Foreign firms’ online income to be taxed
The Treasury Secretary-General has reiterated that foreign companies operating vide online platforms are not exempt from tax in Malaysia if the income is generated here. He informed that the Treasury’s online business and commerce decision task force is working on a mechanism to collect taxes from companies using online platforms.
Directors charged for not declaring income tax, 14 February 2017
The Inland Revenue Board (IRB) has charged two directors for failing to declare their income tax returns.
A contractor is facing eight charges under s 77(1)(a) and 112(1) of the Income Tax Act 1967 for failing to declare his income and submitting the Form B for YAs 2006 to 2013.
In another case, a director is facing three charges under s 77(1)(a) and 112(1) of the Income Tax Act 1967 for failing to declare the company’s income and the Form C for YAs 2011, 2013 and 2014.
If convicted, the two individuals may face a penalty between RM200 to RM2,000 or imprisonment not exceeding six months or both for each charge. The IRB has requested for an arrest warrant and the court has set a mention date of 13 March 2017.
Source: IRB website, 13 February 2017
Recent update dd 10/01/2017
The highlights of the recent update include the following:
Vietnam
Taiwan
South Korea
Hong Kong
India
Malaysia Revenue Legislation, 10 January 2017
We are pleased to inform you that the following has been updated/inserted in CCH’s Malaysia Revenue Legislation and is available on IntelliConnect®:
Provident Fund
The Employees Provident Fund Act 1991 has been amended by the Employees Provident Fund (Amendment) Act 2016 as follows:
– Amendment to s 50, 51A, 70C and 70E, and
– Insertion of new s 55B.
The amendments come into operation on 1 January 2017.
The Rules insert a new r 41A to the Employees Provident Fund Rules 1991. The Rules come into operation on 1 January 2017.
The Order amends s 54(6) of the Employees Provident Fund Act 1991. The Order comes into operation on 1 January 2017.
IRB issues public rulings on tax borne by employers and income from employment on board a ship, 16 December 2016
The Inland Revenue Board (IRB) has published the following public rulings (PRs):
• Tax Borne by Employers (Second Edition) (PR No 11/2016) dated 8 December 2016.
• Taxation of Income from Employment on Board a Ship (PR No 12/2016) dated 9 December 2016.
Tax Borne by Employers (Second Edition) (PR No 11/2016)
This PR rearranged, rewrote and updated the contents of PR No 2/2006. This PR replaces PR No 2/2016 dated 17 January 2006.
Taxation of Income from Employment on Board a Ship (PR No 12/2016)
The PR explains the tax treatment of income of an individual derived from an employment exercised on board a ship. The PR covers, among others, derivation of income, tax treatment, double taxation agreement provision, documents required for verification and responsibility of employer and seafarer.
The penalty imposed by the Director General of Inland Revenue was 20% of the tax assessed for the year. The 20% penalty should not be based on the difference between the tax payable and the tax already paid because that was not what s 112(3) of the Income Tax Act 1967, whether expressly or impliedly provides. Yung Lung Holdings Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri (2016). KCH-14-2/12-2015. High Court, Kuching. Dato’ Rhodzariah binti Bujang J. 4 May 2016.
The abovementioned Order states that any tax payable under the Income Tax Act 1967 and stamp duty payable shall be remitted in full by the Employees Provident Fund Board and the Perbadanan Tabung Pendidikan Tinggi Nasional and any party to whom the agreement is transferred or assigned, in relation to the Murabahah Term Financing Facility Agreement of RM2,200m and the guarantee provided by the Malaysian Government.
The abovementioned Order came into operation on 22 August 2016.
ROYAL MALAYSIAN CUSTOMS DEPARTMENT UPDATED GST GUIDES ON TRANSITIONAL RULES, EXPORT AND GAMING
The Royal Malaysian Customs Department has recently uploaded the updated GST Guides as follows:
GST Specific Guide on Transitional Rules (as at 3 August 2016).
Paragraph 55 (definition of reviewable contract) and Paragraph 56 (meaning of reviewable opportunity) together with the corresponding Example 13 of the guide as at 19 March 2015 were removed.
GST Industry Guide on Export (as at 12 August 2016).
Paragraph 9 was inserted to include additional conditions for the claim of input tax relating to exported goods. Please take note of the new requirement to endorse a statement – “A claim for input tax under the GST Act 2014 will be made”, in the Sistem Maklumat Kastam (SMK) in respect of the export.
Answer (A8) to Frequently Asked Question No. 8 (Q8) was also amended in line with the above requirement, by including two more export documents i.e. the Export Declaration (Form K2/K8) with endorsement on Remarks column in SMK and the Customs Official Receipt (COR), that must be kept for a period of 7 years.
GST Industry Guide on Gaming (as at 12 August 2016).
The amendment was made to the Answer (A6) to Frequently Asked Question No. 6 (Q6) by substituting the words “gaming operator” with the words “casino operator”.
New Customs Offices And Warehouses — Working Hours and Landing Places
Customs (Amendment) (No.2) Regulations 2016 [P.U. (A) 213/2016]
Customs (Amendment) (No.3) Regulations 2016 [P.U. (A) 214/2016]
Customs (Amendment) (No.4) Regulations 2016 [P.U. (A) 215/2016]
The above Amendment Regulations were gazetted on 29 July 2016 and came into operation on 1 August 2016. They amend the Customs Regulations 1977 [P.U.(A) 162/1977] by inserting the new Customs Offices and Warehouses as follows (in blue italic):
Regulation 3. Working days and hours.
(1) The ordinary hours during which customs offices and warehouses shall be opened for business to the public shall be as follows:
Full working days 8.00 a.m. to 3.30 p.m.
Half working days 8.00 a.m. to 12.15 p.m.
Provided that—
………………….
(xxxiv) at Tok Bali Supply Base, Mukim Semerak, Jajahan Pasir Puteh, Kelantan, the hours shall be—
at all times on any day.”; and
(xxxv) at Tanjung Langsat, Mukim Sungai Tiram, District of Johor Bahru, Johor, the hours shall be —
at all times on any day.”; and
(xxxvi) at PETRONAS Floating Liquefied Natural Gas Satu (PFLNG-1), Kumang Cluster Kanowit Field, Bintulu, Sarawak, the hours shall be―
at all times on any day.”; and
……………………….
(4) The ordinary hours during which goods other than the personal effects of bonafide travellers may be unloaded, landed, shipped or made waterborne to be shipped shall be as follows —
Full working days 6.00 a.m. to 6.00 p.m.
Half working days 6.00 am. to 12.00 p.m.
Provided that —
………………………..
(xxxiii) at Tok Bali Supply Base, Mukim Semerak, Jajahan Pasir Puteh, Kelantan, the hours shall be—
at all times on any day.
(xxxiv) at Tanjung Langsat, Mukim Sungai Tiram, District of Johor Bahru, Johor, the hours shall be —
at all times on any day.
(xxxvi) at PETRONAS Floating Liquefied Natural Gas Satu (PFLNG-1), Kumang Cluster Kanowit Field, Bintulu, Sarawak, the hours shall be―
at all times on any day.”; and
Amendment to First Schedule
FIRST SCHEDULE
(Regulation 11)*
PART I
CUSTOM’S PORTS AND LEGAL LANDING PLACES
| Customs Port | Description of Goods | Legal Landing Place |
| STATES OF MALAYA | ||
| Tanjung Langsat,Mukim Sungai Tiram, District of Johor Bahru,Johor | All goods
|
The Jetty of Tanjung Langsat Port Berhad Industrial Complex, Mukim Sungai Tiram, District of Johor Bahru, Johor, extending for a distance of 1188.335 meters to the sea located on the west bank of Sungai Johor at:
Latitude : 01O 26′ 30.98″ N, Longitude : 104O 00′ 41.82″ E Jetty No. 1 (JETTY F): Latitude: 1:26’16.06”N, Longitude: 104:00’33.15”E; Jetty No. 2 (JETTY E): Latitude: 1:26’18.57”N; Longitude: 104:00’31.33”E Jetty No. 3 (JETTY D): Latitude: 1:26’30.25”N, Longitude: 104:00’36.27”E; Jetty No. 4 (JETTY C): Latitude: 1:26’30.71”N, Longitude: 104:00’34.65”E; Jetty No. 5 (JETTY B): Latitude: 1:26’43.14”N, Longitude: 104:00’40.23”E; Jetty No. 6 (DRY CARGO JETTY): Latitude: 1:27’19.69”N, Longitude: 104:00’41.03”E; Jetty No. 7 (DRY CARGO JETTY): Latitude: 1:27’26.39”N, Longitude: 104:00’42.42”E Jetty No. 8 (JETTY A) Latitude: 1:26’54.55”N, Longitude: 104:00’43.13”E; Jetty No. 9 (JETTY G): Latitude: 1:26’00.53”N, Longitude: 104:00’29.13”E |
| Kota Bharu | All goods | The Customs wharf, the Railway jetty, the Penambang Haji Idris Jetty and the river bank between them. |
| Tok Bali Supply Base, Mukim Semerak, Jajahan Pasir Puteh, Kelantan. | Materials and equipment used directly for petroleum and gas upstream operations, and such other goods as may be approved by the Director General | Tok Bali Supply Base, Mukim Semerak, Jajahan Pasir Puteh, Kelantan located at –
Point A: Latitude: 5:53’46.87” N, Longitude: 102:29’16.13” E Point B: Latitude: 5:53’44.45” N, Longitude: 102:29’17.96” E Point C: Latitude: 5:53’43.82” N, Longitude: 102:29’16.93” E; Point D: Latitude: 5:53’24.30” N, Longitude: 102:29’31.62” E; Point E: Latitude: 5:53’20.91” N, Longitude: 102:29’26.82”E Point F: Latitude: 5:53’18.98” N, Longitude: 102:29’13.31”E Point G: Latitude: 5:53’32.25” N, Longitude: 102:29’17.39”E Point H: Latitude: 5:53’39.35” N, Longitude: 102:29’12.07”E Point I: Latitude: 5:53’38.85” N, Longitude: 102:29’11.31”E Point J: Latitude: 5:53’39.85” N, Longitude: 102:29’10.53”E Point K: Latitude: 5:53’38.36” N, Longitude: 102:29’08.11”E Point L: Latitude: 5:53’40.13” N, Longitude: 102:29’07.02” E |
| SARAWAK | ||
| Bintulu | ||
| PETRONAS Floating Liquefied Natural Gas Satu (PFLNG-1), Kumang Cluster Kanowit Field, Bintulu , Sarawak | Liquefied Natural Gas | PETRONAS Floating Liquefied Natural Gas Satu (PFLNG-1) located at –
Latitude: 4o 20’16.281”N, Longitude: 111o 58’11.213”E”. |
*Note :
Regulation 11. Prescribed Ports.
(1) The ports, landing places, places of import and export, routes for import and export, airports, inland clearance depot and inland customs stations set forth in the First Schedule to these Regulations are prescribed as customs ports, legal landing places, places of import and export, routes for import and export, customs airports, inland clearance depot and inland customs stations, for the import or export of such goods, as are prescribed in the said Schedule.
(2) Unless otherwise prescribed in these Regulations, the limit of the customs ports in Part I of the First Schedule shall be the limits prescribed by the Merchant Shipping Ordinance of the States of Malaya, and the Merchant Shipping Ordinance in Sabah and Sarawak.
TAX INCENTIVE FOR EAST COAST ECONOMIC REGION (ECER) – TAX EXEMPTION FOR NON-RESIDENTS AND NON-APPLICATION OF WITHHOLDING TAX
Income Tax (Exemption) (No. 10) Order 2016 [P.U. (A) 163/2016]
The above Order was gazetted on 13 June 2016. It is deemed to have come into operation on13 June 2008.
The salient points in the Order are summarized below:
Definitions (Paragraphs 2 – 3)
The meanings of following words are provided in paragraphs 2 – 3:
| Para | Word | Meaning |
| 2 | Qualifying person (QP) | A QP is a person is a company –
(a) incorporated under the Companies Act 1965 and resident in Malaysia; and (b) which carries on a qualifying activity. |
| 3 | Qualifying activity (QA)
|
A QA is an activity as set out in column (3) of the Schedule in this Order in relation to the sector as set out in column (2) in respect of which exemption is given under –
(a) the Income Tax (Exemption) (No. 4) Order 2016 [P.U.(A) 157/2016] (b) the Income Tax (Exemption) (No. 5) Order 2016 [P.U.(A) 158/2016] (c) the Income Tax (Exemption) (No. 6 ) Order 2016 [P.U.(A) 159/2016] (d) the Income Tax (Exemption) (No. 7) Order 2016 [P.U.(A) 160/2016] |
Exemption (paragraph 4)
Exemption from income tax is granted in respect of the following income of a non-resident person which is received from a QP for the purposes of a QA:
(a) fees for technical advice, assistance or services under S4A(ii) of the Income Tax Act 1967 (ITA); or
(b) royalty under S4(d) of the ITA.
To qualify for exemption, the payments by the QP to the non-resident person must be made on or after 13 June 2008 but not later than 31 December 2020.
Non-application (paragraph 5)
S109 and S109B of the ITA shall not apply to the income exempted under this Order.
The Schedule in this Order lists the sectors and the qualifying activities (related to each respective sector) which are referred to in subparagraph 4(1) under this Order.