Worldwide Tax Guide Malaysia

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MalaysiaTax Guide

2012


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PKF Worldwide Tax Guide 2012I

FOREWORD

A countrys tax regime is always a key factor for any business considering movinginto 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 sourceincome be taxed?

Since 1994, the PKF network of independent member firms, administered by PKFInternational Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provideinternational businesses with the answers to these key tax questions. This handyreference guide provides clients and professional practitioners with comprehensivetax 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 timeto contribute the vital information on their countrys taxes that forms the heart of thispublication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKFWitt Mares, and Kaarji Vaughan, PKF Melbourne for co-ordinating and checking theentries from countries within their regions.

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

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

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


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PKF Worldwide Tax Guide 2012 II

IMPORTANT DISCLAIMER

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

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

The publishers and the authors expressly disclaim all and any liability andresponsibility to any person, entity or corporation who acts or fails to act as aconsequence of any reliance upon the whole or any part of the contents of thispublication.

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

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

of any individual member firm or firms.


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PKF Worldwide Tax Guide 2012III

PREFACE

The PKF Worldwide Tax Guide 2012 (WWTG) is an annual publication that providesan overview of the taxation and business regulation regimes of 100 of the worlds

most significant trading countries. In compiling this publication, member firms of thePKF network have based their summaries on information current as of 30 September2011, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicableto business; how taxable income is determined; sundry other related taxationand business issues; and the countrys personal tax regime. The final section ofeach country summary sets out the Double Tax Treaty and Non-Treaty rates of taxwithholding relating to the payment of dividends, interest, royalties and other relatedpayments.

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

In addition to the printed version of the WWTG, individual country taxation guides areavailable 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


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PKF Worldwide Tax Guide 2012 IV

ABOUT PKF INTERNATIONAL LIMITED

PKF International Limited (PKFI) administers the PKF network of legally independentmember 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 $2.6billion aggregate fee income (year end June 2011). The network is a member of theForum of Firms, an organisation dedicated to consistent and high quality standards offinancial 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; LatinAmerica; Asia Pacific; Europe, the Middle East & India (EMEI); and North America &the Caribbean. Each region elects representatives to the board of PKF InternationalLimited which administers the network. While the member firms remain separateand independent, international tax, corporate finance, professional standards, audit,hotel consultancy, insolvency and business development committees work together toimprove quality standards, develop initiatives and share knowledge and best practicecross the network.

Please visit www.pkf.comfor more information.


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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


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PKF Worldwide Tax Guide 2012 VI

A

Algeria . . . . . . . . . . . . . . . . . . . .1 pm

Angola . . . . . . . . . . . . . . . . . . . .1 pm

Argentina . . . . . . . . . . . . . . . . . .9 am

Australia -

Melbourne . . . . . . . . . . . . . 10 pm

Sydney . . . . . . . . . . . . . . .10 pm

Adelaide . . . . . . . . . . . . 9.30 pm

Perth . . . . . . . . . . . . . . . . . .8 pm

Austria . . . . . . . . . . . . . . . . . . . .1 pm

B

Bahamas . . . . . . . . . . . . . . . . . . .7 am

Bahrain . . . . . . . . . . . . . . . . . . . .3 pm

Belgium . . . . . . . . . . . . . . . . . . . .1 pm

Belize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 am

Brazil. . . . . . . . . . . . . . . . . . . . . .7 am

British Virgin Islands . . . . . . . . . . .8 am

C

Canada -

Toronto . . . . . . . . . . . . . . . . 7 am

Winnipeg . . . . . . . . . . . . . . . 6 am Calgary . . . . . . . . . . . . . . . . 5 am

Vancouver . . . . . . . . . . . . . . 4 am

Cayman Islands . . . . . . . . . . . . . .7 am

Chile . . . . . . . . . . . . . . . . . . . . . .8 am

China - Beijing . . . . . . . . . . . . . .10 pm

Colombia . . . . . . . . . . . . . . . . . . . 7 am

Croatia . . . . . . . . . . . . . . . . . . . .1 pm

Cyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . . 1 pm

D

Denmark . . . . . . . . . . . . . . . . . . .1 pm

Dominican Republic . . . . . . . . . . .7 am

E

Ecuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pm

El Salvador . . . . . . . . . . . . . . . . . 6 am

Estonia . . . . . . . . . . . . . . . . . . . .2 pm

F

Fiji . . . . . . . . . . . . . . . . .12 midnight

Finland . . . . . . . . . . . . . . . . . . . .2 pm

France. . . . . . . . . . . . . . . . . . . . .1 pm

G

Gambia (The) . . . . . . . . . . . . . 12 noon

Georgia . . . . . . . . . . . . . . . . . . . .3 pm

Germany . . . . . . . . . . . . . . . . . . .1 pm

Ghana . . . . . . . . . . . . . . . . . . 12 noon

Greece . . . . . . . . . . . . . . . . . . . .2 pm

Grenada . . . . . . . . . . . . . . . . . . .8 am

Guatemala . . . . . . . . . . . . . . . . . . 6 am

Guernsey . . . . . . . . . . . . . . . . 12 noon

Guyana . . . . . . . . . . . . . . . . . . . .7 am

H

Hong Kong . . . . . . . . . . . . . . . . .8 pm

Hungary . . . . . . . . . . . . . . . . . . .1 pm

I

India . . . . . . . . . . . . . . . . . . . 5.30 pm

Indonesia. . . . . . . . . . . . . . . . . . .7 pm

Ireland . . . . . . . . . . . . . . . . . . 12 noon

Isle of Man . . . . . . . . . . . . . . 12 noon

Israel . . . . . . . . . . . . . . . . . . . . . .2 pm

Italy . . . . . . . . . . . . . . . . . . . . . .1 pm

J

Jamaica . . . . . . . . . . . . . . . . . . .7 am

Japan . . . . . . . . . . . . . . . . . . . . .9 pm

Jersey . . . . . . . . . . . . . . . . . . 12 noon

Jordan . . . . . . . . . . . . . . . . . . . .2 pm

K

Kazakhstan . . . . . . . . . . . . . . . . .5 pm

Kenya . . . . . . . . . . . . . . . . . . . . .3 pm

Korea . . . . . . . . . . . . . . . . . . . . .9 pm

Kuwait . . . . . . . . . . . . . . . . . . . . .3 pm

L

Latvia . . . . . . . . . . . . . . . . . . . . .2 pm

Lebanon . . . . . . . . . . . . . . . . . . .2 pm

Liberia . . . . . . . . . . . . . . . . . . 12 noon

Luxembourg . . . . . . . . . . . . . . . .1 pm

M

Malaysia . . . . . . . . . . . . . . . . . . .8 pm

Malta . . . . . . . . . . . . . . . . . . . . .1 pm

Mauritius . . . . . . . . . . . . . . . . . . .4 pm

Mexico . . . . . . . . . . . . . . . . . . . .6 am

Morocco . . . . . . . . . . . . . . . . 12 noon

N

Namibia. . . . . . . . . . . . . . . . . . . .2 pm

Netherlands (The) . . . . . . . . . . . . .1 pm

New Zealand . . . . . . . . . . .12 midnight

Nigeria . . . . . . . . . . . . . . . . . . . .1 pm

Norway . . . . . . . . . . . . . . . . . . . .1 pm

O

Oman . . . . . . . . . . . . . . . . . . . . .4 pm

P

Panama. . . . . . . . . . . . . . . . . . . .7 am

Papua New Guinea. . . . . . . . . . .10 pm

Peru . . . . . . . . . . . . . . . . . . . . . .7 am

Philippines . . . . . . . . . . . . . . . . . .8 pm

Poland. . . . . . . . . . . . . . . . . . . . .1 pm

Portugal . . . . . . . . . . . . . . . . . . .1 pm

Puerto Rico . . . . . . . . . . . . . . . . . 8 am

INTERNATIONAL TIME ZONES

AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIMEELSEWHERE IS:


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PKF Worldwide Tax Guide 2012VII

Q

Qatar. . . . . . . . . . . . . . . . . . . . . .8 am

R

Romania . . . . . . . . . . . . . . . . . . .2 pmRussia -

Moscow . . . . . . . . . . . . . . .3 pm

St Petersburg . . . . . . . . . . . .3 pm

S

Sierra Leone . . . . . . . . . . . . . 12 noon

Singapore . . . . . . . . . . . . . . . . . .7 pm

Slovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pm

South Africa . . . . . . . . . . . . . . . . .2 pm

Spain . . . . . . . . . . . . . . . . . . . . .1 pm

Sweden . . . . . . . . . . . . . . . . . . . .1 pm

Switzerland . . . . . . . . . . . . . . . . .1 pm

T

Taiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .8 pm

Tunisia . . . . . . . . . . . . . . . . . 12 noon

Turkey . . . . . . . . . . . . . . . . . . . . .2 pm

Turks and Caicos Islands . . . . . . .7 am

U

Uganda . . . . . . . . . . . . . . . . . . . .3 pm

Ukraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pm

United Kingdom . . . . . . .(GMT) 12 noon

United 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 am

Uruguay . . . . . . . . . . . . . . . . . . .9 am

V

Venezuela . . . . . . . . . . . . . . . . . . 8 am

Vietnam . . . . . . . . . . . . . . . . . . . .7 pm


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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 inMalaysia and income received in Malaysia from outside Malaysia is subject to tax.With effect from year of assessment (YA) 2004, income received in Malaysia byany person other than a resident company carrying on the business of banking,

insurance, sea or air transport derived from sources outside Malaysia is exemptedfrom tax. Malaysia has signed tax treaties with over 70 countries.

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

Under the SAS, the tax authorities will conduct tax audits on taxpayers to ensureproper compliance in respect of returns submitted, failing which penalties will be

imposed on tax adjustments made. Following the Malaysian Budget 2012, it isproposed that the time bar for tax audits be reduced from six to five years with effectfrom 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 theconditions 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 andadministration:

SINGLE TIER DIVIDEND SYSTEM

To simplify and ease the administrative burden under the previous tax imputationsystem, a single tier tax system has been introduced with effect from YA 2008. Underthis new system, income tax imposed on a companys chargeable income is a finaltax and dividends distributed are exempted from tax in the hands of the shareholders.During the transition period, tax credits brought forward under the previous systemwould still be made available for franking of dividends, subject to meeting certainterms 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 fromthe Director General of Inland Revenue (DGIR) on the interpretation and applicationof any provision of the Income Tax Act 1967 (the Act) to a particular type ofarrangement or transaction.

GROUP RELIEFWith effect from YA 2006, group relief is made available to all locally incorporatedresident companies, subject to terms and conditions met. Under this provision,a company may elect to surrender 50% of its tax losses to related claimantcompanies 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 toempower the DGIR to make adjustments on the transfer prices in relation to relatedparty transactions, and interest charges for intra-group financial assistance under thethin capitalisation provisions.

ADVANCE PRICING ARRANGEMENTS

With effect from 1 January 2009, companies are allowed to apply to the DGIR forAdvance Pricing Arrangements via a prescribed form containing necessary particularsas required by the DGIR.


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PKF Worldwide Tax Guide 20122

REAL PROPERTY GAINS TAXThe Real Property Gains Tax (RPGT) has been re-introduced with effect from 1January 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 tothe table below for both the old and current tax rates:-

Date ofdisposal fromthe date ofacquisition

Rates provided underSchedule 5 of RPGT

Act 1976

Effectiverates

(ExemptionOrder)

Budget2012

Old Rates With effectfrom1.1.2010

With effectfrom1.1.2012

CompaniesIndividuals &

non-corporateentities

All categoriesof owners

All categoriesof 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 Actfor 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 RM250,000of the aggregate loans or of the aggregatefinancing under the Syariah in a calendar year

RM0.50 for every RM1,000 orfractional thereof

For each additional RM1,000 not exceedingRM1,000,000

RM2.50 for every RM1,000 orfractional 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 educationloans)

Ad valorem of RM5 for everyRM1,000 or part thereof effectivefrom 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 of0.1%

Multi-tier service agreement:

(a) Non-government contract

(b) Government contract

First levelSubsequent level(s)

First level

Second levelSubsequent level(s)

Ad valorem rate of0.1%mRM50.00

Exempted

Ad valorem rate of0.1% RM50.00

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Stamp duty on construction contract instruments

(a) Non-governmentcontract

(b) Government contract

(c) Projects that arecancelled by the parties

who had offered thecontracts, and stampduty for all suchcontracts 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 inexcess will be remitted

Exempted Ad valoremrate of 0.1% RM50.00and any stamp duty paidin excess will be remitted

Only the stampduty at the ad

valorem rate willbe refunded. Stamp duty at

the fixed rate ofRM50.00 will notbe 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 proposedby the Malaysian government that Goods and Service Tax (GST) be introducedto replace the service tax and sales tax; however the implementation of the GSTsystem has been deferred by the government to a later date which has yet to beannounced.

SERVICE TAX Service tax is a single stage tax applicable to certain prescribed services in

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

Professional services provided by a company to companies within the samegroup will be exempted from service tax, subject to meeting certain terms andconditions.

Generally, the imposition of service tax is subject to a specic thresholdbased on an annual turnover ranging from RM150,000 to RM300,000,subject to the types of taxable services and taxable person. The thresholdwould not be applicable for certain prescribed professional and consultancyservices.

With effect from 1 January 2010, service tax to be imposed on credit cards and

charge cards including those issued free of charge as follows: RM50 per year on the principal card RM25 per year on the supplementary cards. With effect from 1 January 2011, the rate of service tax on all taxable services

has been increased from 5% to 6%. With effect from 1 January 2011, service tax on paid broadcasting services will

be charged on the monthly subscription fees on these services.

SALES TAX Sales tax is a single stage tax imposed on taxable goods manufactured locally

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

Manufacturers of taxable goods are required to register with the RoyalMalaysian Customs Department and to levy, charge and collect the tax fromtheir customers. For imported goods, sales tax is collected from the importerupon the release of taxable goods from customs control.

Sales tax is an ad valorem tax and can be computed based on the value oftaxable goods sold, used, disposed of, or imported.

Ordinary mobile phones will be exempted from sales tax effective from 15October 2010.

IMPORT DUTIES Import duties are levied on goods that are subject to import duties and imported

into the country. Import duties are generally levied on an ad valorem basis but may also be

imposed on a specific basis. The ad valorem rates of import duties range from 0% to 60%. Raw materials,

machinery, essential foodstuffs, pharmaceutical products and certain tourismrelated and daily use products are generally non-dutiable or subject to duties atlower rates.

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Full exemption of import duty and excise duty on new completely-built-uphybrid and electric cars has been given to franchise holders for the period of ayear i.e. from 1 January 2011 to 31 December 2011 and the exemption hasbeen 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 Budget2012).

EXCISE DUTIES In Malaysia, excise duties are imposed on a selected range of goods

manufactured in Malaysia and selected imported goods, including motorvehicles.

Goods which are subject to excise duty include: 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 capitalexpenditure incurred by taxpayers have been categorised as follows:

Type of Assets InitialRate

AnnualRate

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/AReplacementbasis

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

Industrial building allowances are available for certain type of qualifying industrialbuildings at the following rates: Initial rates ranging from 0% to 10%; and Annual rates ranging from 3% to 10%.

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 topromote investments in selected industry sectors and/or promoted areas. The trendhas changed in recent years to focus more on high technology based industries andservice sectors such as Islamic financial services, information and communicationtechnology, education and tourism, healthcare and research and development. Themajor types of tax incentives available in Malaysia are Pioneer Status, Investment TaxAllowance and Reinvestment Allowance.

PIONEER STATUS (PS)

An income tax exemption ranging from 70% to 100% (depending on the typeof promoted products and/or activities) on a companys statutory income for aperiod of 5 years.

The PS is generally favorable for companies expecting to generate large protswithin a short time upon commencement of production of promoted productsand/or activities.

The exemption period may be extended for another further 5 years depending on thetype of promoted products and/or activities.

INVESTMENT TAX ALLOWANCE (ITA) The ITA is an alternative incentive to PS which is preferable for capital intensiveprojects involving promoted products and/or activities.

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The ITA is in addition to the normal capital allowances available on the sameasset.

Generally, the rate of the ITA is 60% on the qualifying capital expenditureincurred 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 statutoryincome. The exemption period may be extended for a further ve years depending on

the type of promoted products and/or activities. PS and ITA are mutually exclusive.

REINVESTMENT ALLOWANCE (RA) RA is available for manufacturing companies that reinvest their capital to

embark on: expansion of existing production capacity

modernisation or automation of production facilities diversification into related products. The RA is in addition to the normal capital allowances available on the same

asset. Generally, the rate of the RA is 60% on the qualifying capital expenditure

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

The incentive period is 15 years from the rst year of claim and the RA ismutually exclusive to both PS and ITA.

With effect from YA 2009, a company that has claimed RA on factory, plant or/and machinery is subject to withdrawal of RA in the event that the qualifyingasset is disposed of within 5 years from the date of acquisition.

OTHER INDUSTRIES WHICH MAY QUALIFY FOR TAXINCENTIVES IN MALAYSIA Biotechnology Industries Venture Capital Companies Operational Headquarters International Procurement Centre Regional Distribution Centre Real Estate Investment Trusts Treasury Management Centre Kuala Lumpur International Financial District 4 and 5 Star Hotels in Peninsular Malaysia Prot Oriented Private Schools and International Schools Provider of Industrial Design Services in Malaysia.

EXTENSION OF APPLICATION PERIOD OF TAX INCENTIVES

To further promote the advancement of green technology and efficient utilisationof energy, the application period for tax incentives granted to companies whichundertake the following promoted activities will be extended until 31 December2015: Companies generating energy from renewable sources Companies generating renewal energy for own consumption Companies providing energy conservation services Companies which incur capital expenditure for energy conservation for own

consumption.

EXTENSION OF TAX INCENTIVE PERIOD FOR REDUCTION OFGREENHOUSE GAS EMISSIONAs part of the governments continuous efforts to overcome global warming,the existing tax exemption period in respect of income received from the saleof certified emission reductions from Clean Development Mechanism Projectsapproved by the Ministry of Natural Resources and Environment will be extendedto 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 December2015 and applications need to be submitted to the Ministry of Agriculture and Agro-based Industry for approval.

EXTENSION OF APPLICATION PERIOD FOR TAX INCENTIVESFOR LAST MILE NETWORK FACILITIES PROVIDER FORBROADBANDThe 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 MalaysianIndustrial Development Authority respectively for approval.

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F. WITHHOLDING TAX

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

Types of payment Rates (Effective 21September 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 apparatuspurchased from, such person;

(ii) Amounts paid in consideration of technical advice, assistance or services

rendered in connection with technical management or administration of anyscientific, 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 onhotel accommodation are not to be included in the computation of gross incomefor the purposes of withholding tax.

2. The 10% withholding tax is for non-resident contractors tax liabilities while the3% is for the tax of employees of the non-resident contractor. Withholding taxfor contract payments is not the final tax.

3. Section 4(f) income refers to gains and profits not specifically provided for underSection 4 of the Act, including commissions and guarantee fees (effective from1 January 2009).

Effective from 1 January 2011 for the YA 2011 and subsequent YA, in addition tothe late payment penalty, the DGIR is empowered to impose a penalty for incorrectreturns under Section 113(2) of the Act if a tax deduction on the expenses subjectto 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 bythe number of days the individual is present in Malaysia during a particular calendaryear. Generally, an individual is a tax resident in Malaysia if the individual is presentin Malaysia for 182 days or more during a particular calendar year. An individual taxresident 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 (Furtherdeduction)

Disabled Wife/Husband 3,500

Child relief (


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Tax Reliefs (Effective YA 2012) RM

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

Medical expenses for serious diseases 5,000Basic 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 Nasionalsscheme

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 exceedingRM35,000

400

Additional rebate for spouse with no income and elects forcombined 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 medicaltreatment 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 threeconsecutive years from the first year the housing loan interest is paid. Theclaim for deduction is subject to the following conditions:

The taxpayer is a Malaysian citizen and a resident

Limited to one residential house including at, apartment or condominium The sale and purchase agreement is executed between 10 March 2009

and 31 December 2010 The taxpayer has not derived any income in respect of that residential property.

Non-residents are not eligible to claim relief and rebates and are subject to a tax of26% 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


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Taxable IncomeRM

Rate%

Tax PayableRM

on the next 30,000 24 7,200

on the first 100,000 14,325

on the next 50,00026(see note 1)

13,000

on the first 150,000 27,325

on the next 100,00026(see note 1)

26,000

on 250,000 53,325

Above 250,00026(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:- Effective from YA 2010, the employment income of an individual who is

a knowledge worker residing in Iskandar Malaysia and is employed in a

qualifying activity would be taxed at 15% of the individuals chargeable income. Effective from YA 2012, the employment income of an approved individualunder the Returning Expert Programme would be taxed at 15% of theindividuals chargeable income for a period of 5 years subject to termsand 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 TAX

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

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

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

Companies that are neither resident nor incorporated in Malta are only chargeable totax in Malta in respect of income and gains arising in Malta, for example income of aMaltese permanent establishment.

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

From: To: Percentage of sharesoffered 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

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Worldwide Tax Guide Malaysia

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Transcript of Worldwide Tax Guide Malaysia