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【税务】2025年马来西亚预算案：新的税务激励措施

如何利用马来西亚的新税务激励来帮助您实现现代化和扩展

您准备好利用马来西亚2025年预算中的新税务激励措施吗？政府正在推出一些计划，可以让准备采用最新技术和扩大市场的投资者和企业受益。这些措施包括为智慧物流综合体 (SLC) 提供的激励以及对提升出口能力，尤其是在集成电路 (IC) 设计方面的新福利。如果您的公司准备在物流效率上进行投资或扩大出口，这些激励措施可能就是您下一个重大的机会。

1. 智慧物流综合体 (SLC) 激励：提升供应链效率

物流激励范围从单纯的综合物流服务 (ILS) 扩展到智慧物流综合体 (SLC)，目的是通过采用先进技术来提高供应链效率。对于希望将运营带入工业4.0 (IR4.0) 时代的物流投资者和运营商来说，这是一个绝佳的机会。

根据智慧物流综合体 (SLC) 激励，符合条件的公司可以在5年内对符合条件的资本开支 (CAPEX) 申请60%的投资税务减免 (ITA)。此减免可用于抵扣每个评估年度 (YA) 高达公司法定收入 (SI) 的70%。

谁可以享受这项激励？

要符合SLC的ITA资格，以下标准适用：

SLC公司：包括参与建设智慧仓库的投资者和运营商，或那些长期租赁（至少10年）智慧仓库的运营商。
合格的物流服务：涵盖区域配送中心、综合物流服务、危险品储存和冷链物流。
仓库要求：仓库的面积至少要有30,000平方米。
工业4.0采用：公司必须采用至少三种工业4.0 (IR4.0) 技术，例如人工智能 (AI)、物联网 (IoT) 或区块链。

此激励措施适用于2025年1月1日至2027年12月31日期间马来西亚投资发展局 (MIDA) 接受的申请。对于想要将先进技术引入物流运营的企业来说，这是获得巨大税务优惠的绝好机会。

2. 提升出口激励：让马来西亚成为IC设计中心

根据新的工业主计划2030 (NIMP)，提升出口激励的范围现在扩展到覆盖集成电路 (IC) 设计服务。这旨在将马来西亚打造成为先进IC设计技术和解决方案的中心。从评估年度 (YA) 2025起生效，这项激励旨在吸引更多高科技领域的投资，与国家成为IC设计领导者的愿景相一致。

如果您的企业涉及IC设计或计划扩展到该领域，这项激励就是您加入马来西亚推动先进技术和提高全球竞争力的好机会。

准备好利用这些激励措施了吗？

这些新的税务激励不仅仅是省钱；它们是关于将您的业务定位于马来西亚技术和工业发展的前沿。如果您有兴趣充分利用这些机会，请联系KTP团队。我们随时准备帮助您处理申请流程，并最大限度地提高您的利益。

PS: 由我们客户关系总监Ms Lim Nguan Lian于其个人LinkedIn撰写。

(Tax Update) Malaysia Budget 2025 - New Tax Incentives

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(Tax Update) Malaysia Budget 2025 - New Tax Incentives

Are you ready to take advantage of Malaysia's new tax incentives under Budget 2025? The government is rolling out initiatives that can benefit investors and businesses ready to adopt the latest technologies and expand their market reach.

This includes the introduction of incentives for Smart Logistics Complex (SLC) development and new benefits for businesses that boost exports, especially in Integrated Circuit (IC) Design. If your company is ready to invest in logistics efficiency or expand exports, these incentives might be your next big opportunity.

Smart Logistics Complex (SLC) Incentive: Boosting Supply Chain Efficiency

The scope for logistics incentives has expanded from just Integrated Logistic Services (ILS) to the Smart Logistics Complex (SLC), designed to enhance supply chain efficiency by adopting advanced technology. This is a fantastic opportunity for logistics investors and operators who want to bring their operations into the age of Industry 4.0 (IR4.0).

Under the Smart Logistics Complex (SLC) incentive, qualified companies can claim an Investment Tax Allowance (ITA) of 60% on eligible Capital Expenditure (CAPEX) over a period of 5 years. This allowance can be applied against up to 70% of the company's Statutory Income (SI) for each year of assessment (YA).

Who Is Eligible for This Incentive?

To qualify for the ITA under SLC, the following criteria apply:

SLC Companies: This includes investors and operators involved in the construction of smart warehouses or those leasing these smart warehouses on long-term leases (minimum of 10 years).
Qualified Logistics Services: The services covered include regional distribution centres, integrated logistics services, storage of hazardous goods, and cold chain logistics.
Warehouse Requirements: The warehouse must have a minimum size of 30,000 square meters.
Industry 4.0 Adoption: Companies must adopt at least three Industry 4.0 (IR4.0) technologies, such as Artificial Intelligence (AI), Internet of Things (IoT), or blockchain.

This incentive is applicable for applications accepted by the Malaysian Investment Development Authority (MIDA) from 1 January 2025 to 31 December 2027.

Increased Export Incentives: Making Malaysia a Hub for IC Design

In line with the New Industrial Master Plan 2030 (NIMP), the scope for increased export incentives has now been expanded to cover Integrated Circuit (IC) Design services. This aims to establish Malaysia as a hub for advanced IC Design Technology and Solutions.

Effective from YA 2025, this incentive is designed to encourage more investments into the high-tech sector, aligning with the country’s vision to become a leader in IC Design.

If your business is into IC Design or planning to expand into this field, this incentive is your ticket to becoming part of Malaysia's push towards advanced technology and greater global competitiveness.

Need help navigating these updates? Our team at KTP is here to guide you. Feel free to contact us with any questions or for further assistance in planning your taxes.

Past Update on Budget 2025

Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024
HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024
Companies : https://www.ktp.com.my/blog/malaysia-budget-2025-companies/24oct2024
Individual : https://www.ktp.com.my/blog/malaysia-budget-2025-individual/25oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

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, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) Malaysia Budget 2025 - Individual

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(Tax Update) Malaysia Budget 2025 - Individual

The Budget 2025 has brought several changes to individual tax reliefs and exemptions, designed to support personal well-being, family care, and sustainable practices.

Let’s walk you through the highlights of what’s changing for you and how these updates might benefit your personal financial planning. From expanded childcare reliefs to foreign income exemptions, here are the key points at a glance.

1. Dividend Tax on Individual Shareholders

Tax Rate: 2% on annual dividend income exceeding RM100,000.
Exemptions: Dividends from KWSP, LTAT, ASNB, or any unit trust.
Effective: Year of Assessment (YA) 2025.

2. Foreign Source Income (FSI) Exemption

Extension: FSI received by individuals in Malaysia remains tax-exempt until 31 December 2036, as long as it is taxed in the source country.

3. Child and Elderly Care Allowance

Relief: Up to RM3,000 per year.
New Inclusion: Now extends to elderly care for parents and grandparents.
Effective: YA 2025.

4. Expanded Medical Reliefs for Families

Scope Increase: RM6,000 limit (previously RM4,000) for medical expenses and treatments, covering:
- Diagnostic tests (e.g., blood tests, ultrasounds, mammograms).
- Mental health consultations and complete medical exams.
- Self-monitoring tools (e.g., glucometers, pulse oximeters).
- Self-test kits for illnesses like influenza.
Children with Learning Disabilities: Relief increased to RM6,000, covering diagnostic and rehabilitation expenses.
Effective: YA 2025.

5. Reliefs for Disabled Individuals and Their Families

Increased Limits:
- RM7,000 (up from RM6,000) for disabled taxpayers.
- RM6,000 (up from RM5,000) for taxpayers with a disabled spouse.
- RM8,000 (up from RM6,000) for taxpayers with a disabled, unmarried child.
Effective: YA 2025.

6. Expanded Reliefs for Sports and Elderly Care

What’s New:
- Sports activities now include participation with parents.
- Vaccination costs added to complete medical examinations for parents (limited to RM1,000).
- Expenses for medical treatment and special needs now extend to grandparents.
Effective: YA 2025.

7. Deferred Annuity and PRS Relief

Extension: Available until YA 2030.

8. Education and Medical Insurance

Increased Limit: RM4,000 (previously RM3,000).
Effective: YA 2025.

9. SSPN Contributions

Extension: Tax relief continues until YA 2027, subject to new conditions.

10. Relief on Housing Loan Interest

Two-Tier Relief:
1. RM7,000 for houses priced up to RM500,000.
2. RM5,000 for houses priced between RM500,001 and RM750,000.
Conditions: Applicable to the first residential home loan, provided the house generates no rental income. The sale and purchase agreement (SPA) must be executed between 1 January 2025 and 31 December 2027.

11. Childcare Fees Relief

Limit: RM3,000 annually for fees paid to registered childcare centres or kindergartens.
Effective: YA 2025 to YA 2027.

12. Electric Vehicle Charging and Food Waste Solutions

Relief: Up to RM2,500 for EV charging facilities and newly added food waste composting machines for household use.
Effective: YA 2025 to YA 2027.

These changes reflect a more family-focused and environmentally conscious approach to individual tax planning. Make sure to take full advantage of these enhanced reliefs and exemptions in your 2025 tax filings.

Need help navigating these updates? Our team at KTP is here to guide you. Feel free to contact us with any questions or for further assistance in planning your taxes.

Past Update on Budget 2025

Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024
HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024
Companies : https://www.ktp.com.my/blog/malaysia-budget-2025-companies/24oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

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, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) Malaysia Budget 2025 - Companies (What SMEs Need to Know)

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(Tax Update) Malaysia Budget 2025 - Companies (What SMEs Need to Know)

Dear Valued Clients,

The latest tax updates offer fresh opportunities for businesses to maximize savings. If you’re planning your 2025 budget or strategizing future business expenses, this is the perfect time to explore the new and extended deductions and allowances.

Here’s a breakdown of the latest tax changes you shouldn’t miss:

1. Childcare & Elderly Care Allowance for Employees

What’s New? The current childcare allowance is now extended to cover elderly care for parents or grandparents.
When? Starting from YA 2025.

2. Smart AI-Driven Reverse Vending Machine (RVM)

What’s New? Sponsorship or contributions towards these smart recycling machines are now tax-deductible for an additional 2 years.
Effective Period: 1 January 2025 – 31 December 2026.

3. Encouraging Flexible Working Arrangements (FWA)

Additional Deduction: Enjoy 50% extra deduction on capacity-building costs and software acquisition for FWA.
How Much? Up to RM500,000, applicable as a one-off deduction.
Who Qualifies? Your application must be acknowledged by Talent Corporation Malaysia Berhad.
When to Apply: Between 1 January 2025 and 31 December 2027.

4. Care Leave for Employees

Tax Relief: Employers offering up to 12 months of additional paid leave to employees caring for sick or disabled family members will enjoy 50% additional deduction.
When to Apply: Submit applications to Talent Corporation Malaysia Berhad from 1 January 2025 to 31 December 2027.

5. Hiring Women Returning to Work

Incentive: A 50% additional deduction on employment costs for hiring women re-entering the workforce.
Eligibility Period: 12 months.
When to Apply: Applications open from 1 January 2025 to 31 December 2027 via Talent Corporation Malaysia Berhad.

6. Developing New Courses at Private Educational Institutions

Faster Deduction: Now you can deduct the full cost of developing new courses in the same year of assessment, instead of spreading it over 3 years.
Who Benefits? Private education institutions and TVET training institutes.
When? Effective from YA 2025 until YA 2030.

7. Accelerated Capital Allowance (ACA) for ICT Investments

Shorter Deduction Period: You can now claim ACA over 2 years instead of 3.
Allowances: 20% Initial Allowance (IA) and 40% Annual Allowance (AA).
When?
- YA 2024 to YA 2025
- YA 2025 to YA 2027

These incentives reflect the government’s support for sustainable business practices, inclusive hiring, and workplace flexibility. We encourage you to plan ahead to take advantage of these savings and apply on time where necessary.

If you need further guidance on how these incentives could benefit your business or help with TalentCorp applications, our team is ready to assist. Contact us today to start planning your tax strategy for 2025.

Past Update on Budget 2025

Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024
HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

Best regards
KTP Team
www.ktp.com.my

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, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) Malaysia Budget 2025 - HR

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(Tax Update) Malaysia Budget 2025 - HR

The 2025 Budget introduces several key changes that encourage inclusivity and employee support. However, businesses will need to assess whether these reforms align with their financial capacity and long-term strategy.

While the incentives aim to foster positive workplace policies, they may also increase labor costs and affect hiring decisions.

Below is a summary of these changes, along with my perspective on their practical impact.

Expanded Tax Relief for Caregiving
Employers will now enjoy expanded tax deductions on allowances provided not just for childcare but also for elderly care. Individual tax relief of up to RM3,000 will apply to such allowances, helping employees support aging family members.

While this initiative promotes work-life balance, some businesses might hesitate to implement it broadly due to concerns about the associated administrative burden and the limited financial relief it offers.

Raising the Minimum Wage
From 1 February 2025, the minimum wage will increase to RM1,700 per month, with a grace period until 1 August 2025 for businesses employing fewer than five people. This move will improve living standards but could put financial strain on smaller businesses, particularly in sectors with tight profit margins.

Companies need to plan ahead to accommodate these wage hikes without compromising operational efficiency.

Flexible Work Arrangements
Employers investing in flexible work models will receive a 50% tax deduction on relevant expenses, capped at RM500,000 in a single claim.

This incentive encourages businesses to modernize their work culture, though smaller firms may find the initial investment in software and training a significant barrier to entry.

Support for Caregiver Leave
A 50% tax deduction will apply to employers offering extended paid leave—up to 12 months—for employees caring for children or family members with disabilities.

While this promotes employee wellbeing, it may create workforce management challenges for smaller teams, especially in industries reliant on consistent staffing levels.

Hiring Women Returning to Work
Employers hiring women after a two-year career break will qualify for a 50% tax deduction for 12 months.

This initiative aims to promote gender diversity, but businesses must be ready to invest in re-skilling programs to ensure smooth reintegration into the workforce.

EPF Changes for Foreign Workers
Mandatory EPF contributions will apply to new foreign workers, with gradual increases for existing foreign employees until their rates match those of locals.

While this promotes fair employment practices, companies relying on foreign labor will need to manage higher costs strategically.

SOCSO Incentives for Vulnerable Groups
Employers hiring individuals with disabilities or former convicts will receive RM600 per month for three months under SOCSO.

This initiative encourages inclusive hiring, but businesses must ensure proper workplace support to accommodate these employees effectively.

HRD Corp Allocation for Skills Development
The increased allocation for HRD Corp will enhance skill training programs, offering businesses more opportunities to upskill their workforce.

Employers should actively leverage these resources to remain competitive in an evolving market.

In conclusion, while these reforms open doors to more inclusive policies, they also require careful financial planning. For many businesses, the long-term costs of adopting these changes may outweigh the short-term incentives, raising questions about their overall sustainability.

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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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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.

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) Dividend Income in Malaysia: What Changed and What It Means for You

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(Tax Update) Dividend Income in Malaysia: What Changed and What It Means for You

The Malaysian government introduced notable changes to the taxation of dividend income in Budget 2025, presented on October 18, 2024. Let’s break down these changes and explore how they impact individual taxpayers and entrepreneurs.

New Dividend Tax Structure

Starting from the 2025 assessment year, a 2% tax will apply to annual dividend income exceeding RM100,000. Importantly, this tax will only apply to the amount above the RM100,000 threshold.

Example:
If you receive RM120,000 in dividends, only RM20,000 will be subject to the 2% tax, resulting in RM400 in additional tax.

Although the Prime Minister mentioned that this tax would be introduced “progressively,” it’s not yet clear if this means different tax rates for higher amounts or whether the 2% rate will apply uniformly.

Pre-2008: The Imputation System – A Taxpayer’s Sweet Deal

Before 2008, Malaysia operated under an imputation system. Companies paid corporate tax on their profits, and when dividends were distributed, shareholders received tax credits for the tax already paid by the company.

Example:
If Company A paid 24% corporate tax and distributed RM1,000 in dividends to you, the corporate tax was credited against your personal tax. If your personal tax rate was 15%, you got a refund on the excess tax paid.

2008 Onwards: Introduction of the Single-Tier Tax System

In 2008, Malaysia adopted the single-tier tax system, simplifying dividend taxation. Under this system, companies continued to pay corporate tax, but shareholders no longer received tax credits. However, dividends were fully exempted from personal income tax.

Example:
You received RM1,000 in dividends from Company B in 2015, and the entire amount was tax-free, with no further tax obligations on your end.

2025 Onwards: A New 2% Dividend Tax for High Earners

From 2025, a new 2% tax will apply to the portion of dividend income exceeding RM100,000. This change aims to target high-income earners.

Example:
If your total dividend income for the year is RM150,000, you will be taxed 2% on the RM50,000 exceeding the RM100,000 threshold. That translates to RM1,000 in additional tax.

Double Taxation: A Concern for Entrepreneurs and Investors

A key concern is the issue of double taxation. Malaysian companies already pay 24% corporate tax on their net profits before distributing dividends. With dividends currently tax-free for shareholders, the practice has been perceived as fair.

However, the new 2% dividend tax introduces an extra layer of taxation, particularly affecting high-income individuals.

Impact on Competitiveness:
This tax may make Malaysia less attractive to entrepreneurs and investors. When compared with countries offering lower corporate tax rates or tax-free dividends, Malaysian companies could appear less competitive. Entrepreneurs may be inclined to relocate their operations or explore jurisdictions with more tax-efficient regimes.

Conclusion

While the new dividend tax aims to boost government revenue, it raises concerns about double taxation and could affect Malaysia’s attractiveness to individual entrepreneurs and investors. As the rules take effect in 2025, it’s crucial to stay updated and explore tax planning strategies to manage these changes efficiently.

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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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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.

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

#KTP

(Tax Update) New e-Invoicing Rules in Malaysia: Are You Ready?

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(Tax Update) New e-Invoicing Rules in Malaysia: Are You Ready?

The Malaysian government has introduced the Income Tax (Issuance of Electronic Invoice) Rules 2024, published on 30 September 2024, and effective from 1 October 2024. Here’s everything you need to know to stay ahead in the game.

1. Purpose of the Rules

These new rules establish the legal framework and requirements for electronic invoicing (e-invoicing) in Malaysia, ensuring businesses transition smoothly into the digital tax era.

2. Implementation Timeline

Key dates for businesses based on their annual sales:

Over RM100 million: Implementation starts 1 October 2024
Between RM25 million – RM100 million: 1 January 2025
Below RM25 million: 1 July 2025

3. How to Determine Annual Sales

Based on the 2022 financial year audited statements or tax returns.
If there was a change in the accounting period in 2022, a specific formula must be used.

4. E-Invoice Requirements

The rules outline mandatory and optional fields for e-invoices:

Mandatory Details:
- Seller and Buyer Information
- Invoice Number and Date
- Product/Service Description and Quantity
- Tax-related Information
Optional Details: Payment information or other buyer-seller-specific data.

5. Who is Exempted?

The following are not required to issue e-invoices:

Foreign diplomatic offices
Individuals not engaged in business
Certain transactions by statutory bodies, local authorities, and international organizations until 1 July 2025.

6. Special Provisions to Note

Businesses involved in import/export must follow additional e-invoicing requirements.
If your company had a change in the financial year during 2022, you must adjust annual sales calculations accordingly.

7. Key Takeaways – Important Update on Timeline Discrepancy

The Income Tax (Issuance of Electronic Invoice) Rules 2024 (P.U. (A) 265) differ slightly from earlier e-invoicing guidelines:

Previous Guideline: Start date for businesses with over RM100 million annual sales was 1 August 2024.
Official Rules: Now set the start date as 1 October 2024.

What This Means for Business :

Legally Binding Date: 1 October 2024 is the official deadline.
Additional Time: Businesses in the first batch now have two extra months (August and September) to fine-tune their e-invoice systems.
Action Required:
- Use this time to ensure compliance with all mandatory e-invoice requirements.
- Review internal systems and processes to avoid non-compliance penalties.

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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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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.

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

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Unlocking Opportunities in the Forest City Special Financial Zone (FCSFZ)

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(Tax Update) Unlocking Opportunities in the Forest City Special Financial Zone (FCSFZ)

The Rise of a New Financial Hub in Johor

In a major boost to Malaysia's financial landscape, the Forest City Special Financial Zone (FCSFZ) has officially been introduced, offering an exciting array of incentives for businesses and individuals. Positioned on Pulau Satu, just off the coast of Johor, the FCSFZ aims to attract both local and global investors, making it a prime destination for financial services, technology, and high-end business operations.

If you're considering expanding or establishing your operations, this might just be the opportunity you've been waiting for.

What is the FCSFZ?

The FCSFZ is a newly established special financial zone located within Forest City, a large-scale development between Malaysia and Singapore. This zone, aimed at turning the region into a business hub, provides significant tax and regulatory incentives.

On 25 September 2024, the amendments to various financial regulations were gazetted, solidifying its status as a duty-free area. With the Malaysian government behind it, FCSFZ promises to be a game-changer in attracting foreign investment and boosting local economic growth.

Key Incentives and Benefits

Here’s a quick breakdown of what makes the FCSFZ attractive:

0% to 5% Corporate Tax Rate: Companies operating in global financial services, fintech, and other eligible sectors can enjoy corporate tax rates as low as 0%. This presents a significant opportunity for businesses looking to maximize their earnings.
15% Income Tax for Knowledge Workers: If you're a professional in the knowledge sector, you can take advantage of a flat 15% income tax rate, a major incentive compared to regular rates in Malaysia.
SFO Scheme for Wealthy Families: The Single-Family Office (SFO) Scheme allows family offices to benefit from a 0% tax rate on eligible investments for up to 20 years. This scheme is designed for wealthy families to manage their investments while operating from Pulau Satu in Forest City.
Special Financial Services Incentives: Banking institutions, insurance companies, and capital market intermediaries can benefit from additional deductions and exemptions. For example, there are special deductions on relocation costs and enhanced allowances for industrial buildings.

Single-Family Office (SFO) Scheme Requirements :

Establish a Family Office and Family Office Vehicle (SFOV): A Single-Family Office (SFO) and its related entity, the Single-Family Office Vehicle (SFOV), must be set up to manage family investments.
Location: Both the SFO and SFOV must establish and operate out of Pulau Satu within the FCSFZ.
Pre-Registration with Securities Commission (SC): The SFOV must be pre-registered with the SC to be eligible for the tax incentives.
Physical Office and Staffing Requirements: At least one investment professional with a minimum salary of RM10,000 must be employed.
Minimum Asset Under Management (AUM): The SFOV must manage a minimum AUM of RM30 million for the first 10 years, increasing to RM50 million for the extended 10-year period.
Local Investment Requirement: A minimum of 10% of the AUM or RM10 million must be invested locally.
Annual Operating Expenditure: The SFOV must incur a minimum local operating expenditure of RM500,000 in the initial period, which increases to RM650,000 in the extended period.

Strategic Location and Future Growth

Located strategically close to Singapore, the FCSFZ provides easy access to one of the world’s busiest financial hubs. This proximity not only enhances business connectivity but also offers firms in the zone a unique advantage—operating in a low-cost jurisdiction while enjoying access to global markets.

Is the FCSFZ Right for You?

If you're in sectors like fintech, financial services, or if you’re looking to establish a family office, the FCSFZ offers a wealth of opportunities. The incentives alone could provide substantial tax savings and operational flexibility, allowing businesses to thrive in this burgeoning hub.

Whether you're an entrepreneur, an investor, or a corporate leader, this is the time to explore the potential of this new financial zone.

Conclusion

The Forest City Special Financial Zone represents a fresh chapter in Malaysia's economic development. With its generous incentives and prime location, it’s a must-consider for businesses aiming to expand or relocate their operations.

If you're interested in learning more about how the FCSFZ can benefit you or your business, feel free to reach out to our KTP team. We’re here to guide you through the process and help you seize these opportunities.

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
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(Tax Update) GST 2.0 Is Coming?

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(Tax Update) GST 2.0 Is Coming?

According to Nanyang Siang Pau, the government is preparing to reintroduce GST (Goods and Services Tax) in the 2025 Budget, with the mechanism and exemption list already finalized, ready for announcement.

The implementation is expected by 2026 to help improve the country’s financial position ahead of the 2027 general election.

Early market suggestions indicate a proposed 4% rate.

When the Goods and Services Tax (GST) 1.0 was introduced in Malaysia, there was a widespread belief that auditors and tax agents were the biggest winners.

Many are now echoing the same sentiment with the talks of GST 2.0.

But let me tell you, as someone who has been through GST 1.0 – this couldn’t be further from the truth.

Firstly, GST 1.0 was highly politicized.

While it was meant to create a more transparent taxation system, it faced challenges, especially around reimbursement delays for tax credits.

Businesses had to wait for months to receive their rightful claims, causing cash flow issues for many.

Secondly, let’s compare GST and SST. Under the Sales and Services Tax (SST), businesses only pay tax at the end of the supply chain, whereas GST taxes each stage of the supply chain.

Yes, GST allows input tax credits, but these credits are only useful if they are reimbursed promptly. The delays we faced during GST 1.0 caused more headaches

Let me set the record straight—we’re just trying to help businesses navigate these complex systems while ensuring compliance.

PS : Authored by Mr Koh Teck Peng, the Group Principal, in his personal LinkedIn post https://bit.ly/4ezf81g

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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(Tax Update) Socso Salary Ceiling Raised to RM6,000—What Employers Need to Know

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(Tax Update) Socso Salary Ceiling Raised to RM6,000—What Employers Need to Know

Effective October 1, 2024, the Social Security Organisation (Socso) in Malaysia will increase the insured salary ceiling from RM5,000 to RM6,000. This change, introduced through amendments to the Employees' Social Security Act 1969 and the Employment Insurance System Act 2017, is part of the government's efforts to enhance social protection for employees.

What Does This Mean for Employers?

The increase in the salary ceiling directly impacts employer contributions, especially for those with employees earning between RM5,000 and RM6,000 per month. As of October 1, 2024, employers will need to adjust their payroll systems to comply with the new contribution rates.

Here’s a breakdown of the changes:

Impact on Employer Contributions:

Higher contributions

Employers will need to contribute more for employees whose salaries fall between the new RM5,000 and RM6,000 threshold.

Expanded coverage

This adjustment affects both local and foreign workers, impacting around 1.5 million employees or 15.5% of Socso contributors nationwide.

Immediate compliance

Employers must start making contributions according to the new salary ceiling from October 1, 2024.

Employer Responsibilities:

Update payroll systems

Employers are required to ensure their payroll systems reflect the new contribution rates for affected employees.

Maintain accurate records

Contributions must be clearly reflected in employees’ pay statements for compliance and audit purposes.

Adhere to regulations

Non-compliance could result in penalties or legal consequences, making it crucial to follow the updated rules from the start.

Benefits and Implications for Employers and Employees:

Enhanced employee benefits

Employees earning above RM5,000 will benefit from improved disability, pension, and job search allowances, with up to a 20.2% increase in interest payments.

Strengthened social protection

This move will enhance overall social protection under the Employee Social Security Act and the Employment Insurance System Act, providing workers with better security.

Cost implications for employers

While this reform benefits employees, employers—especially SMEs—should be prepared for higher contribution costs, which may impact their operational budgets.

Conclusion

Although the increased salary ceiling means higher contributions for employers, it is a step towards strengthening the nation's labor market and ensuring better social protection for workers. Employers must act now to update their payroll systems, keep accurate records, and ensure compliance to avoid penalties.

This change presents both opportunities and challenges for businesses, but it ultimately aligns with the government's broader aim to improve the social safety net for all workers in Malaysia.

We look forward to helping you navigate these changes smoothly.

Warm regards,

KTP Team

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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(Tax Update) LHDN’s New E-PCB PLUS System

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(Tax Update) LHDN’s New E-PCB PLUS System

Dear Valued KTP Clients,

We hope this newsletter finds you well. We have some crucial updates from the Inland Revenue Board of Malaysia (LHDN) that we believe you should be aware of. LHDN has recently made an early announcement regarding the transition to the new E-PCB PLUS system via the MyTax platform.

This transition is expected to bring significant changes to the way employers handle monthly tax deductions (PCB) for their employees. As your trusted partner in navigating the complex world of taxation, we want to ensure you are fully prepared for these upcoming changes.

Context

The Inland Revenue Board of Malaysia (LHDN) has taken a proactive step by announcing an early transition to the E-PCB PLUS system, a move aimed at modernizing and streamlining the payroll tax deduction process for employers.

This transition is set to enhance the efficiency and accuracy of calculating and remitting monthly tax deductions (PCB) through the MyTax platform. Here’s what you need to know about this important development and how it might impact your business operations.

What is the E-PCB PLUS System?

The E-PCB PLUS system is an upgraded electronic platform introduced by LHDN to simplify the monthly tax deduction process for employers. Unlike the current system, the E-PCB PLUS system integrates directly with the MyTax platform, offering a more comprehensive and user-friendly experience.

This new system will not only streamline the calculation of PCB but also improve the accuracy of data submission, reducing the likelihood of errors and ensuring compliance with tax regulations.

How to Add Employees to e-PCB Plus

Here’s a step-by-step guide on how to add employees to e-PCB Plus using the MyTax system.

1. Log in to e-PCB Plus:

Access the system via MyTax.
Ensure you have selected the correct role—either Pentadbir or wakil Pentadbir.

2. Go to the Employees Section:

Navigate to the ‘Pekerja’ (Employees) menu.

3. Create an Employee Group (if needed):

If you haven't created an employee group yet, click on ‘Tambah Kumpulan Pekerja’ (Add Employee Group).
Enter the group name and click ‘Tambah’ (Add).

4. Add Employees:

Once the group is set, click on ‘Tambah Pekerja’ (Add Employee) within the employee group.

5. Select Employee Identification Type:

Choose the appropriate identification type for the employee:
- Tax Identification Number (TIN)
- Identity Card Number (NRIC)
- Passport Number (Passport)

6. Enter Employee Details:

Input the selected identification number and click the search icon (usually a magnifying glass).

7. Review and Complete Employee Information:

If the employee exists in the LHDNM database, their details will appear automatically.
Complete or update the required fields (marked with a red asterisk *).
If you are using a passport number and multiple records are found, you may need to enter the employee's TIN to refine the search.

8. Save the Employee Information:

Once all required information is filled out, click ‘Simpan’ (Save).

9. Handling New Employees Not in the LHDNM Database:

For new employees not found in the system, you will need to manually enter all their information. Ensure all mandatory fields are completed.

10. Verify Employee Addition:

After saving, check that the employee is listed in the appropriate employee group.
You can review all added employees in the ‘Employee List’ section.

Important Notes:

Ensure that the details you enter for each employee, particularly their tax identification numbers, are accurate and up-to-date.
If you are migrating from an older system, you might have employees requiring group assignments or information updates.
Employees with incomplete data will appear in the ‘Employees who need to be updated’ section for further action.

This guide provides the general steps, but note that the interface may vary slightly based on the version of the system.

Conclusion

The introduction of the E-PCB PLUS system marks a significant step towards a more efficient and modern tax administration in Malaysia. As we move closer to the implementation date, we encourage all our clients to stay informed and proactive in preparing for these changes.

Should you have any questions or need further assistance, please do not hesitate to reach out to our team.

We look forward to helping you navigate these changes smoothly.

Warm regards,

KTP Team

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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(Sec Update) Rewarding Long-Serving Employees: A Tax-Efficient Strategy for SME Owners

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(Sec Update) Rewarding Long-Serving Employees: A Tax-Efficient Strategy for SME Owners

Sitting in a cozy kopi shop with a close friend, our usual teh tarik session quickly turned into a thoughtful conversation. “How do I reward a long-serving employee when my private limited company makes a profit from holding investment properties, without adding more tax burdens?” he asked, sounding a bit anxious.

I leaned back, smiling. “There are ways,” I said, “but let’s talk about a few tax-exempt employee benefits that could work in your favor. After all, why should you get taxed twice when the gain from the investment is already taxed at the company level, right?”

Tax-Free Benefits: Keep the Gains, Share the Reward

First things first, I explained to my friend that there are tax-friendly ways to reward loyal employees without further increasing the company’s tax liabilities. Simple things like housing loans, leave passage … can be provided tax-free, or with minimal tax implications, to the employee.

One of the most direct approaches? I suggested offering shares of the company. By issuing shares of your Sdn Bhd, the employee becomes a shareholder, giving them (don’t give them FREE) a vested interest in the company’s long-term growth.

It’s more than just a bonus—it’s a slice of the company pie that ties their success to the company’s prosperity.

But if you’re looking for something more flexible, then I had another option that got his wheels turning.

Why Consider an LLP? A Flexible Approach for Employee Incentives

I brought up the idea of using a Limited Liability Partnership (LLP) for employee incentives. It’s not the most common approach, but in some cases, it can be a great alternative for businesses looking for flexibility.

''Why an LLP?'' he asked, intrigued.

“Well,” I started, “with an LLP, your employee gets protection from personal liability, just like with an Sdn Bhd, but with much more flexibility in how you manage profit-sharing.”

Here’s what I laid out for him:

Limited Liability: Employees who become partners in an LLP are shielded from personal liability, which can give them peace of mind.
Flexibility: You have more control over how profits are distributed, making it easier to customize rewards based on the employee’s contribution.
Simplified Compliance: Unlike an Sdn Bhd, LLPs don’t require annual audits unless necessary, which cuts down on paperwork and compliance costs.

The Right Fit for Your Business

As our conversation continued and the coffee cups emptied, he seemed intrigued by the simplicity and flexibility that both options could offer. “It all depends on your business setup,”

I said, “but whether you go with shares in an Sdn Bhd or explore the LLP route, the goal is the same: reward your employees in a way that benefits both them and the company, without overburdening anyone with extra taxes.”

In the end, the takeaway was clear. SME bosses like my friend often find themselves in this situation—balancing tax efficiency with employee motivation. But with the right approach, it’s possible to achieve both, creating a win-win for everyone involved.

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Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

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How to Incorporate a Private Limited Company in Malaysia

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(Sec) How to Incorporate a Private Limited Company in Malaysia: A Step-by-Step Guide for Investors

With over 50,000 private limited companies incorporated in Malaysia in 2023, the country remains a hot spot for new businesses. Whether you're a local or international investor, setting up a company in Malaysia is an attractive option.

To make the process smoother, here are six essential steps to help you get started on your entrepreneurial journey.

1. Company Name
Choosing your company name is the first step. The name must be unique, not identical to an existing company, and must meet the standards set by the Companies Commission of Malaysia (SSM). Your company secretary will handle the name submission to ensure it meets SSM's requirements and is available for registration.

2. Business Activity
When incorporating your business, you will need to select up to three categories from the MSIC (Malaysia Standard Industrial Classification) code. These categories define your business's nature and scope, and getting them right is key to starting off on the right foot.

3. Share Capital
While the minimum paid-up capital in Malaysia can be as low as RM1, it is recommended to have more than RM1,000 to facilitate the opening of a bank account. A higher capital not only reflects better financial standing but also helps in building credibility with banks and clients.

4. Registered Office Address
Every company must have a registered office address for receiving official correspondence. This is usually provided by your corporate secretary, ensuring all legal documents and notifications are properly handled.

5. Director and Shareholder Requirements
Your company needs at least one director and one shareholder, both of whom must be over 18 years old. If your company only has a foreign director, they must reside in Malaysia to meet local regulations.

6. Opening a Company Bank Account
Opening a traditional bank account can be challenging for newly incorporated companies without solid business documentation. Many opt for electronic banking solutions like Payoneer at the start, until they can provide sufficient business evidence, such as contracts and proof of revenue growth. Most banks will also require a valid business address as part of their compliance process.

By following these steps, you’re on your way to incorporating your private limited company in Malaysia. To learn more about how we can assist you with this process, visit our blog at KTP or THKs. We specialize in helping investors navigate company incorporation, and our team is ready to guide you through every step.

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

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公司成立后许可证常见问题

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公司成立后许可证常见问题 | THK (www.thks.com.my)

在马来西亚创业？别担心，THK 为您解答公司成立后关于许可证的常见问题。

无论您是刚刚成立公司，还是准备扩展业务，遵守法律法规是非常重要的。

我们将讨论以下关键问题：

我成立公司后，第一项必须完成的强制性注册是什么？
我们公司刚招聘了一名新员工。是否需要注册与员工相关的组织？
计划在实体办公室经营？要合法设立业务场所需要什么许可证？
想要开办制造业？需要申请哪种特定许可证？
如果从事贸易行业，您的业务需要什么许可证？
其他行业需要哪些注册？

保持信息更新，确保合法合规。有关适合您业务的许可证或注册的更多指导，请联系 THK (www.thks.com.my) – 您在柔佛州中小企业合规方面的可靠伙伴。

不要错过专家建议。订阅我们的频道，获取 THK 的最新动态！

点击观看我们的视频：https://youtu.be/-X5_lUPHwSE

(Tax Update) LHDN’s New E-PCB PLUS System

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(Tax Update) LHDN’s New E-PCB PLUS System

Dear Valued KTP Clients,

Context

1. What is the E-PCB PLUS System?

This new system will not only streamline the calculation of PCB but also improve the accuracy of data submission, reducing the likelihood of errors and ensuring compliance with tax regulations.

2. Why is LHDN Making This Transition?

The transition to the E-PCB PLUS system reflects LHDN’s commitment to embracing digital transformation and enhancing its services for taxpayers. By adopting this new system, LHDN aims to provide a more efficient, transparent, and reliable tax filing experience for employers.

The E-PCB PLUS system is designed to reduce administrative burdens, minimize errors in PCB calculations, and facilitate easier access to tax records through the MyTax portal.

3. Key Features and Benefits for Employers

Employers will benefit from several new features with the E-PCB PLUS system. These include automated updates on the latest tax rates, a streamlined interface for submitting employee tax data, and enhanced security measures to protect sensitive information.

The system’s integration with the MyTax platform allows employers to manage all their tax-related activities in one place, from filing tax returns to monitoring payment statuses.

This centralized approach will save time and reduce the hassle associated with managing multiple tax filings.

4. Preparing for the Transition: What Should You Do?

To ensure a smooth transition to the E-PCB PLUS system, we recommend that all employers familiarize themselves with the new system requirements and functionalities. LHDN is expected to provide detailed guidelines and training sessions in the coming months to help employers adapt to the new platform.

We also encourage you to review your current payroll processes and systems to ensure compatibility with the E-PCB PLUS system.

5. How Can KTP Help?

As always, KTP is here to support you through this transition. Our team of experts is ready to assist you in understanding the new system and its implications for your business.

We can provide personalized guidance on how to integrate the E-PCB PLUS system into your existing payroll processes, ensuring a seamless shift and continued compliance with LHDN requirements.

Conclusion

Should you have any questions or need further assistance, please do not hesitate to reach out to our team.

We look forward to helping you navigate these changes smoothly.

Warm regards,

KTP Team

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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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

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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#Thk

#KTP

Can intercompany loans be interest free?

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(Tax Update) Interest-Free Loans – Are You at Risk?

Dear Valued Clients,

Are you providing interest-free loans between your companies? If so, it's time to take a closer look! The Malaysian Inland Revenue Board (IRB) has ramped up its scrutiny on these transactions, and they’re not playing around.

What’s Happening?

The IRB is closely examining interest-free loans between related parties, including those from directors to their companies. Even if no interest is charged, the IRB considers these loans as generating ''deemed interest income,'' which is taxable.

This could result in an unexpected tax bill, plus a 5% surcharge tax penalty for what the IRB views as unpaid interest.

Why Now?

Although the rules have been in place for years, the IRB is now strictly enforcing them. Under Section 140B of the Income Tax Act 1967 and Public Ruling No. 8/2015 Loan or Advances to Director by a Company, the IRB has the power to retroactively tax interest income on these loans, with a look-back period of up to seven years.

This means you could be liable for back taxes on past transactions.

Legal and Compliance Risks

If you haven't been reporting these loans or justifying their interest-free nature, you could face penalties. The IRB argues that interest-free loans violate the arm's length principle—meaning they're not conducted on terms that independent parties would agree to.

There is also no guarantee that a company making a payment under such a loan will receive a corresponding tax deduction. Deductions are only allowed if the payment meets the 'wholly and exclusively for the production of income' rule.

But it doesn't stop at loans.

The IRB’s scrutiny also covers other financial arrangements such as cash advances, payments on behalf of related parties, long-outstanding trade debts, financial support, and guarantee fees. It’s essential to determine whether these are genuine loans or could be seen as equity instruments.

IRB’s Active Enforcement

The IRB is actively enforcing these rules, sending letters to taxpayers requesting explanations for their interest-free loan arrangements.

If the IRB isn't satisfied with your explanations or documentation, you could face hefty fines and back taxes.

What Should You Do? Best Practices to Follow

To protect your business from these risks, it’s crucial to:

Keep Proper Documentation

Always have loan agreements in place and maintain clear records justifying any interest-free loans.
Review Your Financial Arrangements

Conduct a thorough review of all transactions to ensure they are properly classified and reported.
Seek Professional Guidance

Engage with tax professionals to help navigate these complex rules and ensure your compliance with all tax regulations.

Transfer Pricing and Tax Evasion

Remember, transfer pricing—pricing transactions between related entities to minimize taxes—is a primary method of tax avoidance that the IRB is targeting. Make sure your transactions are compliant with Malaysian laws to avoid being flagged for tax evasion.

Conclusion

With the IRB’s increased scrutiny, it’s more important than ever to ensure your financial practices are in line with current tax laws. Don’t wait until it’s too late—take action now to review your interest-free loans and related transactions to avoid any surprises.

Stay informed, stay compliant, and reach out to us at KTP if you need any assistance navigating these changes.

Thank you for reading our weekly newsletter!

Best regards,

KTP Team

Credit : 'Interest-Free Loans Blitz Is Now Haunting Taxpayers,' as reported by Thannees.com.''

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KTP (Audit, Tax, Advisory)

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

THK (Secretarial, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
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(Tax Update) MIDA Reinvestment Incentive Eligibility

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(Tax Update) MIDA Reinvestment Incentive Eligibility

Dear KTP Clients,

As a licensed tax agent with years of experience, I’ve seen how the right tax incentives can make a significant difference for businesses in Malaysia.

Recently, a client of ours, the boss of a well-established manufacturing company producing automotive spare parts, approached me with a question that I believe many of you in similar industries might be asking: “Am I eligible for the new reinvestment incentive under the New Industrial Master Plan 2030 (NIMP 2030)?”

Let’s walk through the scenario.

This particular company has been in operation for over 10 years, a solid track record in the industry. Previously, they claimed Pioneer Status, a tax incentive that many companies in the manufacturing sector have benefited from.

Now, as they consider expanding their operations to meet increasing demand, the question of eligibility for the new reinvestment incentive arises.

The Incentive: What’s on the Table?

Under the NIMP 2030, the government has introduced a tiered Investment Tax Allowance (ITA) aimed at encouraging businesses to reinvest in high-growth, high-value activities.

The incentive is split into two tiers:

✅ Tier 1: Offers an ITA of 100% of qualifying capital expenditure (QCE), which can be set off against 100% of statutory income (SI).

✅ Tier 2: Provides an ITA of 60% of QCE, set off against 70% of SI.

Both tiers come with a 5-year incentive period, a substantial benefit for companies looking to expand or diversify their operations.

Are You Eligible?

Here’s where it gets interesting. To qualify for this incentive, your company must meet several criteria:

✅ Operational History

Your company must be a resident manufacturing company incorporated under the Companies Act 2016 and must have been in operation for at least 36 months. Given that your company has been running for over 10 years, this criterion is clearly met.

✅ Previous Incentives

If your company has previously claimed a tax incentive, such as Pioneer Status under the Promotion of Investment Act 1986, the incentive period for that must have ended. With your Pioneer Status period now behind you, this opens the door to new opportunities like the NIMP 2030 incentive.

✅ Project Type

The incentive applies if your company is undertaking an expansion (increasing production capacity or market share) or diversification (introducing new products) project within the manufacturing sector.

✅ Timing

This is crucial. The company must submit the incentive application to MIDA before the commencement of the proposed project. In this context, ‘commencement’ is specifically defined as the issuance of the first sales invoice related to the proposed project.

If you’re planning an expansion or diversification project, I strongly recommend that you prepare your application as soon as possible to ensure it is submitted to MIDA before you issue the first sales invoice for the project.

Past blog

15 August 2024 New Tax Incentive Under the Industrial Master Plan 2030

https://www.ktp.com.my/blog/reinvestment-incentive-under-the-industrial-master-plan/15aug2024

Note: The information provided in this newsletter is for general guidance only and should not be considered as professional advice. Always consult with a tax professional before making any business decisions.

PS : Authored by Mr Koh Teck Peng, the Group Principal, in his personal LinkedIn post https://bit.ly/3YT8GgA

What are allowable expenses in Hungry Ghost praying expenses?

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(Tax Update) Tax Deductible for Hungry Ghost Praying Expenses

In Malaysia, many businesses observe the Hungry Ghost Month by holding prayer sessions, which may include offerings and ceremonies.

Understanding the tax implications of these expenses is crucial, especially given the cultural significance of this period. Most taxpayer

Here’s a detailed explanation of how these expenses can be categorized and which are tax-deductible.

1. Tax Deductible Expenses (Section 33, Income Tax Act 1967)

Under Section 33(1) of the Income Tax Act 1967, expenses that are ''wholly and exclusively incurred in the production of income'' are deductible. For businesses, this includes expenses that are directly related to operations and maintaining employee morale or customer relations.

a) Staff Refreshments

Expenses for food, drinks, and other refreshments provided during the prayer sessions can be classified as staff refreshments. These expenses are generally deductible under Section 33(1) if they are part of the company’s customary practice to foster goodwill and maintain good working relationships with employees.

The deductibility is further supported by Public Ruling No. 1/2003 on ''Perquisites From Employment,'' which clarifies that reasonable staff welfare expenses, such as refreshments during events, are allowable.

b) Expenses for Staff Welfare

Related expenses, such as venue setup and basic offerings that are part of the staff’s well-being during the prayer ceremony, can also be considered deductible under the same section. These are seen as necessary for maintaining a harmonious workplace, thus directly contributing to the production of income.

2. Non-Deductible Expenses (Section 39, Income Tax Act 1967)

Under Section 39(1) of the Income Tax Act 1967, certain expenses are specifically disallowed as deductions, even if they are related to business activities.

a) Ceremonial Items

Expenses incurred for ceremonial items such as papercraft, incense papers, and other related materials used during prayers fall under this category. These items are considered non-business expenses, primarily personal or cultural, and therefore, do not qualify for a deduction under Section 39(1).

b) Excessive Expenditure

If the expenses for refreshments or other related items are deemed excessive or extravagant, they could also be disallowed under Section 39(1) as they may not be seen as wholly and exclusively for business purposes.

3. Other Relevant Sections and Public Rulings

Beyond Sections 33 and 39, Public Ruling No. 3/2013 on ''Entertainment Expenses'' provides additional insights. It clarifies that expenses on food and beverages for employees during work-related events are generally allowable, provided they are reasonable and not excessive.

Summary

In conclusion, when it comes to tax-deductible expenses during the Hungry Ghost Month:

Expenses for food, drinks, and related items provided during prayers can be tax-deductible under Section 33(1) and can be categorized as staff refreshments or staff welfare.
Expenses for papercraft, incense papers, and similar items are not deductible under Section 39(1).

Businesses should ensure that these expenses are reasonable, directly related to the production of income, and properly documented to support their tax filings. For further guidance, consulting with a licensed tax agent is advisable to ensure compliance with the Income Tax Act 1967 and related public rulings.

(Tax Update) Consolidated Self-Billed for Import of Goods or Services

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(Tax Update) Consolidated Self-Billed for Import of Goods or Services

According to the Inland Revenue Board of Malaysia (IRBM) letter dated 12 August 2024, addressed to the Chartered Tax Institute of Malaysia (CTIM), the following key issues were clarified regarding the implementation of consolidated self-billed e-invoices for the import of goods or services:

Timing During Relaxation Period

Even during the six-month interim relaxation period, taxpayers must issue consolidated self-billed e-invoices monthly, within seven days after the end of the month.

Importation of Goods

For goods cleared by customs in August 2024, self-billed e-invoices must be issued as follows:

Individual e-invoice: By 30 September 2024.
Consolidated e-invoice: By 7 October 2024.

Importation of Services:

For services either paid for or invoiced in August 2024:

Individual e-invoice: By 30 September 2024.
Consolidated e-invoice: By 7 October 2024.

Clarifications

No e-invoice is required if goods/services were paid for or invoiced before the mandatory implementation date.

Further Action

IRBM will provide more details in upcoming FAQs to clarify the e-invoice requirements.

This should provide a clear and concise understanding of the recent e-invoicing updates.

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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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

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(Tax Update) Understanding the Manufacturing License in Malaysia: What You Need to Know

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(Tax Update) Understanding the Manufacturing License in Malaysia: What You Need to Know

If you're running a manufacturing business in Malaysia or planning to start one, understanding the manufacturing license is crucial.

This license isn't just a formality; it's a key requirement that can impact your business operations, particularly when dealing with local authorities.

In this blog, we'll break down what a manufacturing license is, how to apply for it, why it's important, and who MIDA is.

What is a Manufacturing License?

A manufacturing license is an official permit issued by the Malaysian Investment Development Authority (MIDA) that allows businesses to carry out manufacturing activities in Malaysia.

This license is mandatory under the Industrial Coordination Act 1975 for any manufacturing company with a share capital of RM2.5 million and above or employing 75 or more full-time workers.

How to Apply for a Manufacturing License?

Applying for a manufacturing license is a straightforward process but requires careful preparation. Here’s a step-by-step guide:

Prepare Your Documentation

Ensure all your company documents are in order, including your business plan, company profile, and relevant financial statements.

Submit an Online Application

Applications for the manufacturing license must be submitted through MIDA's online system, which includes filling out the necessary forms and uploading your documents.

MIDA Review

Once submitted, MIDA will review your application. This process may involve a site visit to verify your operations.

Approval and Issuance

If your application is successful, MIDA will issue the manufacturing license. This license should be renewed periodically as required.

Why is the Manufacturing License Important?

The manufacturing license is essential for several reasons:

Compliance with the Law

Operating without a license can lead to penalties, including fines or business shutdowns.

Local Council Requirements

It's rumored that local councils in Malaysia are increasingly requiring manufacturing licenses as part of the criteria for approving business and signboard licenses. Without it, your business may face difficulties in obtaining these necessary approvals.

Facilitating Investment

A valid manufacturing license can also make it easier to attract investors, as it demonstrates that your business complies with Malaysian regulations.

Who is MIDA?

The Malaysian Investment Development Authority (MIDA) is the principal government agency responsible for promoting the manufacturing and services sectors in Malaysia. MIDA assists companies in the application process for manufacturing licenses and provides support in navigating the regulatory environment. Established in 1967, MIDA has been pivotal in driving Malaysia's industrial development.

When Should You Apply?

You should apply for a manufacturing license as soon as you plan to engage in manufacturing activities that meet the criteria under the Industrial Coordination Act 1975.

Early application ensures you can legally operate your business and avoid delays in starting your operations.

Conclusion

Securing a manufacturing license is a critical step for any manufacturing business in Malaysia. Not only does it ensure compliance with local laws, but it also supports your business in obtaining necessary approvals from local councils.

If you're unsure where to start, KTP is here to guide you through the process. Contact us today to learn more about how we can assist you in securing your manufacturing license.

For more detailed information on manufacturing licenses, visit our website at www.ktp.com.my.

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, Bookkeeping, Payroll, Advisory)

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

Website www.thks.com.my
Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

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

Instagram https://bit.ly/3u2PxHg
Facebook http://bit.ly/3rPxz9o

#Thk

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