Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Overview of
Malaysian Tax
Topics Addressed
Importance of Taxation
Federal Governments tax revenue
Profile of the Inland Revenue Board
Taxes under the preview of the Inland
Revenue Board
Basis of Malaysian income tax
Taxation system in Malaysia
Taxation
A fee charged (levied) by a government on a product/
income/activity
Government
Main source of revenue
Government expenditure
Financing for development
Taxes In Malaysia
2 Types :
Direct taxes (on person/corporate)
income tax
petroleum income tax
stamp duties and
real property gains tax.
Indirect taxes (price of good/service)
import duties
excise duties
sales tax and service tax.
Federal Tax
Revenue
Profile of the
Inland
Revenue
Board of
Malaysia
(IRB)
Profile
Prior to March 1996, known as the Department of
Inland Revenue Malaysia (under the Ministry of
Finance).
Became a Statutory Board on the 1st of March,
1996.
Generally speaking the Inland Revenue Board
(IRB) is responsible for:
formulation of new tax policies for both the
private and public sectors,
tax collection; and
compliance enforcement.
Specific Functions
Act as an agent of the Malaysian Government and to
provide services in administering, assessing, collecting and
enforcing payment of taxes under the IRB.
Advice the Malaysian Government on matters relating to
taxation and to liase with the appropriate Ministries and
statutory bodies on such matters;
Participate in or outside Malaysia in respect of matters
relating to taxation;
Perform such other functions as are conferred on the
Board by any other written law;
Act as a collection agent for and on behalf of any body for
the recovery of loans due for repayment to that body under
any written law.
Types of taxes
Income tax
Petroleum tax
Stamp duty
Estate duty
Basis of
Malaysian
Income Tax
Scope of Taxation
Sec 3 of ITA 1967 :
A tax known as income tax shall be charged
for each year of assessment upon the income
of any person accruing in or derived from
Malaysia or received in Malaysia from outside
Malaysia ( foreign source income).
With effect from YA 2004, foreign source income
received by any person ( other than a resident
company carrying on the business of banking,
insurance, sea or air transport) will be exempted from
income tax.
14
Characteristics of Income
Repetitive from a source of income and
received in the ordinary course of business.
Periodical return coming in with some sort
of regularity or expected regularity from
defined sources.
Nature of gains or profits has to fall into any
of the sub-paragraphs under section 4 and 4A
of ITA 1967.
15
Examples:
Revenue
Business income, employment income, rent
and dividends
Capital
Gains from realization of investments, personal
assets and from gambling activities
Payments to non-residents
Payment for use of rights, technical advice or for
rental of movable properties
18
Person
Includes:
Company
A
body of persons
Unincorporated
etc.
Individual
Territorial Basis
Income is assessed on a territorial basis.
Accrued
Carries the meaning earned or right to
receive.
Does not mean received.
Income from a particular source can be earned
and received in the same period.
Note that the earned and the right to receive is
different from having received
Example
A payment for sales of RM5,000 (the sum) made in
15 Dec 2011 to a customer was due on 31 December
2011 but the trader received it only on 1 January
2012.
Tax implications
The payment accrued in Dec 2011
The sum was received in Jan 2012
The sum will be taxed in the year of assessment
2011 since it was business income that accrued in
Dec 2011. It is immaterial that the sum was
received the following year.
Derivation rules
Rules on the derivation of the various
income differ according to the source of
those income and are specified under the
law.
Derived
Sec 4 of ITA 1967 - Classes of Taxable
Income
Sources of income
Derivation section
S4(a)
Business
12
S4(b)
Employment
S4(c)
S4(d)
15
S4(e)
Pensions, annuities
and other periodical
payments
17(1) to 17(3)
S4(f)
Special
classes
of 15A
income
Gains or profits not falling
under
any
of
the
foregoing paragraphs
Derived
Malaysian Derived Employment Income
Gross income in respect of gains or profits
from an employment for any period during
which the employment is exercised in
Malaysia; shall be deemed to be derived
from Malaysia.
Exercise
Question
Mike , a Germany national, is a Malaysia non-resident
for year 2009. His income for the year consists of
commission from Malaysia as well dividends from an
investment in Germany. The dividend income was
remitted back to Malaysia in the year of assessment
concerned.
Issue: Determine whether the dividend income
derived from Germany should be subject to Malaysian
income tax.
Discussion:
The dividend income derived from Germany is exempted from
Malaysian income tax by virtue of Schedule 6, paragraph 28 of
the Income Tax Act 1967.
The dividend income would be exempted from Malaysian
income tax even if Tanakura was a Malaysian resident for year
2009.
Capital Receipts
Capital gains are not chargeable to income tax.
Example :
Realization from long term investments.
Realization from personal assets.
Windfall, gambling or profits from speculative
activities.
Gift
Scope of Charge of
Income Tax (from YA
2004)
Income
Capital
Other Income
No Tax
Taxed
Offshore business
activity income by
offshore company
Accrued in or
derived from
Malaysia
Not
Chargeable
Other Persons
:Resident/nonresident
Exempted from
Income Tax
Taxed
irrespective of
resident status
of person
(Sec. 3B)
Income Tax
Rate
Individual
Resident: scale rate based on level of income 0% to 26%
Non-resident: Flat rate 28%
Company with paid up capital 2.5 million= 24% for YA2016
Basically, Tests:
Determine the receipt is income in nature
The income is accrued within the relevant period for income
tax purposes
Whether the income stream from Malaysia
Calculations (RM)
On the First 2,500
Next 2,500
On the First 5,000
Next 5,000
On the First 10,000
Next 10,000
On the First 20,000
Next 15,000
On the First 35,000
Next 15,000
On the First 50,000
Next 20,000
On the First 70,000
Next 30,000
On the First 100,000
Next RM
Rate %
0
0
1
1
5
10
16
21
24
Tax(RM)
0
0
0
50
50
100
150
750
900
1,500
2,400
3,200
5,600
6,300
11,900
12,000
If chargeable income is $80,000 for the year 2016, compute the amount of tax
payable:
Resident: 5,600 + (21% x $10,000))
$7.700
Computation
of Income tax
Payable
38
39
Computatio
n of
Statutory
Income
from
Business
(Approach
Note: Computation
of SI
1)
from business has to be
done separately for each
business
source
as
balancing
charges
and
capital
allowances
are
source specific.
Gross Income
Less: Allowable expenses
Less: Double deduction of
expenses
Less: Special deductions
(S34(6) of ITA 1967)
Adjusted Income
Add: Balancing charges [SP > TWDV]
Less: Balancing allowances [SP < TWDV]
Less: Capital allowances (IA and AA)
Statutory Income
Computatio
n of
Statutory
Income
from
Business
(Approach
2)
Profits before
Taxation
Add: Disallowed expenses
Less: Expenses which qualify for double
deduction
Less: Non-business income or Capital
receipts
Adjusted Income
Computatio
n of
Statutory
Income
from NonBusiness
Sources
Gross Income
Less: Allowable expenses
Statutory Income
Computatio
n of
Aggregate
Income
Unabsorbed
business loss can
be set-off against
any
business
source.
Unabsorbed
business losses can
be carried forward
indefinitely.
Aggregate
Statutory Income
from Business
Sources
Computatio
n of Total
Income
Only adjusted loss
from business can
be set-off.
Unutilized portion
can
be
carried
forward to next YA
to
be
set-off
against aggregated
SI from business.
Aggregate Income
Total Income
Approved Donations
Cash donation to approved institution, Government,
State Government and local authority.
Donations to approved institutions restricted to 10% of
aggregate income (in the case of companies), & 7% of AI
(individual).
Donation of artifact, manuscripts or painting (value as
determined by Department of Museums and Antiquities)
to Government.
Donations of painting (value to be determined by
National or State Art Gallery) to National or State Art
Gallery.
Approved Donations
Cash donation to approved libraries.
Restricted to RM20,000.
For the provision of library facilities to public or
school libraries, university or colleges.
Donations of cash or goods (value to be determined
by local authority) for the provision of facilities in public
places for the benefit of disabled persons.
Available only to individuals.
Donations of cash or in kind of medical equipment
(value to be certified by Ministry of Finance) for the
healthcare facility approved by the Ministry.
Restricted to RM20,000 cash.
Total
Income
Computatio
n of Tax
Payable
Chargeable Income
Tax Rates
Tax Chargeable
Non-Allowable expenses
Double deductions
Adjusted income
Add
Less
Balancing charges
Capital allowances and balancing allowances & Unabsorbed
capital allowances b/f (Max: to adjusted income; balance c/f)
Statutory income
** Add all: Aggregate Statutory income from business source
Less
Add
Less
Aggregate income
Total income
Less
Less
Personal relief
Chargeable
income
Tax Chargeable
Tax Payable
Taxation
System in
Malaysia
NEXT WEEK!!!
Basis periods
Income is taxed on an entity in relation to a time
frame.
In income tax law, these time frames are
constituted by accounting or financial periods,
basis periods and year of assessment
The current year assessment system (CYA)
operates with effect from the year of assessment
2004.
50
CLOSING ACCOUNTS
31 DECEMBER
CLOSING ACCOUNTS
NON-31 DECEMBER
52
Accounts to 31 Dec
Example: Cyber Sdn. Bhd. (a limited
company) closes its accounts to 31 Dec
2011. It has business income and dividend
income
The calendar year 2011 will form the basis
period for the year of assessment 2011.
It will apply to all the sources of income i.e.
business income and dividend income.
55
57
YA 2011
60
61
The Inland Revenue authorities would check and verify tax returns
through tax audits and the implementation of penalty system to
enforce compliance with tax law.
The self-assessment system (SAS) was implemented in two stages:
companies in 2001 followed by businesses, partnerships and salaried
individuals in 2004.
62
The End
Tutorial next week:
Please download from
mmls
Attempt before you
come