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Malaysia's Budget 2024: Watch The Summary on YouTube

Malaysia's Budget 2024: Watch The Summary on YouTube
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Malaysia's Budget 2024: Watch The Summary on YouTube

In line with the Budget for 2024, Malaysia is poised for significant changes in its taxation landscape, particularly in the realm of Capital Gains Tax (CGT). The proposed amendments are expected to impact various sectors and types of taxpayers.

Budget 2024 Highlight - YouTube Video

Stay updated with the latest tax developments by watching our key summary of the 2024 Budget on our YouTube channel https://youtu.be/BrYNZNfJ1iE

Here's a summary of the key takeaways:

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/.../malaysias-budget-2024.../18oct23

Tax Exemptions : https://www.ktp.com.my/.../malaysias-budget-2024.../19oct23

Tax Incentives : https://www.ktp.com.my/.../malaysias-budget-2024.../20oct23

Stamp Duty & Indirect Tax https://www.ktp.com.my/.../malaysias-budget-2024.../23oct23

Payroll (EPF & SOCSO) https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-epf-socso-updates/24oct23

Others https://www.ktp.com.my/blog/malaysias-budget-2024-others-important-updates/26oct23

Capital Gain Tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23

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Capital Gain Tax 2024

Capital Gain Tax 2024
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Malaysia's Budget 2024: A Glimpse into Capital Gain Tax Updates (Part I)

In line with the Budget for 2024, Malaysia is poised for significant changes in its taxation landscape, particularly in the realm of Capital Gains Tax (CGT). The proposed amendments are expected to impact various sectors and types of taxpayers.

Here's a summary of the key takeaways:

1. Types of Capital Asset

The new proposed CGT focuses on

1.1 Capital assets situated in Malaysia :

• Unlisted shares of companies Incorporated in Malaysia

• Shares in foreign incorporated companies deriving value from real property in Malaysia

1.2 All types of capital assets situated outside Malaysia

2. Eligible Taxpayers

There are 4 categories listed below:

  • Company

  • Limited Liability Partnership (LLP)

  • Cooperative

  • Trust Body (including unit trusts)

3. Effective date

1 January 2024

The Ministry of Finance (MOF) has clarified the effective date of capital gains tax (CGT) imposition:

  • CGT is to be imposed with effect from 1 January 2024 as indicated in the Finance Bill (No. 2) 2023.

  • Notwithstanding the above, the imposition of CGT on gains or profits from disposal of local companies’ unlisted shares will commence from 1 March 2024. This will be implemented through subsidiary legislation.

4. Tax Rate

4.1 Shares acquisition date :

• Before 1 March 2024 * :

The taxpayers may choose either

• 10% on the net gain of the disposal of shares; or

• 2% on the gross sales value.

• From 1 March 2024 *

10% on the net gain of the disposal of shares ;

4.2 All types of capital assets situated outside Malaysia are based on the prevailing income tax rate of the taxpayer.

• Companies, LLP’s and trust bodies: 24%

• Co-operative : 0% to 24%

*See clarification from MOF from Effective date under Point #3 as above

5. Exemptions

Transactions exempted from CGT

  • Initial Public Offering (IPO) approved by Bursa Malaysia; and

  • Restructuring of shares within the same group.

  • Venture capital companies

  • Gains from disposal of foreign capital assets from outside Malaysia which meet economic substance requirement (ESR)

  • Individual

6. Date of Disposal and Acquisition

There are 2 points in time to determine the date of disposal and acquisition

  • With a written agreement: Date of the agreement

  • Without a written agreement: Date of completion of the disposal

7. Basis period

Reporting must be done for each disposal transaction.

8. Allowable expenses

Expenses related to the acquisition or disposal of capital assets such as stamp duty, legal fees, broker fees and commission fees. It is important to keep track of these expenses related to the acquisition or disposal of capital assets.

9. Losses

Taxpayers are allowed deductions from the same sources. Any unabsorbed capital losses can be carried forward for a limited period of 10 years.

10. Tax reporting

Submission of the prescribed form through e-filing within 60 days from the date of disposal.

11. Tax payment

Any payment should be made within 60 days from the date of disposal, emphasizing the need for timely compliance.

12. Profits Derived from Foreign Sources

The following conditions apply:

  • Exemptions are given on remittances that meet the economic substance requirements;

  • Gains from the disposal of shares by a controlled company incorporated outside Malaysia.

13. Deemed to be acquired from Malaysia

Shares in a company will be considered acquired from Malaysia if it owns:

  • real estate located in Malaysia; or

  • shares in another controlled company; or

  • both

where the market value of the real estate or shares or both is more than 75% of the value of its tangible assets.

In conclusion, these proposed changes to Malaysia's Capital Gains Tax system are expected to have a far-reaching impact on businesses, investors, and various taxpayers. Staying informed, seeking professional advice, and ensuring compliance will be key to navigating this evolving tax landscape effectively.

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/.../malaysias-budget-2024.../18oct23

Tax Exemptions : https://www.ktp.com.my/.../malaysias-budget-2024.../19oct23

Tax Incentives : https://www.ktp.com.my/.../malaysias-budget-2024.../20oct23

Stamp Duty & Indirect Tax https://www.ktp.com.my/.../malaysias-budget-2024.../23oct23

Payroll (EPF & SOCSO) https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-epf-socso-updates/24oct23

Others https://www.ktp.com.my/blog/malaysias-budget-2024-others-important-updates/26oct23

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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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

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KTP Career

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{Tax Update} IRBM e-Invoice Guideline 2.1

{Tax Update} IRBM e-Invoice Guideline 2.1
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{Tax Update} e-Invoice Guideline 2.1

Latest Development on e-Invoice

The Inland Revenue Board (IRB) has issued updated e-Invoice Guidelines, including:

  • e-Invoice Guideline (version 2.1)

  • e-Invoice Specific Guideline (version 1.1)

Key updates in the guidelines: e-Invoice Guideline (version 2.1):

  • Removed references to non-business transactions between individuals.

  • Revised implementation timeline:

    1. 1 August 2024 - Mandatory for taxpayers with an annual turnover/income exceeding RM100 million.

    2. 1 January 2025 - Mandatory for taxpayers with an annual turnover/income between RM25 million and RM100 million.

    3. 1 July 2025 - Mandatory for all other taxpayer categories.

Key updates e-Invoice Specific Guideline (version 1.1):

  • Requires service tax amount inclusion in self-billed e-Invoices for imported taxable services.

  • Extends the deadline for issuing e-Invoices for foreign income received in Malaysia from the same month to the end of the following month.

Reference to Past Blog on e-Invoice

Source

Guidelines are accessible on IRB's website: www.hasil.gov.my (Home > e-Invoice)

IRB e-Invoice version 2.0 https://www.hasil.gov.my/media/nofmzbk1/irbm-e-invoice-guideline-version-20.pdf

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  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

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Malaysia's Budget 2024: A Glimpse into Others’ Important Updates

Malaysia's Budget 2024: A Glimpse into Others’ Important Updates
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Malaysia's Budget 2024: A Glimpse into Others’ Important Updates

Budget 2024 introduces a wide range of financial reforms set to have a substantial impact on various sectors. These proposals are geared toward maintaining the fiscal responsibility of the nation while promoting economic growth.

In this last blog post, we will delve into the remaining key highlights of this budget to understand the changes and their implications

1. Capital Gains Tax (CGT)

As we approach 2024, a notable update is in the works concerning Capital Gains Tax (CGT) in Malaysia. This tax reform is set to affect the disposal of unlisted shares and aims to strike a balance between fiscal responsibility and economic growth.

Key Details:

• Disposal of unlisted shares

• Rate

• Except for

i. Initial Public Offering (IPO) approved by Bursa Malaysia; and

ii. Restructuring of shares within the same group.

• Effective from 1 March 2024

2. High-Value Goods Tax

Another significant development on the horizon is the introduction of the High-Value Goods Tax in Malaysia. This tax targets specific luxury items, such as jewellery and watches, and may influence your financial decisions.

Key Details:

• Specific high-value items (eg. jewellery and watches)

• Rates of 5% to 10%

• Based on the threshold value of good price

3. E-invoice

Embracing modern technology and digital solutions is a crucial step forward in the world of taxation. E-invoice, an electronic invoicing system, is set to bring substantial changes to how businesses manage their financial transactions. To accommodate this significant shift and ensure a smooth transition for taxpayers, the Government has introduced an extension to the enforcement timeline.

Key Details:

• Mandatory implementation for businesses with an annual income or sales exceeding RM100 million, beginning 1 August 2024.

• Second phased enforcement for other categories, with comprehensive implementation starting from 1 July 2025.

• Expanded usage of Tax Identification Number (TIN) to support e-invoice.

4. Conditions for Institutions/ Organisations/ Funds approved under Subsection 44(6) of Income Tax Act 1967 (ITA)

In the ever-evolving landscape of taxation, the Government has undertaken a review of the conditions governing institutions/ organisations/ funds approved under Subsection 44(6) of the ITA. These changes are designed to ensure compliance and promote transparency in the utilisation of accumulated funds for business activities.

Key Details:

• Reviewed the conditions:

i. Increase in the accumulated funds utilisation limit in business activities from 25% to 35%

ii. 2 options to continue with the benefits of the incentives:

iii. Consequences of breaching conditions and its impact on tax exemption

- DGIR will not withdraw the approval under subsection 44(6) for institutions/organisations/funds during the validity period.

- for any breach of conditions within the approval period, the institutions/organisations/funds will not be eligible for tax exemption

- DGIR will raise tax assessment on all income received by the institutions/organisations/funds in the YA the breach of conditions occurred.

• Effective Date From the year of assessment 2024.

5. Preferential tax rate

To boost the Malaysian film industry and attract foreign film production companies, actors, and crews, the government is introducing a preferential tax rate scheme

Key Details:

• For foreign film production companies, actors and crews filming in Malaysia

• Between 0% to 10%

In summary, as the nation looks forward, these changes are expected to contribute to a stronger and more secure future.

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/.../malaysias-budget-2024.../18oct23

Tax Exemptions : https://www.ktp.com.my/.../malaysias-budget-2024.../19oct23

Tax Incentives : https://www.ktp.com.my/.../malaysias-budget-2024.../20oct23

Stamp Duty & Indirect Tax https://www.ktp.com.my/.../malaysias-budget-2024.../23oct23

Payroll (EPF & SOCSO) https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-epf-socso-updates/24oct23

Visit Us

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  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

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KTP Career

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Malaysia's Budget 2024: Stamp Duty and Indirect Taxes Updates

Malaysia's Budget 2024: Stamp Duty and Indirect Taxes Updates
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Malaysia's Budget 2024: A Glimpse into Stamp Duty and Indirect Taxes Updates

The budget 2024 encompasses a range of proposals that touch upon stamp duty and indirect taxes, critical elements of the country's fiscal framework.

Let's dive into the key highlights of these proposals, exploring how they will impact property ownership, service tax, and more, while striving to strike a balance between economic growth and citizens’ welfare

Stamp Duty

1. Transfer of property ownership by renunciates of rights

The proposal involves a review of the stamp duty rate imposed when a beneficiary renounces their right to another eligible beneficiary in accordance with a will/ Faraid, or the Distribution Act 1958. This change aims to replace the current ad valorem duty rate under Item 66(c) of the First Schedule of the Stamp Act 1949.

Key Details:

• A fixed duty of RM10 will be imposed

• Effective from 1 January 2024 for instrument of property ownership transfer.

2. Property ownership by non-citizen

The Budget 2024 introduces a crucial review of the stamp duty legislation, specifically focusing on properties owned by foreign-owned companies and non-citizen individuals in Malaysia. The existing policy treats these property owners the same as Malaysian citizens when it comes to the ad valorem stamp duty rate imposed during the transfer of property ownership.

This review is integral to a more comprehensive strategy aimed at controlling property prices in the country. By reassessing the stamp duty structure for foreign-owned properties and non-citizen individuals, the government intends to create a fair and competitive property market.

Key Details:

• A flat rate stamp duty of 4% be imposed on the instrument of transfer executed by foreign-owned companies and non-citizen individuals (except Malaysian permanent residents)

• Effective from 1 January 2024 for instrument of property ownership transfer.

Indirect Taxes

1. Service Tax

The government acknowledges the importance of increasing revenue while gradually reducing subsidies. To achieve this goal, it has proposed measures to broaden the country's revenue sources without overburdening the citizens. Although these measures are challenging, the government is considering an increase in the service tax rate and an expansion of its scope to encompass various industries.

Key Details:

• Increased from 6% to 8% except for telecommunication and food & beverage

• Expanded the scope to include logistics, brokerage, underwriting and karaoke services

2. Import Duty and Sales Tax Exemption on Manufacturing Aids

This proposal is poised to bring about a notable transformation in our industries, significantly boosting the competitiveness of Malaysian-manufactured products. It signifies a shift from the existing policy where manufacturers are not entitled import duty and sales tax exemptions on the importation and locally purchased of manufacturing aids under the Customs Act 1967 and the Sales Tax Act 2018.

Key Details:

• eligible to manufacturers on the importation and locally purchased of manufacturing aids

• subject to types of industry and category of goods determined

• Effective from 1 January 2024

3. Entertainments Duty Exemption

To support the development of the national creative industry, strengthen cultural unity, and foster family bonding, the Minister of Finance is proposing a series of exemption rates under the Entertainment Duty Act of 1953.

Key Details:

• Entertainment held in the Federal Territories

• Propose types and rate

i. Full exemption for stage performances by local artists

ii. Reduction from 25% to 10% for

 stage performance by international artist/ light show/ Circus

 film screening (Cinema) / theatre

 exhibition/ Zoo/ Aquarium

 sport event/ e-sports/ bowling/ snooker/ pool/ billiard/ karaoke

iii. Reduction from 25% to 5 % for theme parks, family recreation centre, indoor gaming centre, and simulators

• Applications received by the Ministry of Finance from 1 January 2024 to 31 December 2028

4. Excise Duty

In the interest of public health and the well-being of our citizens, particularly with a focus on preventing diseases such as diabetes and obesity, there are 2 proposals to raise the excise duty rate:

i. Sugar sweetened beverages

• Increased to RM0.50 per litre

• Effective From 1 January 2024

ii. Chewing tobacco

• Imposed a rate of 5% + RM27/kg under the tariff code 2403.99.5000.

• From 1 January 2024

In summary, the proposed changes in stamp duty and indirect taxes are part of a broader strategy to steer the nation towards greater economic prosperity while ensuring fairness and inclusivity in various sectors. As these policies take effect, it will be fascinating to see how they shape the future of Malaysia's economy and the lives of its people.

Budget 2024 Highlights - Past Updates

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

Companies : https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-companies-updates-/18oct23

Tax Exemption https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-tax-exemption-updates/19oct23

Tax Incentive : https://www.ktp.com.my/blog/malaysias-budget-2024-a-glimpse-into-tax-incentives-updates/20oct23

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  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

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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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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KTP Lifestyle

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Malaysia's Budget 2024: A Glimpse into Companies Updates

Malaysia's Budget 2024: A Glimpse into Companies Updates
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Malaysia's Budget 2024: A Glimpse into Companies Updates

The budget for the year 2024 was presented by Prime Minister and Finance Minister YAB Dato’ Seri Anwar Bin Ibrahim on 13th October 2023 and it includes proposals related to the Companies

Key summary on Budget 2024 for Companies under Deductions and Capital Allowance:

A) Tax Deduction

1. Environmental, Social and Governance (ESG) related expenditures

• Up to RM50,000 per YA

• Introduces related expenditures incurred to comply with ESG standards

• Applicable from YA 2024 to YA 2027

2. Cost of Sustainable and Responsible Investments (SRI) sukuk approved by the Securities Commission (SC)

• Extended from YA 2024 until YA 2027 (4 years)

3. Rental of non-commercial EV

• Up to RM300,000

• Extended from YA 2025 until the YA 2027 (2 years)

4. Contributions for Environmental Preservation and Conservation projects

• Involves contributing to or sponsoring activities related to tree planting projects or environmental preservation and conservation awareness projects verified by the Forest Research Institute Malaysia (FRIM)

• Applications received by the Ministry of Finance from 1 January 2024 to 31 December 2026

5. Voluntary Carbon Market

• Up to RM300,000

• Covers costs incurred on the Development and Measurement, Reporting and Verification (MRV) related to the development of carbon projects.

• Tax deduction against income from carbon credits traded on Bursa Carbon Exchange (BCX).

• Registered with an international standards body recognised by Bursa Malaysia and expenditure on development of carbon projects must be certified by the Malaysia Green Technology and Climate Change Corporation (MGTC)

• Applications received by the MGTC from 1 January 2024 until 31 December 2026

B) Capital Allowance

1. ICT equipment and computer software

• Revised to initial allowance (IA) at 40% and annual allowance (AA) at 20%

• Claiming period is shortened from 4 years to 3 years

• Effective from YA 2024

2. Industrial Building Allowance (IBA) – Private Nursing Home for Senior Citizens

• AA at 10% on the total cost of buildings purchased or built, including renovation costs.

• Approved by the Ministry of Health Malaysia (MOH)

• Expenditure incurred from 01 January 2024 to 31 December 2026

In summary, the Budget 2024 proposal for companies primarily focuses on environmental protection to encourage more private sector contributions through projects or community initiatives.

Budget 2024 Highlights - Others

Individual : https://www.ktp.com.my/.../malaysias-budget-2024.../17oct23

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e-Invoice Guideline 2.0

e-Invoice Guideline 2.0
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{Tax Update} e-Invoice Guideline 2.0

Latest Development on e-Invoice

The Inland Revenue Board of Malaysia (IRB) has updated its electronic invoice (e-Invoice) guidelines. Version 2.0 of the e-Invoice Guideline and a new Specific Guideline on e-Invoicing were released on September 29, 2023. A full 116-page document providing further guidance on specific areas of e-invoicing.

Key Changes to e-Invoice Guideline (Version 1.0 to Version 2.0):

Exempted Individuals/Entities

All individuals and legal entities must comply with e-invoice requirements, except for government, Rulers, local authorities, statutory authorities and statutory bodies, consular officers and diplomatic officers and facilities provided by the government, government bodies and government facilities such as clinics, multipurpose halls, etc.

These persons and authorities do not need to issue e-invoices, but their suppliers must issue e-invoices.

Companies listed on the stock exchange will be exempted from issuing e-invoices for dividend payments.

Consolidated E-Invoices

Businesses dealing with consumers need not issue an e-invoice on every sale. They can provide normal invoices to the customers. Such businesses can issue a consolidated invoice for the particular month, and this has to be done within seven days after the month’s end.

Consumers who require an e-invoice can request an e-invoice within the month of the purchase.

Suppliers can issue consolidated e-invoices monthly for specific B2C transactions exempt from e-invoicing for end consumers.

Certain activities, like motor vehicle sales, flight tickets, luxury goods, and construction contractors, require mandatory e-invoices.

E-Invoice Treatment

Invoices issued by the person registered under the e-invoicing system has to be validated or rejected by the purchaser within 72 hours. Otherwise, the invoice becomes final. In the event of a dispute, the only way to reverse the transaction is to issue a credit note and another invoice for the revised amount.

E-invoice treatment varies for disbursements or reimbursements.

Self-billed e-invoices apply to foreign suppliers, payments to agents, dealers & distributors, dividend distribution, e-commerce transactions, and acquisitions from individual taxpayers.

Exemptions for employment income, pension, alimony, certain dividends, zakat, and scholarships.

Transmission Mechanisms

Two e-invoice transmission mechanisms: MyInvois Portal hosted by IRBM and Application Programming Interface (API).

API configuration to be included in the Software Development Kit (SDK) expected in Q4 2023.

Foreign Income

E-invoices are required for all foreign income received in Malaysia from outside the country, serving as proof of income and expenses for tax purposes.

Data Fields

51 data fields, with some concessions for individual buyers, must be completed to issue an e-invoice.

Validated e-invoices include IRBM Unique Identifier Number, validation date, time, link, and QR code.

Previous Updates on E-Invoicing

  • E-Invoicing Malaysia - Transition Challenges and Strategies https://www.ktp.com.my/blog/e-invoicing-malaysia-transition-challenges-and-strategies/17aug23

  • 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-Invoice version 2.0 https://www.hasil.gov.my/media/nofmzbk1/irbm-e-invoice-guideline-version-20.pdf

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  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

#Thk

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OASB vs. Director General of Inland Revenue

OASB vs. Director General of Inland Revenue
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OASB vs. Director General of Inland Revenue

Overview compensation from the compulsory acquisition of land

Taxation can become a complex matter, especially when it involves components like compensation from the compulsory acquisition of land. In Malaysia, the tax treatment for compensation received from compulsory land acquisition can be scrutinized under various legal and regulatory frameworks. Below is a general outline of the tax treatment.

Tax Treatment of Compensation Received:

1. Determination of the Nature of Receipt:

Capital Receipt: Generally, if the land was used for investment purposes or was a capital asset, the compensation might be considered a capital receipt.

Revenue Receipt: If the land was utilized in a business, or the act of acquiring and selling lands was a business in itself, the compensation might be treated as revenue receipt.

2. Applicable Legislation:

Income Tax Act (ITA) 1967: Compensation is scrutinized under various sections of ITA to determine its taxability.

Section 4(a): Concerns the taxability of gains or profits from a business.

Section 4(f): Often pertains to other sources of income not categorized under sections 4(a) to 4(e).

3. Calculating Taxable Gain:

Real Property Gains Tax (RPGT) Act 1976: If compensation is considered a capital receipt, it may be subject to RPGT which is imposed on gains from the disposal of real property.

Compensation may need to be adjusted for enhancements and modifications made to the land to calculate the precise taxable amount.

Case Overview:

Join us in dissecting a compelling tax case involving OASB and the Director General of Inland Revenue (DGIR), revealing the trending tax, legal, and financial impact on compensation received from the compulsory acquisition of land.

Background

OASB, utilizing a rented shop lot for its audio-video business from 2004 to 2017, received RM2,341,817 as compensation due to government acquisition under Section 16 of the Land Acquisition Act 1960. However, the waters muddied when the DGIR issued a Notice of Additional Assessment along with a penalty, pursuant to Section 113(2) of the Income Tax Act (ITA) 1967.

Taxpayer's Argument

OASB fervently argued that the compensation should be categorized as a capital receipt, with a two-pronged rationale:

The compensation intended to restore the taxpayer’s position, based on the replacement cost at the time of compulsory acquisition.

The involuntary suspension of business activities during the acquisition resulted in a consequential loss of sales and profits.

DGIR’s Perspective

In opposition, the DGIR insisted it was a revenue receipt, taxable under Section 4(f) of ITA 1967, justifying that:

OASB lacked ownership rights over the land and building being compensated.

Section 4(f) of ITA 1967 broadly encompasses gains or profits outside the scope of Sections 4(a) to 4(e) for tax purposes.

Verdict from the Special Commissioners

Ultimately, the Special Commissioners of Income Tax sided with the DGIR, rejecting OASB's appeal and upholding the Notice of Additional Assessment along with its penalty.

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Failure to Furnish Information within a Stipulated Period

Failure to Furnish Information within a Stipulated Period
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(Tax Update) : Failure to Furnish Information within a Stipulated Period

Overview

Taxation constitutes a fundamental pillar of the Malaysian economy, and the Inland Revenue Board of Malaysia (IRBM) assumes a pivotal role in upholding tax law compliance. One of its key functions involves conducting tax audits to verify the accuracy of income reporting and tax payments by taxpayers.

Public Ruling No. 3/2015 is a comprehensive guide that outlines taxpayer obligations. It covers record-keeping, the need for timely information submission, and the consequences of non-compliance. In this article, we delve into the insights offered by this crucial Public Ruling, providing clarity on Malaysian taxpayers' responsibilities.

Key takeaways:

You will understand:

• How to secure deduction claims?

• What types of supporting documents that IRBM has the power to call?

• Who holds the responsibility for maintaining records and supporting documents?

• What are the consequences of failing to furnish documents within the prescribed timeframe?

• Can the taxpayer apply for an extension of time with IRBM?

Summary of learnings:

How to secure the deduction claims?

Taxpayers must submit specific supporting documents within the prescribed timeframe as set out by the IRBM in the notice issued under section 81 of the Income Tax Act 1967 (ITA).

What types of supporting documents that IRBM has the power to call?

IRBM has the authority to request various supporting documents, including books of accounts, invoices, vouchers, receipts, and any other records specified by IRBM.

Who holds the responsibility for maintaining records and supporting documents?

Taxpayers are responsible for keeping financial records and documents for seven years from the end of the year of assessment in which the Income Tax Return Form (ITRF) is furnished.

What are the consequences of failing to furnish documents within the prescribed timeframe?

Failure to provide requested documents within the stipulated time may result in the disallowance of claimed expenses for tax deduction under subsection 39(1A) of the ITA.

Can the taxpayer apply for an extension of time with IRBM?

Yes, taxpayers can apply for an extension of time from IRBM, provided the application is made before the stipulated timeframe expires and valid reasons are provided.

The approval status and details of the application will be issued in the form of a notice by IRBM.

Source:

Public Ruling No. 3/2015: Failure to Furnish Information within a Stipulated Period

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(Tax Update) : Use Of e-WHT For WHT Payment

(Tax Update) : Use Of e-WHT For WHT Payment
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(Tax Update) : Use Of e-WHT For WHT Payment

IRB Public Annoucement

The Inland Revenue Board of Malaysia has issued a media release dated 30 August 2023 on encouraging the use of electronic withholding tax (e-WHT) for WHT payment on its website.

From 1 January 2023, HASiL started this e-WHT system to make tax payments simpler.

e-WHT is one of the e-taxation services which is compulsory to be used online in stages with effect from 1 September 2023. Taxpayers will have to use it step by step, starting 1 September 2023.

How to e-WHT

Payment of WHT through e-WHT will use the Bill Number as a payment reference which can be made through the FPX method at the HASiL Payment Portal (ByrHASiL) or can be accessed via the MyTax Portal https://mytax.hasil.gov.my.

e-WHT enables proof of receipt of payment to be issued directly and data to be received directly by HASiL as soon as payment is made.

Taxpayers who wish to make WHT payments through e-WHT need to access the system by first logging in using their MyTax identification (ID) information for access at ezHasil Services > eWHT. A Bill Number will be generated automatically after the form is successfully submitted online with complete information.

KTP Thoughts

The Inland Revenue Board of Malaysia will mandate the use of e-services through the MyTax portal in stages from 1 September 2023. This is in line with the government’s digitalisation of service delivery systems, with full implementation expected by 1 January 2024.

Taxpayers are advised to switch to online services for all transactions, including online payment methods, to ensure that the transactions are safe and in order.

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(Tax Update) : Special Voluntary Disclosure Programme 2.0 guidelines

(Tax Update) : Special Voluntary Disclosure Programme 2.0 guidelines
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(Tax Update) : Special Voluntary Disclosure Programme 2.0 guidelines

IRB Public Annoucement

Based on IRB website, 22 August 2023, The Inland Revenue Board of Malaysia (IRB) may now conduct tax audits/investigations on the year of assessment the voluntary disclosure is made.

If the voluntary disclosure is made on non-transfer pricing matters only and the IRBM finds there is a risk of transfer pricing issues, a tax audit/investigation can be performed.

Conversely, if the taxpayer makes a voluntary disclosure of transfer pricing matters only, a tax audit/investigation can be performed on non-transfer pricing issues.

In the previous Special Voluntary Disclosure Programme 2.0 guidelines, a tax audit/investigation can only be carried out if the taxpayer fails to make the voluntary disclosure payment within the stipulated period.

In Taxpayers' Words

If you only report non-transfer pricing problems but IRB finds transfer pricing issues, IRB can still investigate those transfer pricing issues.

Similarly, if you only report transfer pricing problems, IRB can look into other unrelated issues.

KTP Thoughts

The implication for taxpayers is that even if they voluntarily disclose issues in one area, they could still be investigated for problems in other areas they didn't disclose.

This means taxpayers should be thorough and transparent in all areas to reduce the risk of audits or investigations.

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

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

Overview of Tax Representative

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

Key Takeaways

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

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

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

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

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

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

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

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

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

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

Final Words

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

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

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

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

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

Background of Multi Square case

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

Key takeaways include:

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

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

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

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

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

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

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

Final Words

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

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What PCB Audit is searching for and taxpayers often neglect?

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

What is PCB in LHDN?

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

Essential Documents for a Successful PCB Audit.

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

1. Employee pay slip

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

2. Payment Vouchers

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

3. CP39

Outlines employee details and monthly PCB deductions for each employee.

4. Certificate of Registration

Reflects the company’s legal standing.

5. Financial Statements

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

6. EA Forms

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

7. Employee Details List

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

8. TP 1, TP 2 and TP 3

Salary payouts have taken into account deductions for relief.

9. CP 21, CP 22 and CP 22A

Updates regarding changes in employment.

Final Words

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

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Sales Tax Exemption For The Manufacturers

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

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

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

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

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

2. Who is eligible?

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

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

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

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

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

3. Qualifying Categories of Materials

• Raw materials and components

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

• Packaging materials

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

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

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What are the new TP rules 2023?

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

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

Malaysia's New Transfer Pricing Rules 2023: Key Highlights

Introduction and Applicability

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

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

Contemporaneous TP Documentation

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

  • The date of preparation must be clearly stated.

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

  • Taxpayers must indicate when the TP documentation is finished.

  • Documentation must contain foundation documents and supporting materials.

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

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

Arm’s Length Range

  • Defined as figures between 37.5 percentile to 62.5 percentile.

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

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

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

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

Comparability Analysis

  • Precise delineation of controlled transactions emphasized.

  • Use of prior year data outlined with specific purposes.

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

Definitions and Changes

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

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

Practical Considerations for Taxpayers

  • The new rules provide clarity but have challenges.

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

  • Definition gaps on what constitutes a comparability defect.

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

  • The burden on taxpayers to maintain and prove documentation.

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

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

Next Steps for Taxpayers

  • Begin preparation to meet Schedule 1 requirements.

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

Source:

IRB : Transfer Pricing Rule 2023

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

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E-Invoicing Malaysia - Transition Challenges and Strategies

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

Introduction

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

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

Transition Challenges and Strategies

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

Integration with Existing Systems

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

Adherence to Local Regulations

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

Data Privacy and Security

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

Resistance to Change

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

Training and Education

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

Ensuring Data Accuracy

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

Supplier and Customer Adoption

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

Cost Implications

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

Scalability Concerns

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

Diverse Formats and Standards

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

Previous Updates on E-Invoicing

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

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

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

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

Source

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

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Double Tax Deduction on Hiring Interns

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

Background of MySIP

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

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

Key Takeaways

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

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

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

Effective date:

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

PU Order

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

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

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

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

Terms and conditions of MySIP

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

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

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

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

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

  • Registered with the Companies Commission of Malaysia (SSM)

  • Complete your MySIP registration at www.mynext.my

Contact TalentCorp

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

Past KTP Blog on the MySIP

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

  • Structured internship Programme TalentCorp - No Gazette Order dated 17.02.2023

    https://rb.gy/xp29f

  • Structured internship Programme TalentCorp dated 18.10.2022

    https://rb.gy/fpfux

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

  • https://shorturl.at/mox03

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  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

#Thk

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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.

Visit Us

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

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.

KTP Career

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

#Ktp #Thks

 

 

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/

Visit Us

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

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

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.

KTP Career

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

#Ktp #Thks

 

 

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

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+6012-771 7903 (Secretary Department)
+6012-771 7803 (Account Department)
+607-361 3443

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