Capital Gains Tax: Implementation and effects with Income Tax and RPGT

On 29 December 2023, the Finance (No.2) Act 2023 was published, and with it, the tax laws governing Capital Gains Tax (“CGT”) were formally enacted.

Who is affected?

Companies
Trust Bodies
Limited Liability Partnerships (LLP)
Co-Operative Societies

Implementation Dates

Effective date	Types of Capital Assets Affected
1 Jan 2024	Foreign Capital Assets
1 Mar 2024*	•Local Unlisted Shares •Shares Deemed Acquired in Malaysia Pursuant to Section 15C of the Income Tax Act

*The effective date has been deferred to 1 March 2024 with the gazette of Income Tax (Exemption) (No.7) Order 2023.

Types of Capital Assets subject to this CGT

Local unlisted shares
Section 15C
- foreign unlisted company shares deemed acquired in Malaysia
All types of foreign capital assets

CGT Tax Rates

Effective date of acquisition	Types of Capital Assets Affected
Malaysian unlisted company shares acquired before 1 January 2024	10% on gain or 2% on gross proceeds
Malaysian unlisted company shares acquired after 1 January 2024	10% on gain
Foreign sourced capital gains i.e capital gains from disposals of assets held outside Malaysia and acquired at any time in the past	Taxpayer’s prevailing tax rate

How e-Invoice actually works?

The e-invoice workflow

So how does the whole process of sending and receiving of e-Invoice is like and how long does it take for the validation process?

While it involves a series of complex procedures to ensure a safe digital transaction between supplier and buyer, most of the processes will be conducted within the system, and does not require user’s intervention, and for the validation process, according to LHDN, it will be conducted electronically, which can be done instantly or near-instantly.

Step 1: Issuance of e-Invoice.
The whole e-invoice process begins when a sale and or transaction is made (including e-invoice adjustments), which the supplier or sender create and e-Invoice to share to IRBM via Myinvoice Portal or API for validation. For accounting solution such as AutoCount, this feature is connected through API, by including e-Invoice within our system, users can have a more complete and automated invoicing process, without the need of accessing portal often to send and receive invoices.

Step 2: Validation of e-Invoice.
As the submitted data needs to be validate before release, to ensure the e-Invoice meets the necessary standards and criteria, and according to info provided by LHDN, the validation process by IRBM is in real time or near-instantly.

After the validation process, the supplier will receive a Unique Identifier Number from IRBM within the platform they operates on, and the number will allow IRBM to trace as to reduce instances of tampering with e-Invoice, further strengthen the transaction’s safety and transparency.

Step 3: Notification of validated e-Invoice.
After e-Invoice validation, IRBM will notify both supplier and buyer, either in MyInvoice Portal or APIs.

Step 4: Sharing of e-Invoice.
Upon validation, the supplier is obliqued to share the cleared e-Invoice with the buyer, with a QR code embedded within, which the purpose is to validate the existence of the e-invoice by enablling checking or view in official MyInvois portal.

Step 5: Rejection/Cancellation of e-Invoice.
After the e-Invoice has been issued, a stipulated period of time is given, to allow buyer to request for rejection of the invoice or supplier to cancel the e-Invoice in the process. In this stage, any rejection or cancellation request must be accompanied by justifications.

Step 6: MyInvois Portal.
While there might seems like there are a series of complex procedures involved to send and share invoices, but worry not, with solution such as AutoCount, the e-Invoice feature will be embedded within the system, which users only have to select or enter some basic detail to generate invoices, and let the system automates the rest while keeping you updated, integrating official e-Invoicing within the system also maintain a better data integrity, accuraccy and safety.

LHDN e-Invoice Implementation Updates in Malaysian Budget 2024

A revision to the new e-Invoice implementation timeline for businesses has been announced during the Malaysian Budget 2024, with an update of the postponement of the start date and a shorter target timeframe for full implementation for every taxpayer.

The updated detailed timeline is as follows:

1 August 2024: Implement on taxpayers with an annual turnover of RM100 million and above.
1 January 2025: Implementation towards taxpayers with an annual turnover of RM25 million to RM100 million.
1 July 2025: To achieve full and comprehensive implementation on other remaining taxpayers.

2020 MALAYSIAN BUDGET PROPOSAL

Important tax proposals on the Budget 2020 that would affect relevant to SME and Individual Tax Payers are described below.

Corporate Income Tax for Small and Medium Enterprises (SME)

Currently:

SME is defined as Company resident in Malaysia with paid-up capital is not more than RM2.5 million.
Subject to income tax at the rate of 17% on the first RM500,000 of chargeable income. The remaining chargeable income is taxed at 24%.

Budget 2020 Proposal:

Definition of SME to include a requirement of annual sales of not more than RM50 million, in addition to the paid-up capital requirement.
Chargeable income to be increased from RM500,000 to RM600,000.

Effective date: Year of Assessment 2020

Capital Allowance (CA) for Small Value Assets (SVA)

Currently:

Qualifying expenditures on assets valued RM1,300 and below are eligible for 100% of special allowance and there is no limit for SME.
For non-SMEs the total SVA is limited to RM13,000 for each year of assessment.

Budget 2020 Proposal:

Qualifying expenditure of SVA to be increased from RM1,300 to RM2,000.
For non-SMEs the limit of total SVA to be increased from RM13,000 to RM20,000 for each year of assessment.

Effective date: Year of Assessment 2020

Tax deduction on Secretarial fee and Tax filing fee

Currently:

Secretarial fee is allowed up to RM5,000 for each year of assessment.
Tax filing fee is allowed up to RM10,000 for each year of assessment.

Budget 2020 Proposal:

To combine both secretarial fee and tax filing fee and to be allowed up to RM15,000 for each year of assessment.

Effective date: Year of Assessment 2020

Change in Individual Income Tax rate

Currently:

Tax rate for a resident individual with chargeable income exceeding RM2 million is 28%.
Tax rate for a non-resident individual is 28%.

Budget 2020 Proposal:

Tax rate for a resident individual with chargeable income exceeding RM2 million to be increased to 30%.
Tax rate for a non-resident individual to be increased to 30%.

Effective date: Year of Assessment 2020

Royal Malaysian Customs Department publishes guide on transmission and distribution of electricity services and guide on information technology services

Royal Malaysian Customs Department publishes guide on transmission and distribution of electricity services

The Royal Malaysian Customs Department published the guide on transmission and distribution of electricity services on 1 July 2020. The guide seeks to assist taxpayers in understanding the service tax treatment on the provision of electricity services.

The guide illustrates the following:

• terminology

• scope of tax

• service tax treatment on the provision of electricity services

• treatment of service tax on electricity services in designated area and special area

• frequently asked questions

• inquiry contact

Royal Malaysian Customs Department publishes guide on information technology services

The Royal Malaysian Customs Department published the guide on information technology services on 1 July 2020. The guide seeks to assist taxpayers in understanding the service tax treatment on information technology services. The service tax is a consumption tax governed by the Service Tax Act 2018 and its subsidiary legislation.

The guide illustrates the following:

• imposition and scope of tax

• terminology

• general operations of the industry and overview of information technology services

• charging service tax

• service tax treatment on information technology services

• exemption from payment of service tax (business-to-business exemption)

• treatment on imported taxable services

• responsibility of a registered person

• frequently asked questions

• inquiry contact

Source: Royal Malaysian Customs Department website, 1 July 2020

PM unveils short-term recovery plan, 09 June 2020

Prime Minister Tan Sri Muhyiddin Yassin on 5 June 2020 announced a series of measures for the Short-Term Economic Recovery Plan aimed at alleviating the effects of the COVID-19 pandemic. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz stated that the plan would focus on three key objectives, namely empowering people, propelling businesses and stimulating the economy.

The Short-Term Economic Recovery Plan is the fourth of the six-phase 6R approach, which are Resolve, Resilience, Restart, Recovery, Revitalise and Reform.

The highlights of the Prime Minister’s speech are illustrated below:

• The Statistics Department recorded that until 2 June 2020, around 12.7m of the workforce have started working in comparison to only 10.2m on 17 May 2020.

• RM9b has been allocated by the Government to address rising unemployment and it is to benefit over 3m workers nationwide.

• Wage Subsidy Programme which has allocated RM600 per worker is to be extended for another three months.

• Employers who were not allowed to operate during the conditional movement control order (MCO) are allowed to apply for the Wage Subsidy Programme.

• The Pelan Jana Semula Ekonomi Negara, which is a direct fiscal injection, seeks to empower people, propel businesses and stimulate the economy.

• The government packages have so far saved 2.4m jobs, has reduced the cash flow burden of around 10m people and supported more than 300,000 companies.

• Employment subsidy programme worth RM1.5b introduced. Companies to get financial subsidies for giving jobs to the unemployed.

• There are two incentives given to companies for six months, whereby companies that employ unemployed Malaysians under 40 years are eligible to get RM800 per worker and firms that employ Malaysians over 40 years and persons with disabilities (OKU) will get RM1,000.

• The Government plans to introduce My30 unlimited pass for public transport users. It is open to all nationalities, beginning 15 June until the end of 2020.

• Grants are to be given to daycare (taska) operators for implementing and adhering to the standard operating procedures set by the Government.

• E-vouchers will be available for online child-minders’ services.

• Incentives of RM3,000 have been allocated for individual income tax for fees paid by parents to taska and tadika (kindergartens).

• To encourage trade via e-commerce platforms using promo codes and discount vouchers, the Government is allocating RM70m in Campaign Shop Malaysia Online.

• Banking sector allocated RM2b to assist SMEs with a threshold of RM500,000 per SME.

• RM1b allocated for the tourism industry under Penjana Tourism Funding to ensure that the country’s tourism industry can still be competitive.

• G2 and G3 contractors who have been awarded minor government projects are provided cash-flow aid by SME bank.

• Malaysian Global Innovation and Creativity Centre (MaGIC) have been allocated RM10m to fund social enterprises for social projects for vulnerable groups.

• Penjana Nasional fund worth RM600m introduced to drive the process of digitalisation of businesses and innovation.

• RM75m has been allocated to draft policies related to the so-called gig economy.

• The Government allocated RM50m matching grant for gig economy workers’ Employees Provident Fund and Social Security Organisation contribution.

• The Government allocated RM75m to e-wallets, or RM50 per person, where Malaysians can begin applying in July 2020 to encourage cashless payments.

• The Government has provided 100% tax exemption for the purchase of locally assembled cars beginning June until 31 December 2020.

• An additional RM50m has been provided to the Malaysian Investment Development Authority for promotional and marketing activities.

• RM1b allotted for the tourism industry to help related SMEs to operate.

• RM400m microcredit has been provided by Tekun and Bank Simpanan Nasional with RM50m specifically for female entrepreneurs.

• Full exemption of tourism tax from 1 July 2020, until 30 June 2021.

• The exemption provided of services tax on lodgings and accommodation services extended from 1 September 2020 until 30 June 2021.

• Companies’ financial burden has been reduced through the waiver of penalty to companies that are late in submitting payment for Sales and Service Tax as well as an extension of tax exemptions.

Source: The Star, 5 June 2020

STANDARD OPERATING PROCEDURES (SOPs) FOR VISITORS TO PASSIT PMC OFFICE

STANDARD OPERATING PROCEDURES (SOPs) FOR VISITORS TO PASSIT PMC OFFICE

Prime Minister Tan Sri Muhyiddin Yassin announced today that the Conditional Movement Control Order (CMCO) which was originally scheduled to end on 12 May 2020 has been further extended until 9 June 2020.

Passit PMC will continue with its plan to resume office on 11 May 2020. To support the Government’s efforts to control and contain the spread of COVID-19 while adhering to its call to minimise the movement of people, and taking into consideration of the safety of our staff, Passit strongly encourages its clients and other stakeholders to liaise with the us online unless absolutely essential to visit its office premises.

Guidelines and SOPs for Visitors to Offices

Passit’s office will resume to attend to matters that cannot be dealt with online as part of our ongoing support to clients and other stakeholders.

To ensure the safety of our visitors, Passit will implement SOPs as set by the Government as follows:

Visitors are required to make an appointment prior to coming to Passit’s office in order to limit the number of people present in the office.
Visitors are required to complete the health declaration form before entering the office.
Physical appointments and meetings shall comply with all social distancing and sanitisation protocols.
Temperature screening will be carried out for all visitors before they enter the office. If their temperature is high (37.5° C) or they present COVID-19-like symptoms (such as cough, sore throat or shortness of breath), Passit will advise them to go to the nearest clinic. They will not be allowed to enter the office.
To observe strict personal hygiene practices including wearing masks, practising social distancing and sanitisation.

Thank you and stay safe.

Standard Operating Procedure (SOP) for Conditional MCO

You may download the SOP of different industries below if you wish to re-start your business operations.

Lampiran:

00 – PENGENALAN SOP PEMBUKAAN SEMULA EKONOMI.pdf

01 – SOP SEKTOR SUKAN DAN REKREASI – KEMENTERIAN BELIA & SUKAN.pdf

02 – SOP SEKTOR PENGANGKUTAN – KEMENTERIAN PENGANGKUTAN.pdf

03 – SOP SEKTOR MAKANAN – KEMENTERIAN WILAYAH PERSEKUTUAN.pdf

04A – SOP SEKTOR PERKHIDMATAN IKHTISAS & PROFESIONAL – KEMENTERIAN PERDAGANGAN ANTARABANGSA DAN INDUSTRI.pdf

04B – SOP SEKTOR PEMBUATAN – KEMENTERIAN PERDAGANGAN ANTARABANGSA DAN INDUSTRI.pdf

05 – SOP SEKTOR SOSIAL – KEMENTERIAN PERPADUAN.pdf

06 – SOP SEKTOR MINYAK & GAS – PETRONAS.pdf

07 – SOP SEKTOR PERKHIDMATAN & PELBAGAI – KEMENTERIAN SUMBER MANUSIA.pdf

08 – SOP SEKTOR PERUNCITAN – KEMENTERIAN PERDAGANGAN DALAM NEGERI DAN HAL EHWAL PENGGUNA.pdf

09 – SOP AR-RAHNU & KOPERASI KREDIT – KEMENTERIAN PEMBANGUNAN USAHAWAN DAN KOPERASI.pdf

10 – SOP SEKTOR AGRIKOMODITI – KEMENTERIAN PERUSAHAAN PERLADANGAN DAN KOMODITI -.pdf

11 – SOP SEKTOR KEWANGAN – KEMENTERIAN KEWANGAN.pdf

12 – SOP SEKTOR INDUSTRI PERTAHANAN – KEMENTERIAN PERTAHANAN.pdf

13 – SOP SEKTOR TENAGA, PERHUTANAN & MINERAL – KEMENTERIAN TENAGA DAN SUMBER ASLI.pdf

14 – SOP SEKTOR PENDIDIKAN – KEMENTERIAN PENDIDIKAN MALAYSIA.pdf

15 – SOP SEKTOR PERTANIAN & MAKANAN – KEMENTERIAN PERTANIAN DAN INDUSTRI MAKANAN.pdf

16 – SOP SEKTOR KOMUNIKASI & TEKNOLOGI MAKLUMAT – KEMENTERIAN KOMUNIKASI & MULTIMEDIA.pdf

17 – SOP SEKTOR PELANCONGAN, SENI & BUDAYA – KEMENTERIAN PELANCONGAN, SENI & BUDAYA.pdf

18 – SOP SEKTOR ALAM SEKITAR – KEMENTERIAN ALAM SEKITAR.pdf

19 – SOP SEKTOR PEMBINAAN – KEMENTERIAN KERJA RAYA.pdf

20 – SOP SEKTOR GUAMAN – BAHAGIAN HAL EHWAL UNDANG-UNDANG.pdf

21 – SOP SEKTOR KAWALAN KESELAMATAN SWASTA – KEMENTERIAN DALAM NEGERI.pdf

22 – SOP SEKTOR KEBERSIHAN, KESELAMATAN, PEMBINAAN, PENGURUSAN STRATA, KEWANGAN – KEMENTERIAN PERUMAHAN DAN KERAJAAN TEMPATAN.pdf

23 – SOP SEKTOR PERUBATAN – KEMENTERIAN KESIHATAN MALAYSIA.pdf

24 – SOP SEKTOR R&D DAN MAKMAL UJIAN – KEMENTERIAN SAINS, TEKNOLOGI DAN INOVASI.pdf

25 – SENARAI AKTIVITI YANG DILARANG.pdf

Announcement — Penalty in MySST system for late payment of taxes on Taxable Period included in the Movement Control order (MCO) period

Announcement — Penalty in MySST system for late payment of taxes on Taxable Period included in the Movement Control order (MCO) period

Due to inevitable time and system constraints during the MCO, penalties on Taxable periods which are included in the MCO period will still be generated in the MySST as usual. However JKDM will remit the penalties as soon as possible.
Actual Due Date of the taxable period and the date of penalty generated are as follows:

No.	Taxable period	Due Date to submit return and payment	Date of penalty generated
1.	Jan-Feb 2020	31/3/2020	1/4/2020
2.	Feb-Mar 2020	30/4/2020	1/5/2020

Any Bill of Demand (BOD) on penalties elligable for remission during the Movement Control Order (MCO) the will be remitted by JKDM as soon as possible.
Application for remission of these penalty is not required.

Allow SMEs to defer paying income tax till December 2020

Accountants urged the Government to permit small- and medium-sized enterprises (SMEs) to defer income tax instalment payments up to December 2020 instead of a three-month period ending in June 2020.

The Malaysian Institute of Certified Public Accountants and Malaysian Rating Corporation Bhd said that several SMEs were facing bankruptcy as their cash flow and revenue ran out with overhead expenses accumulated with the movement control order. The Government could consider extending the deferment until December 2020 as the impact of supply chain disruptions would be felt even after the COVID-19 outbreak ends.

The Government permits all SMEs to postpone income tax instalment payments for a three-month period commencing 1 April 2020 under the Prihatin Rakyat Economic Stimulus Package. This measure is in addition to the tax instalment payment postponement provided to impacted businesses in the tourism sector for six months, also beginning from 1 April 2020.

The accountants said that it is essential for financial institutions, namely commercial banks and development financial institutions, to step forward at this critical moment in Malaysia’s economic history. It is necessary that they continue to introduce funds into the economy and support economic activities by lending to viable businesses.

Otherwise, Malaysia could end up with thousands of business failures which would have dire implications on the financial system, economy and labour market. The two organisations said that the surge in business failures could also trigger large-scale social problems.

Source: Free Malaysia Today