lumpur M B Gathani 3 20323828 [email protected]

Malaysian taxation is territorial in scope, whereby income derived from sources in Malaysia and income received in Malaysia from outside Malaysia is subject to tax. With effect from year of assessment (YA) 2004, income received in Malaysia by any person other than a resident company carrying on the business of banking, insurance, sea or air transport derived from sources outside Malaysia is exempted from tax. Malaysia has signed tax treaties with over 70 countries.

Malaysia is currently under a Self-Assessment tax regime (SAS), where taxpayers have the responsibility to assess the extent of their tax liability and bear the onus of disclosure and representation of information.

Under the SAS, the tax authorities will conduct tax audits on taxpayers to ensure proper compliance in respect of returns submitted, failing which penalties will be imposed on tax adjustments made. Following the Malaysian Budget 2012, it is proposed that the time bar for tax audits be reduced from six to five years with effect from YA 2013.

a. taXes payable

CORPORATE TAXTaxable income of companies is generally subject to corporate tax at the rate of 25% (with effect from YA 2009). Small and Medium Enterprises (SMEs) which fulfill the conditions set will be subject to tax at the following rates:

For the first RM500,000 taxable income 20%

Balance of taxable income thereafter 25%

The following are some of the key aspects of the Malaysian income tax system and administration:

sINGLE TIER DIVIDEND sysTEMTo simplify and ease the administrative burden under the previous tax imputation system, a single tier tax system has been introduced with effect from YA 2008. Under this new system, income tax imposed on a company’s chargeable income is a final tax and dividends distributed are exempted from tax in the hands of the shareholders. During the transition period, tax credits brought forward under the previous system would still be made available for franking of dividends, subject to meeting certain terms and conditions. The transition period will end on 31 December 2013.

ADVANCE RULINGsWith effect from 1 January 2007, a taxpayer may request an advance ruling from the Director General of Inland Revenue (DGIR) on the interpretation and application of any provision of the Income Tax Act 1967 (the Act) to a particular type of arrangement or transaction.

GROUP RELIEFWith effect from YA 2006, group relief is made available to all locally incorporated resident companies, subject to terms and conditions met. Under this provision, a company may elect to surrender 50% of its tax losses to related claimant companies and, with effect from YA 2009, the rate of group relief has been increased to 70%.

TRANsFER PRICING REGULATIONsIt was proposed in the 2009 Budget that specific provisions be established to empower the DGIR to make adjustments on the transfer prices in relation to related party transactions, and interest charges for intra-group financial assistance under the thin capitalisation provisions.

ADVANCE PRICING ARRANGEMENTsWith effect from 1 January 2009, companies are allowed to apply to the DGIR for Advance Pricing Arrangements via a prescribed form containing necessary particulars as required by the DGIR.

PKF Worldwide Tax Guide 20122

REAL PROPERTy GAINs TAXThe Real Property Gains Tax (RPGT) has been re-introduced with effect from 1 January 2010. Gains arising from the disposal of real property and any interest, option, or other right in or over such land or shares in real property companies (collectively known as chargeable assets) would be subject to RPGT.

With effect from 1 January 2012, the RPGT rates have been revised. Please refer to the table below for both the old and current tax rates:-

Date of disposal from the date of acquisition

Rates provided under schedule 5 of RPGT

Act 1976

Effective rates

(Exemption Order)

Budget 2012

Old RatesWith effect

from 1.1.2010

With effect from

1.1.2012

CompaniesIndividuals &

non-corporate entities

All categories of owners

All categories of owners

Within 2 years 30% 30% 5% 10%

3rd year 20% 20% 5% 5%

4th year 15% 15% 5% 5%

5th year 5% 5% 5% 5%

6th year 5% Nil Nil Nil

The DGIR may utilise any excess of tax paid (which is to be refunded) under the Act for the payment of any other amount of tax which is due and payable under the Act, the Petroleum (Income Tax) Act 1967 or the RPGT Act 1976 and vice versa.

sTAMP DUTyStamp duty for charge or mortgage (including that under the Syariah), bond, covenant, debenture (not being a marketable security)

For an amount not exceeding RM250,000 of the aggregate loans or of the aggregate financing under the Syariah in a calendar year

RM0.50 for every RM1,000 or fractional thereof

For each additional RM1,000 not exceeding RM1,000,000

RM2.50 for every RM1,000 or fractional thereof

For each additional RM1,000 or part thereof RM5.00

Stamp duty for conveyance, assignment, or transfer of property

On the first RM100,000 (value of property) RM1.00 per RM100 or part thereof

On the next RM400,000 (value of property) RM2.00 per RM100 or part thereof

In excess of RM500,000 (value of property) RM3.00 per RM100 or part thereof

Stamp duty on loan agreements

All loan agreements (except education loans)

Ad valorem of RM5 for every RM1,000 or part thereof – effective from 1 January 2009

Education loan agreements Fixed at RM10

Stamp duty on service agreement instruments executed on or after 1 January 2011

All service agreements (one tier)

Ad valorem rate of 0.1%

Multi-tier service agreement:

(a) Non-government contract

(b) Government contract

First levelSubsequent level(s)

First levelSecond levelSubsequent level(s)

Ad valorem rate of 0.1%mRM50.00

ExemptedAd valorem rate of 0.1% RM50.00

Malaysia


Stamp duty on construction contract instruments

(a) Non-government contract

(b) Government contract

(c) Projects that are cancelled by the parties who had offered the contracts, and stamp duty for all such contracts had been paid

First levelSubsequent level(s)

First levelSecond levelSubsequent level(s)

Ad valorem rate of 0.1%RM50.00 and any stamp duty paid in excess will be remitted

Exempted Ad valorem rate of 0.1% RM50.00 and any stamp duty paid in excess will be remitted

– Only the stamp duty at the ad valorem rate will be refunded.

– Stamp duty at the fixed rate of RM50.00 will not be refunded.

INDIRECT TAXEsService tax and sales tax are currently the two major types of consumption taxes levied and charged on taxable services and taxable goods. It has been proposed by the Malaysian government that Goods and Service Tax (GST) be introduced to replace the service tax and sales tax; however the implementation of the GST system has been deferred by the government to a later date which has yet to be announced.

sERVICE TAX• Servicetaxisasinglestagetaxapplicabletocertainprescribedservicesin

Malaysia. The tax also applies to professional and consultancy services as prescribed by the Royal Malaysian Customs Department.

• Professionalservicesprovidedbyacompanytocompanieswithinthesamegroup will be exempted from service tax, subject to meeting certain terms and conditions.

• Generally,theimpositionofservicetaxissubjecttoaspecificthreshold based on an annual turnover ranging from RM150,000 to RM300,000, subject to the types of taxable services and taxable person. The threshold

would not be applicable for certain prescribed professional and consultancy services.

• Witheffectfrom1January2010,servicetaxtobeimposedoncreditcardsandcharge cards including those issued free of charge as follows:

– RM50 per year on the principal card – RM25 per year on the supplementary cards.• Witheffectfrom1January2011,therateofservicetaxonalltaxableservices

has been increased from 5% to 6%.• Witheffectfrom1January2011,servicetaxonpaidbroadcastingserviceswill

be charged on the monthly subscription fees on these services.

sALEs TAX• Salestaxisasinglestagetaximposedontaxablegoodsmanufacturedlocally

and/or imported. “Taxable goods” means goods of a class or kind not for the time being exempted from sales tax. Generally, all exports are exempted from sales tax.

• ManufacturersoftaxablegoodsarerequiredtoregisterwiththeRoyalMalaysian Customs Department and to levy, charge and collect the tax from their customers. For imported goods, sales tax is collected from the importer upon the release of taxable goods from customs control.

• Salestaxisanadvaloremtaxandcanbecomputedbasedonthevalueoftaxable goods sold, used, disposed of, or imported.

• Ordinarymobilephoneswillbeexemptedfromsalestaxeffectivefrom15October 2010.

IMPORT DUTIEs• Importdutiesareleviedongoodsthataresubjecttoimportdutiesandimported

into the country. • Importdutiesaregenerallyleviedonanadvalorembasisbutmayalsobe

imposed on a specific basis.• Theadvaloremratesofimportdutiesrangefrom0%to60%.Rawmaterials,

machinery, essential foodstuffs, pharmaceutical products and certain tourism related and daily use products are generally non-dutiable or subject to duties at lower rates.

Malaysia


• Fullexemptionofimportdutyandexcisedutyonnewcompletely-built-uphybrid and electric cars has been given to franchise holders for the period of a year i.e. from 1 January 2011 to 31 December 2011 and the exemption has been extended for another two years (i.e. effective for applications received by the Ministry of Finance from 1 January 2012 to 31 December 2013 in Budget 2012).

EXCIsE DUTIEs• InMalaysia,excisedutiesareimposedonaselectedrangeofgoods

manufactured in Malaysia and selected imported goods, including motor vehicles.

• Goodswhicharesubjecttoexcisedutyinclude: – Beer, stout and other intoxicating liquors (e.g. cider and perry, rice wine,

mead, brandy, whisky, rum and tafia, gin) – Cigarettes containing tobacco – Motor vehicles – Playing cards.

b. determination to taXable income

CAPITAL ALLOwANCEsWith effect from YA 2000 (current year basis), capital allowances for qualifying capital expenditure incurred by taxpayers have been categorised as follows:

Type of Assets Initial Rate

Annual Rate

Heavy machinery and motor vehicles 20% 20%

Plant and machinery (general) 20% 14%

Others 20% 10%

Assets with a lifespan not exceeding two years N/A Replacement basis

Small value assets (of value less than RM1,000 each) N/A 100%

Industrial building allowances are available for certain type of qualifying industrial buildings at the following rates:• Initialratesrangingfrom0%to10%;and• Annualratesrangingfrom3%to10%.

Qualifying capital expenditures incurred for the following equipment are given accelerated capital allowances as follows:

Equipment Claim Period

Security control 1 year

Information and communication technology 1 year

Environmental protection 3 years

INVEsTMENT INCENTIVEsMalaysia offers a wide range of tax incentives for foreign and local investors to promote investments in selected industry sectors and/or promoted areas. The trend has changed in recent years to focus more on high technology based industries and service sectors such as Islamic financial services, information and communication technology, education and tourism, healthcare and research and development. The major types of tax incentives available in Malaysia are Pioneer Status, Investment Tax Allowance and Reinvestment Allowance.

PIONEER sTATUs (Ps)• Anincometaxexemptionrangingfrom70%to100%(dependingonthetype

of promoted products and/or activities) on a company’s statutory income for a period of 5 years.

• ThePSisgenerallyfavorableforcompaniesexpectingtogeneratelargeprofitswithin a short time upon commencement of production of promoted products and/or activities.

• Theexemptionperiodmaybeextendedforanotherfurther5yearsdependingonthetype of promoted products and/or activities.

INVEsTMENT TAX ALLOwANCE (ITA)• TheITAisanalternativeincentivetoPSwhichispreferableforcapitalintensive

projects involving promoted products and/or activities.

Malaysia


• TheITAisinadditiontothenormalcapitalallowancesavailableonthesameasset.

• Generally,therateoftheITAis60%onthequalifyingcapitalexpenditureincurred on qualifying plant and machinery and can be used to offset up to 70% (or 100% in certain promoted products and/or activities) of the statutory income.

• Theexemptionperiodmaybeextendedforafurtherfiveyearsdependingonthe type of promoted products and/or activities.

• PSandITAaremutuallyexclusive.

REINVEsTMENT ALLOwANCE (RA)• RAisavailableformanufacturingcompaniesthatreinvesttheircapitalto

embark on: – expansion of existing production capacity – modernisation or automation of production facilities – diversification into related products.• TheRAisinadditiontothenormalcapitalallowancesavailableonthesame

asset.• Generally,therateoftheRAis60%onthequalifyingcapitalexpenditure

incurred on qualifying factory, plant or/and machinery and can be used to offset up to 70% (or 100% in certain circumstances) of the statutory income.

• Theincentiveperiodis15yearsfromthefirstyearofclaimandtheRAismutually exclusive to both PS and ITA.

• WitheffectfromYA2009,acompanythathasclaimedRAonfactory,plantor/and machinery is subject to withdrawal of RA in the event that the qualifying asset is disposed of within 5 years from the date of acquisition.

OTHER INDUsTRIEs wHICH MAy QUALIFy FOR TAX INCENTIVEs IN MALAysIA• BiotechnologyIndustries• VentureCapitalCompanies• OperationalHeadquarters• InternationalProcurementCentre• RegionalDistributionCentre• RealEstateInvestmentTrusts• TreasuryManagementCentre• KualaLumpurInternationalFinancialDistrict• 4and5StarHotelsinPeninsularMalaysia• ProfitOrientedPrivateSchoolsandInternationalSchools• ProviderofIndustrialDesignServicesinMalaysia.

EXTENsION OF APPLICATION PERIOD OF TAX INCENTIVEsTo further promote the advancement of green technology and efficient utilisation of energy, the application period for tax incentives granted to companies which undertake the following promoted activities will be extended until 31 December 2015:• Companiesgeneratingenergyfromrenewablesources• Companiesgeneratingrenewalenergyforownconsumption• Companiesprovidingenergyconservationservices• Companieswhichincurcapitalexpenditureforenergyconservationforown

consumption.

EXTENsION OF TAX INCENTIVE PERIOD FOR REDUCTION OF GREENHOUsE GAs EMIssIONAs part of the government’s continuous efforts to overcome global warming, the existing tax exemption period in respect of income received from the sale of certified emission reductions from Clean Development Mechanism Projects approved by the Ministry of Natural Resources and Environment will be extended to YA 2012.

EXTENsION OF APPLICATION PERIOD FOR TAX INCENTIVEs FOR APPROVED FOOD PRODUCTION PROJECTsThe application period for the above incentive will be extended until 31 December 2015 and applications need to be submitted to the Ministry of Agriculture and Agro-based Industry for approval.

EXTENsION OF APPLICATION PERIOD FOR TAX INCENTIVEs FOR LAsT MILE NETwORK FACILITIEs PROVIDER FOR BROADBANDThe application period for the above incentive will be extended until 31 December 2012 and applications need to be submitted to the Ministry of Finance and Malaysian Industrial Development Authority respectively for approval.

Malaysia


f. witHHoldinG taX

Certain types of payments to non-residents are subject to withholding tax at the following rates:

Types of payment Rates (Effective 21 september 2002)

Special classes of income (Note 1) 10%

Interest 15%

Royalties 10%

Contract payments (Note 2) 10 + 3%

Other income [Section 4(f)] (Note 3) 10%

Notes:1. Special classes of income (Section 4A) include: (i) Amounts paid in consideration of services rendered by the person or his

employee in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from, such person;

(ii) Amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;

(iii) Rent or other payment, made under any agreement or arrangement for the use of any moveable property.

Payments on technical advice, assistance or services rendered overseas will not be liable to withholding tax. Effective from 1 January 2009, disbursements on hotel accommodation are not to be included in the computation of gross income for the purposes of withholding tax.

2. The 10% withholding tax is for non-resident contractor’s tax liabilities while the 3% is for the tax of employees of the non-resident contractor. Withholding tax for contract payments is not the final tax.

3. Section 4(f) income refers to gains and profits not specifically provided for under Section 4 of the Act, including commissions and guarantee fees (effective from 1 January 2009).

Effective from 1 January 2011 for the YA 2011 and subsequent YA, in addition to the late payment penalty, the DGIR is empowered to impose a penalty for incorrect returns under Section 113(2) of the Act if a tax deduction on the expenses subject to withholding tax is claimed and the withholding tax and penalty are not paid by the due date for submission of the tax return that relates to such expenses.

H. personal taX

Tax residency status of an individual person in Malaysia is generally determined by the number of days the individual is present in Malaysia during a particular calendar year. Generally, an individual is a tax resident in Malaysia if the individual is present in Malaysia for 182 days or more during a particular calendar year. An individual tax resident is entitled to several tax reliefs, tax rebates, scaled tax rates and exemptions, as set out below.

Tax Reliefs (Effective yA 2012) RM

Taxpayer 9,000

Husband/Wife/alimony payments 3,000 (Limited)

Disabled taxpayer 6,000 (Further deduction)

Disabled Wife/Husband 3,500

Child relief (<18 years old per child) 1,000

Child aged 18 years old and above, not married and receiving full-time tertiary education

1,000

Child aged 18 years old and above, not married and pursuing diploma or above qualification in Malaysia/bachelor degree or above outside Malaysia (per child)

4,000

Disabled child – Additional exemption of RM4,000 for every disabled child aged 18 years old and above, not married and pursuing diploma or above qualification in Malaysia/bachelor degree or above outside Malaysia

5,000

Malaysia


Tax Reliefs (Effective yA 2012) RM

Medical expenses for parents 5,000 (Limited) See Note 1

Medical expenses for serious diseases 5,000

Basic supporting equipment for disabled 5,000 (Limited)

Life insurance and Employees Provident Fund 6,000 (Limited)

Private Retirement Scheme and annuity premium 3,000 (Limited)

Insurance premiums for education or medical benefits 3,000 (Limited)

Education fees (taxpayer) 5,000 (Limited)

Purchase of books, journals, magazines and publications 1,000 (Limited)

Purchase of computer 3,000 (Limited)

Net saving in Skim Simpanan Pendidikan Nasional’s scheme

3,000 (Limited)

Purchase of sports equipment 300 (Limited)

Subscription fees for broadband 500 (Limited)

Interest paid on housing loans 10,000 (Limited) See Note 2

Tax Rebates (Effective yA 2009) RM

Rebate given to taxpayer with chargeable income not exceeding RM35,000

400

Additional rebate for spouse with no income and elects for combined assessment

400

Zakat, Fitrah and any other Islamic religious dues Full rebate

Notes1. With effect from YA 2011, the existing relief of up to RM5,000 on medical

expenses for parents is to be extended to include expenses on medical treatment and care for parents, with certain conditions to be met.

2. With effect from YA 2009, relief of up to RM10,000 a year is given for three consecutive years from the first year the housing loan interest is paid. The claim for deduction is subject to the following conditions:

• ThetaxpayerisaMalaysiancitizenandaresident • Limitedtooneresidentialhouseincludingflat,apartmentorcondominium • Thesaleandpurchaseagreementisexecutedbetween10March2009

and 31 December 2010 • Thetaxpayerhasnotderivedanyincomeinrespectofthatresidentialproperty.

Non-residents are not eligible to claim relief and rebates and are subject to a tax of 26% on taxable income.

The resident individual tax rates are as follows:

Taxable IncomeRM

Rate%

Tax PayableRM

on the first 2,500 0 0

on the next 2,500 1 25

on the first 5,000 25

on the next 5,000 3 150


on the next 10,000 3 300


on the next 15,000 7 1,050

on the first 35,000 1,525

on the next 15,000 12 1,800


on the next 20,000 19 3,800


Malaysia


Taxable IncomeRM

Rate%

Tax PayableRM

on the next 30,000 24 7,200

on the first 100,000 14,325

on the next 50,000 26 (see note 1) 13,000

on the first 150,000 27,325

on the next 100,000 26 (see note 1) 26,000

on 250,000 53,325

Above 250,000 26 (see note 1)

Notes1. With effect from YA 2010, the tax rates for the highest income bracket, which

was 27%, has been revised to 26%.2. Preferential tax rate is available for the following categories of taxpayers:- • EffectivefromYA2010,theemploymentincomeofanindividualwhois

a knowledge worker residing in Iskandar Malaysia and is employed in a qualifying activity would be taxed at 15% of the individual’s chargeable income.

• EffectivefromYA2012,theemploymentincomeofanapprovedindividualunder the Returning Expert Programme would be taxed at 15% of the individual’s chargeable income for a period of 5 years subject to terms

and conditions met.

malta

Currency: Euro Dial Code To: 356 Dial Code Out: 00 (EUR)

Member Firm:City: Name: Contact Information:Birkirkara George M Mangion 21493041 [email protected]

a. taXes payable

COMPANy TAXA company incorporated in Malta is considered both domiciled and ordinarily resident in Malta from the date of incorporation. A company not incorporated in Malta is considered resident in Malta if the management and control of its business is exercised in Malta.

Companies ordinarily resident and domiciled in Malta are subject to income tax on their world wide income and chargeable gains.

Companies that are resident in Malta but not ordinary resident and domiciled are taxed in Malta on a source and remittance basis, that is on income and chargeable gains arising in Malta and on income arising outside Malta that is remitted in Malta, but are not taxable on capital gains arising outside Malta regardless of whether received in Malta.

Companies that are neither resident nor incorporated in Malta are only chargeable to tax in Malta in respect of income and gains arising in Malta, for example income of a Maltese permanent establishment.

The rate of tax on resident companies listed on the Maltese Stock Exchange is reduced as follows:

From: To: Percentage of shares offered to the public:

35% 33% 20% to 30%

35% 31.5% 31% to 40%

35% 30.% 41% onwards

The reduction in the tax is also passed to shareholders when dividends are paid out.

ADMINIsTRATION AND COMPLIANCE - COMPANIEs

Malaysia


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