Stay current. Be tax savvy TaXavvy www.pwc.com/my Jan 2012

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Stay current. Be tax savvy
TaXavvy
Jan 2012
Issue 1/2012
Inside this issue
Tax Laws
• Income Tax (Exemption)(No. 10) Order 2011
• Income Tax (Exemption)(No. 11) Order 2011
• Income Tax (Deduction for Payment of Premium to Malaysia Deposit
Insurance Corporation) Rules 2011
• Income Tax (Deduction for Implementation of RosettaNet) (Revocation)
Rules 2011
• Real Property Gain Tax (Exemption) Order 2011
• Extension of Labuan Related Exemption Orders
• Stamp Duty Exemption Orders
3
Tax Administration
• IRB Headquarters has Relocated to Cyberjaya
• Structured Internship Programme
• New Public Rulings
5
Regulatory Developments
• Employees Provident Fund – New Contribution Rate For Employer’s
Share
7
Tax Cases
8
Upcoming Events
9
TaXavvy is a
bi-monthly publication
which aims to provide
concise updates on
developments in tax laws,
cases, guides, administrative
practices and other
regulatory developments
Tax Laws
Income Tax (Exemption) (No. 10)
Order 2011
Income Tax (Exemption) (No. 11)
Order 2011
The Income Tax (Exemption)(No. 10)
Order 2011 was gazetted on 31 December
2011 and is effective from year of
assessment (YA) 2012 to 2014. This
exemption order applies to non-Ringgit
sukuk issued/guaranteed by the
Government of Malaysia or approved by
the Securities Commission under the
Capital Markets and Services Act 2007
(CMS).
The Income Tax (Exemption)(No. 11)
Order 2011 was gazetted on 31 December
2011 and is effective from year of
assessment (YA) 2012 to 2014. This
exemption order applies to non-Ringgit
sukuk issued/guaranteed by the
Government of Malaysia or approved by
the Securities Commission under the
Capital Markets and Services Act 2007
(CMS).
This order provides for the exemption from
payment of income tax on statutory income
derived from a business of dealing in such
sukuk under the CMS for the following
persons resident in Malaysia:
The order exempts a person resident in
Malaysia from payment of income tax on
statutory income derived from the
regulated activity of dealing in securities
and advising on corporate finance under
the CMS relating to the arranging,
underwriting and distributing of such
sukuk.
Income Tax (Deduction for Payment of
Premium to Malaysia Deposit
Insurance Corporation) Rules 2011
These rules, gazetted on 22 November 2011,
provide for a deduction of an amount equal to
the first or annual premium paid to the
Malaysia Deposit Insurance Corporation
(MDIC) by the following member institutions:
•
•
•
Holder of a Capital Markets Services
License for the regulated activity of
dealing in securities;
•
Person registered under Schedule 4
(paragraph 76(1)(1)) of the CMS; and
•
Registered person under subsection
76(2) of the CMS.
a financial institution under section 37 of
the MDIC Act 2005 (effective from YA
2005 to 2010); or
a financial institution under paragraph
36(1)(b), a Takaful operator or an
insurance company under subsection
36(2) of the MDIC Act 2011 (effective from
YA 2011).
Income Tax (Deduction for
Implementation of RosettaNet)
(Revocation) Rules 2011
The Income Tax (Deduction for
Implementation of RosettaNet) Rules 2004
were revoked by the Income Tax (Deduction
for Implementation of RosettaNet)
(Revocation) Rules 2011 with effect from YA
2012.
3
Tax Laws
Real Property Gain Tax (Exemption) Order 2011
Extension of Labuan Related Exemption Orders
In order to curb speculative activities in real property and to ensure
that the lower and middle income groups are able to own affordably
priced houses, it was proposed in the 2012 Budget that the effective
Real Property Gains Tax (RPGT) rates be reviewed for disposals of
chargeable assets from 1 January 2012 as follows:
Following the extensions gazetted in 2007 which expired in YA 2010 ,
the following exemption orders have been gazetted on 27 December
2011 and are effective from YA 2011 to 2020.
Disposal
RPGT rates
Companies
Individuals
10%
10%
In the third, fourth or
fifth year after date of
acquisition
5%
5%
In the sixth year after
date of acquisition and
any year thereafter
0%
0%
Within 2 years after date
of acquisition
This proposal has been gazetted on 30 December 2011 via the Real
Property Gains Tax (Exemption) Order 2011 and is effective from 1
January 2012. The Real Property Gains Tax (Exemption) (No 2)
Order 2009 has been duly revoked.
• Income Tax (Exemption) (No.6) Order 2011
Income tax exemption of 65% on statutory income derived from a
source consisting of the provision of qualifying professional
services rendered in Labuan by a person to a Labuan entity.
• Income Tax (Exemption) (No. 7) Order 2011
Full income tax exemption on director’s fees received by a director
of a Labuan entity
• Income Tax (Exemption) (No. 8) Order 2011
Income tax exemption of 50% on the gross income of a nonMalaysian / non-citizen individual from the exercise of an
employment in a managerial capacity with a Labuan entity in
Labuan, co-located office or marketing office.
• Income Tax (Exemption) (No. 9) Order 2011
Income tax exemption of 50% on the gross housing allowance and
gross Labuan territory allowance received by an individual from
exercising an employment in Labuan with a Labuan entity.
4
Tax Laws
Tax Administration
Stamp Duty Exemption Orders
IRB Headquarters has relocated to Cyberjaya
Following the 2012 Budget announcement, the following stamp duty
exemption orders have been gazetted on 31 December 2011:
The IRB has relocated its headquarters to Cyberjaya and has been
operational at the new location since 22 December 2011. Information
on the new contact numbers and addresses has been published on the
IRB’s website www.hasil.gov.my
Gazette Order
Full stamp duty exemption is given on:
Stamp Duty
(Exemption)
(No.3) Order
2011
Loan agreements executed from 1 January
2012 to 21 December 2016 for the purchase of
residential properties priced up to RM300,000
under the PR1MA Scheme.
Stamp Duty
(Exemption)
(No.4) Order
2011
Loan agreements up to RM50,000 executed
from 1 January 2012 under the Micro
Financing Schemes approved by the National
Small and Medium Enterprise Council.
Stamp Duty
(Exemption)
(No. 5) Order
2011
Loan agreements up to RM50,000 executed
from 1 January 2012 under the Professional
Services Fund. The loans must be executed
between a professional and Bank Simpanan
Nasional.
Structured Internship Programme
TalentCorp has made available the guidelines and FAQs on
participation in this programme in their website
www.talentcorp.com.my
5
Tax Administration
New Public Rulings
The IRB has recently issued the following public rulings, all of which come into effect from year of assessment 2011:
8/2011
Foreign nationals working in
Malaysia – Tax treatment
Outlines the tax treatment of employment income derived by foreign nationals exercising
employment in Malaysia.
9/2011
Co-operative society
Explains the tax treatment of a co-operative society registered in Malaysia.
A co-operative society, for purposes of income tax, is any c0-coperative society registered under any
written law relating to the registration of co-operative societies in Malaysia.
10/2011
Gratuity
Explains the method used to characterise lump sum payments received by employees upon the
termination of employment as gratuity and the tax treatment of gratuity.
The term “termination of employment” includes retirement, premature termination of the contract
of service or by mutual agreement.
11/2011
Bilateral credit and unilateral
credit
12/2011
Tax exemption on employment
income of non-citizen individuals
working for certain companies in
Malaysia
Explains bilateral credit and unilateral credit that may be claimed by a person who has been charged
to tax on the same income in Malaysia and in another country.
Outlines the tax treatment of employment income derived by non-citizen individuals working for an
Operational Headquarters company, Regional Office, International Procurement Centre company or
Regional Distribution Centre company in Malaysia.
6
Regulatory Developments
Employees Provident Fund – New Contribution Rate for
Employer’s Share
With effect from January 2012 (February 2012 contribution), the
new employer’s share contribution rate for employees with monthly
wage/salary of RM5,000.00 and below will be as follows:
•
Employees aged below 55 years
The new employer’s share contribution rate is 13% (an increase of
1%); subject to the wage/salary in Part A, Third Schedule of the
Employees Provident Fund Act 1991 (EPF Act).
•
Employees aged 55 years and above, up to 75 years
The new employer’s share contribution rate is 6.5% (increase of
0.5%); subject to the wage/salary in Part C, Third Schedule of the
EPF Act.
7
Tax Cases
The following cases were decided recently:
Case
Issue(s)
Decision/ Status
Whether congress expenses incurred in sponsoring doctors,
specialists, pharmacists, practitioners who were not the taxpayer’s
employees to attend congresses, symposia and other similar events,
are entertainment expenses under Section 18 of the Income Tax Act,
1967 and hence should be disallowed under Section 39(1)(l) as
contended by IRB.
Taxpayer's appeal allowed
1) Whether the taxpayer had one (as contended by IRB) or three
separate property development projects; and
IRB’s appeal dismissed
2) Whether the assessment for YA 1997 was time barred.
(SCIT : In favour of taxpayer)
Whether contractual rights and benefits as contemplated in the Joint
Venture is a “right in and on the land” as provided for in the
definition of Real Property, as contended by IRB.
The taxpayer’s appeal dismissed
Court of Appeal
Eli Lily (Malaysia) Sdn Bhd v
Ketua Pengarah Hasil Dalam
Negeri
(High Court: In favour of IRB)
High Court
Ketua Pengarah Hasil Dalam
Negeri v Debir Desa
Development Sdn Bhd
Brem Development Sdn Bhd v
Ketua Pengarah Hasil Dalam
Negeri
(SCIT: In favour of IRB)
8
Upcoming Events by The Academy
International Assignment Services Workshop Series
Annual Employment Income Reporting
Date: Monday, 13 February 2012 or Tuesday, 14 February 2012
Time: 8.30 am to 5.00 pm
Venue: PwC, Level 10, 1 Sentral
Corporate Tax Workshop Series
Mastering the Essentials for Tax Computations
Date: Thursday, 16 February 2012
Time: 9.00 am to 5.00 pm
Venue: PwC Training Centre, Level 16, Sheraton Imperial Hotel
For more information/to register
please visit PwC’s website at
www.pwc.com/my/en/TheAcademy
or contact Che Sham Ahmad at
+60 (3) 2173 1188
Goods & Services Tax (GST) Workshop Series
Getting the GST Essentials Right
Date: Tuesday, 21 February 2012
Time: 9.00am - 5.00pm
Venue: Sime Darby Convention Centre
9
PwC Contacts
Our offices
Our services
Kuala Lumpur
Melaka
Khoo Chuan Keat
Tel: +60(3) 2173 1368
[email protected]
Teh Wee Hong
Tel: +60(3) 2173 1595
[email protected]
Penang / Ipoh
Au Yong
Tel: +60(6) 283 6169
[email protected]
Tony Chua
Tel: +60(4) 238 9118
[email protected]
Johor Bahru
Lorraine Yeoh
Tel: +60(3) 2173 1499
[email protected]
Norafiza Abdul Rahman
Tel: +60(7) 222 4448
norafiza.abdul.rahman
@my.pwc.com
Labuan
Jennifer Chang
Tel: +60(3) 2173 1828
[email protected]
Kuching
Phan Wai Kuan
Tel: +60(3) 2173 1589
[email protected]
Christine Cheng
Tel: +60(82) 413 957
[email protected]
Consumer & Industrial
Products
Margaret Lee
Tel: +60(3) 2173 1501
margaret.lee.seet.cheng
@my.pwc.com
Energy, Utilities, Multimedia
& Infocomm
Frances Po
Tel: +60(3) 2173 1618
[email protected]
Financial Services
Jennifer Chang
Tel: +60 (3) 2173 1828
[email protected]
Services
Theresa Lim
Tel: +60 (3) 2173 1583
[email protected]
Indirect Tax
International Tax Services
Wan Heng Choon
Tel: +60 (3) 2173 1488
[email protected]
Dorothy Ooi
Tel: +60(3) 2173 1444
[email protected]
International Assignment
Services
Corporate Services
Sakaya Johns Rani
Tel: +60 (3) 2173 1553
[email protected]
Transfer Pricing &
Investigations
SM Thanneermalai
Tel: +60(3) 2173 1582
thanneermalai.somasundaram@
my.pwc.com
Theresa Lim
Tel:+60(3) 2173 1583
[email protected]
Worldtrade Management
Services
Huang Shi Yang
Tel:+60(3) 2173 1657
[email protected]
Japanese Business
Consulting
Junichi Fujii
Tel: +60(3) 2173 1480
[email protected]
pwc.com/my
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