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TaXavvy Issue 39/2020
In this issue:
Practice Note 3/2020 - Determination of gross income from business sources of not more than RM50 million of a company or limited liability partnership
Under the Income Tax Act 1967, various preferential tax treatments are granted to companies with paid-up capital in respect of ordinary shares of not more than RM2.5 million at the beginning of a basis period (commonly referred to as “SMEs”). Effective from year of assessment (YA) 2020, this definition has been tightened by imposing an additional condition, that is, the taxpayer must also have gross income from a source or sources consisting of a business not exceeding RM50 million for the basis period for that YA (“RM50 million threshold”).
The Inland Revenue Board (“IRB”) has issued Practice Note No. 3/2020 - Clarification on determining the gross income from business sources of not more than RM50 million of a company or limited liability partnership to provide clarification on the application of the RM50 million threshold.
Public Ruling 1/2020 - Tax Incentives for Bionexus Status Companies
The IRB has issued Public Ruling 1/2020 on Tax Incentives for Bionexus Status Companies (“PR 1/2020”) which replaces the earlier Public Ruling 8/2018.
Following the review of tax incentives and recommendations by the Forum on Harmful Tax Practices, Malaysia has amended the legislation for these incentives to incorporate the substantial activities requirements and exclude income from intellectual property rights from the scope of the incentives. Changes to the incentives for Bionexus Status Companies are effected through the following gazette orders.
Income Tax (Exemption) (No. 2) 2009 (Amendment) Order 2018
Income Tax (Exemption) (No. 17) 2007 (Amendment) Order 2018
The amendments reflected in PR 1/2020 are to incorporate the changes from the above developments.
Automation equipment incentives: Investment Allowance and Accelerated Capital allowance
Amending gazette orders have been issued to amend the existing gazette orders to provide for extension of the above incentives as proposed in Budget 2018 and Budget 2020. The amendments are deemed effective from YA 2018.
Stamp duty exemption for restructuring or rescheduling of a business loan or financing
Bank Negara Malaysia had announced via its 25 March 2020 press release that banking institutions will facilitate requests by corporations to defer or restructure their loans / financing repayments. Following this, the Stamp Duty (Exemption) (No.2) Order 2020 has been gazetted.
Labuan entities carrying on pure equity holding activity - Full-time employees requirement
The Labuan Business Activity Tax (Exemption) Order 2020 has been gazetted on 2 June 2020.
TaXavvy is a newsletter issued by PricewaterhouseCoopers Taxation Services Sdn Bhd. While every care has been taken in compiling this newsletter, we make no representations or warranty (expressed or implied) about the accuracy, suitability, reliability or completeness of the information for any purpose. PricewaterhouseCoopers Taxation Services Sdn Bhd, its employees and agents accept no liability, and disclaim all responsibility, for the consequences of anyone acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Recipients should not act upon it without seeking specific professional advice tailored to your circumstances, requirements or needs.
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