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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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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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Insolvency Act Amendments 2023

Insolvency Act Amendments 2023
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Insolvency Act Amendments 2023

Latest Development on Insolvency Malaysia

The Insolvency Act (Amended) 2023 will come into force on Friday (Oct 6), says Datuk Seri Azalina Othman Said.

The Minister in the Prime Minister's Department (Law and Institutional Reform) said the amendment resulted from discussions between the Attorney General's Department, Federal Court Chief Registrar, Finance Ministry, Bank Negara Malaysia, Inland Revenue Department, Employees Provident Fund, Credit Counselling and Management Agency and Associations of Bank Malaysia.

Key Summarise

Here's a summary of the key points from the Insolvency (Amendment) Act 2023

Discharge from Bankruptcy

The Insolvency (Amendment) Act 2023, effective from 06.10.2023, brings changes to bankruptcy regulations.

It expands the categories of bankrupt individuals who are protected from objections by creditors when a certificate of discharge from bankruptcy is issued by the Director General of Insolvency (DGI).

The existing Insolvency Act 1967 prohibits creditors from objecting to discharge for certain categories, including social guarantors, persons with disabilities, deceased individuals, and those with serious illnesses.

The Amending Act adds two new groups: bankrupts with mental disorders certified by a psychiatrist from a government hospital and bankrupts aged 70 or older, deemed incapable of contributing to estate administration by the DGI.

Automatic Discharge from Bankruptcy

The Amending Act revises Section 33C of the Act regarding a bankrupt's right to automatic discharge.

Previously, automatic discharge occurred after three years if the bankrupt met certain criteria.

Post-amendment, automatic discharge happens three years from the submission of the statement of affairs if the bankrupt pays a sum determined by the DGI for estate administration purposes.

This change is expected to benefit a significant number of bankrupt individuals in Malaysia, with an estimated 130,000 people being discharged from bankruptcy.

Suspension of Automatic Discharge from Bankruptcy

The Amending Act introduces the concept of suspending automatic discharge for up to two years if the bankrupt fails to comply with their obligations under the Act.

The suspension is effective upon notice from the DGI to creditors who filed a proof of debt within six months before the original three-year mark.

Remote Communication Technology and Electronic Communications:

Section 14 of the Amending Act allows the DGI to hold creditor meetings using remote communication technology, reflecting a transition to remote hearings due to the COVID-19 pandemic.

Previously, meetings were held at locations deemed convenient for the majority of creditors.

Section 13 of the Amending Act amends Section 130 of the Act to permit electronic means for serving notices when consent is obtained.

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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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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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Memorandum & Articles of Association vs Constitution

Memorandum & Articles of Association vs Constitution
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M&A vs Constitution

Under the Companies Act 1965, every company was required to have a Memorandum and Articles of Association (M&A). According to the Companies Act 2016, the Memorandum and Articles of Association (M&A) are now referred to as the Constitution. Companies incorporating under the Companies Act 2016 are not obligated to have a constitution immediately upon incorporation. However, they have the option to adopt a constitution after the company has been incorporated.

The Differences

You may notice the following differences between M&A and the Constitution.

1. Number of Directors

2. Annual General Meeting

3. Reduction of Share Capital

4. Share Certificate

Number of Directors

In the M&A under the Companies Act, 1965, a minimum of two directors is required for Sdn Bhd.

However, Constitution is under the Companies Act, 2016, therefore if not being fixed by the company itself, sole director is allowable.

Annual General Meeting

During M&A era, an AGM was a mandatory requirement for a company, therefore the compliance of the timeframe to call for an AGM needs to be complied.

Whereas, in the new act regime, a Sdn. Bhd is no longer required to call for an AGM if the constitution is silent, where to follow the Companies Act, 2016 requirement.

Reduction of Share Capital

Under the Constitution regime, the reduction of share capital is a more streamlined process that outlines the requirement for solvency statements and other procedures

Whereas if under M&A regime of the Companies Act, 1965, it must go through a court order.

Share Certificates

In M&A, issuing a share certificate is a mandatory requirement for all shareholders, whereas, if the Constitution is silent, the issuance of a share certificate is upon request.

Key Takeaways

The above outline highlighted key differences between M&A and the Constitution regime, there are some more variances in terms of requirements of directors, holding of meeting procedures, issuance of dividends, and other pertinent aspects. To provide a more in-depth and details examination of these distinctions, further exploration of specific areas or aspects is needed.

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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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Tips For Graduates In Accounting Industry

Tips For Graduates In Accounting Industry
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Tips For Graduates In Accounting Industry

My tips to our fresh #graduates in our professional industry :

1. Embrace a Learning Mindset

Approach your internship with an open and receptive mindset. Recognize that this is a valuable learning opportunity where you can acquire new skills, industry knowledge, and gain exposure to real-world scenarios.

Take every task as a chance to learn and grow, and actively seek feedback from your supervisors and colleagues.

2. Develop Strong Technical Skills

Audit and tax internships require a solid foundation of technical skills. Familiarize yourself with the fundamental concepts, regulations, and industry standards relevant to your role.

Stay updated with the latest developments in accounting principles, tax laws, and auditing procedures.

3. Master Time Management

In the fast-paced world of audit and tax, efficient time management is crucial. Learn to prioritize tasks effectively, set realistic deadlines, and allocate your time accordingly.

Use tools like to-do lists, calendars, and project management software (Trello as we did) to stay organized and ensure the timely completion of assignments.

4. Nurture Effective Communication Skills

Strong communication skills are essential in any professional setting. As an intern, you will interact with team members, clients, and stakeholders at various levels.

5. Seek Mentors and Network

Take advantage of the wealth of knowledge and experience available to you within your organization. Seek out mentors who can guide you in your career journey and provide valuable insights.

6. Embody Professionalism (one of KTP core value)

Demonstrate professionalism in all aspects of your internship. Adhere to company policies and ethical guidelines, maintain confidentiality, and exhibit a high level of integrity.

These qualities will help you establish a strong professional reputation and position you for future opportunities.

YouTube Video

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https://lnkd.in/gBjDuuv5

Source

Authored by Mr Koh Teck Peng, our Group Principal in his personal LinkedIn posting

https://bit.ly/3PJ0rxF

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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)

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KTP Lifestyle

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Tips For Graduates In Accounting Industry

Tips For Graduates In Accounting Industry
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Tips For Graduates In Accounting Industry

My tips to our fresh #graduates in our professional industry :

1. Embrace a Learning Mindset

Approach your internship with an open and receptive mindset. Recognize that this is a valuable learning opportunity where you can acquire new skills, industry knowledge, and gain exposure to real-world scenarios.

Take every task as a chance to learn and grow, and actively seek feedback from your supervisors and colleagues.

2. Develop Strong Technical Skills

Audit and tax internships require a solid foundation of technical skills. Familiarize yourself with the fundamental concepts, regulations, and industry standards relevant to your role.

Stay updated with the latest developments in accounting principles, tax laws, and auditing procedures.

3. Master Time Management

In the fast-paced world of audit and tax, efficient time management is crucial. Learn to prioritize tasks effectively, set realistic deadlines, and allocate your time accordingly.

Use tools like to-do lists, calendars, and project management software (Trello as we did) to stay organized and ensure the timely completion of assignments.

4. Nurture Effective Communication Skills

Strong communication skills are essential in any professional setting. As an intern, you will interact with team members, clients, and stakeholders at various levels.

5. Seek Mentors and Network

Take advantage of the wealth of knowledge and experience available to you within your organization. Seek out mentors who can guide you in your career journey and provide valuable insights.

6. Embody Professionalism (one of KTP core value)

Demonstrate professionalism in all aspects of your internship. Adhere to company policies and ethical guidelines, maintain confidentiality, and exhibit a high level of integrity.

These qualities will help you establish a strong professional reputation and position you for future opportunities.

YouTube Video

🎥 Explore Career Success with Our Latest Video on KTP YouTube 🎥

https://lnkd.in/gBjDuuv5

Source

Authored by Mr Koh Teck Peng, our Group Principal in his personal LinkedIn posting

https://bit.ly/3PJ0rxF

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KTP (Audit, Tax, Advisory)

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

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What are proxy rules in the meeting ?

What are proxy rules in the meeting ?
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What are proxy rules in the meeting ?

What exactly is a proxy?

In the world of business and formal meetings, a ''proxy'' refers to a person who appointed to represent someone else, typically when the primary individual is unable to attend the meeting themselves. The proxy has the responsibility to act on behalf of the absent individual, making decisions, casting votes, or conveying information as required during the meeting.

What if only one proxy?

If a member appoints a proxy during a meeting and that proxy can vote on show of hands. The proxy allows to make important decisions and discussions to proceed even when key stakeholders cannot be physically present. It ensures that their interests are still represented and their input is considered.

Can a member choose more than one proxy?

Certainly! A member eligible to vote can pick one or more proxies. But remember, these proxies can only vote in a poll.

However, the appointment only counts if the member specifies how much of their stake each proxy represents.

What is Proxy’s responsibility?

The responsibilities of a proxy can vary depending on the context in which they are appointed and the specific instructions or authority granted to them by the absent individual. However, here are some common responsibilities associated with being a proxy: -

a) Representing:

The primary responsibility of a proxy is to represent the absent individual faithfully and in accordance with their interests, preferences, and instructions. This includes speaking on their behalf, voting as directed, and making decisions in their stead.

b) Attendance:

Proxies are expected to attend the meeting or event in place of the absent individual. They should arrive on time and be prepared to participate in discussions, votes, and any other relevant activities.

c) Knowledge and Preparation:

A proxy should be knowledgeable about the issues, topics, or agenda items to be discussed at the meeting. They may need to review relevant materials or information in advance to make informed decisions on behalf of the absent party.

d) Voting:

If voting is part of the meeting, a proxy typically casts votes as instructed by the absent individual. This may involve voting on resolutions, proposals, or other matters according to the absent individual’s preferences.

e) Reporting:

After the meeting, a proxy may be required to provide a report or summary to the absent party, detailing what transpired during the meeting, the decisions made, and any important discussion or outcomes.

f) Communication:

Proxies often serve as a communication channel between the absent individual and other participants in the meeting. They may convey messages, questions, or requests as necessary.

g) Adherence to Instructions:

It’s crucial for a proxy to strictly adhere to the instruction, limitations, and wishes of the absent individual. They should not make decisions or take actions that go against the absent party’s directives.

h) Confidentiality:

If sensitive or confidential information is discussed during the meeting, a proxy must maintain confidentiality and not disclose such information to unauthorised parties.

i) Ethical Conduct:

Proxies should act with honesty, integrity, and in a manner consistent with ethical standards. They should avoid conflicts of interest and act in the best interests of the absent individual.

Key Summary

It is important for individuals acting as proxies to have a clear understanding of their role and responsibilities, as well as any legal or contractual obligations associated with their appointment. They should also maintain open communication with the absent party to ensure they fulfil their duties effectively.

 

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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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Update of our services during this challenging time

Update of our services during this challenging time
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Update of our services during this challenging time

Dear Clients :

I hope this message finds you well.

I want to personally reach out to provide an update on our services during this challenging period.

First and foremost, I'd like to extend our sincere gratitude for your continued trust in our firm. We understand the importance of timely and accurate auditing/taxation, especially in these crucial times.

While we always aim to deliver top-notch service, we acknowledge that some aspects of our recent service delivery may not have met the standards you've come to expect from us.

As an accounting firm, our commitment to transparency and diligence remains steadfast, and it's vital for us to provide context.

The recent constraints, primarily due to a reduced workforce, have affected our usual efficiency and response times.

While this challenge is being faced by many businesses, we comprehend that it does not lessen the significance of your financial concerns or obligations.

Rest assured, we are implementing various strategies to mitigate these issues. These include deploying advanced auditing software, re-prioritizing tasks, and adjusting workflows to minimize potential delays, training and development.

It's essential to underscore that these are temporary solutions in response to unprecedented challenges. Our dedication to ensuring meticulous accounting and financial oversight remains our top priority.

Your partnership means a great deal to us, and we are committed to making the necessary adjustments to serve you better in the days ahead.

Please feel free to share any concerns or suggestions with us. Your insights are invaluable in our journey of continuous improvement.

My email is tpkoh@ktp.com.my or you can leave a message on our Google Business page https://g.page/r/CSeHx4H8B4oPEBM/review

Thank you for your understanding and patience during this period.

Warm regards,

KTP Group of Company

Koh Teck Peng

Principal

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

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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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