Direct Taxation Update – December

Direct Taxation Update – December

LHDNM’S PRACTICE NOTE NO. 3/2017 ON CLARIFICATIONS ON EFFECTIVE DATE OF INCOME TAX (EXEMPTION) (NO.9) ORDER 2017 [P.U. (A) 323/2017]

The Inland Revenue Board of Malaysia (LHDNM) has recently uploaded the Practice Note No.3/2017 (issue date: 7 December 2017) on its website:

The following are examples to demonstrate circumstances when withholding tax under section 109B of the Act is applicable or not.

• For contracts signed and performed outside Malaysia after 6.9.2017, the payments made to non-residents are not subject to withholding tax.

Example 1:

• For contracts signed before 6.9.2017 and the services are performed outside of Malaysia before and after 6.9.2017.

Example 2: Contract signed for period 1.2.2017 – 28.2.2018.

• For contracts signed and services performed outside of Malaysia before 6.9.2017, but payments are made after 6.9.2017, such payments are subject to withholding tax.

Example 3:

• For contracts signed and payment made before 6.9.2017, but services performed outside Malaysia after 6.9.2017, such payments are not subject to withholding tax.

Example 4:

To read the Practice Note in full at the websites of the CTIM and the LHDNM.

LHDNM Updates – Country-by-Country Reporting Extensible Markup Language Schema

Further to our e-CTIM TECH-DT 73/2017 dated 16 October 2017, the Inland Revenue Board of Malaysia (LHDNM) has uploaded the Organisation for Economic Co-Operation and Development’s (OECD’s) user guides for tax administrations on Country-by-Country Reporting (CbCR) Extensible Markup Language (XML) Schema on its website as follows:

• CbCR XML Schema: User Guide for Tax Administrations (September 2017)
• CbCR Status Message XML Schema: User Guide for Tax Administrations (September 2017)

Note:

According to Subrule 4(3) of the Income Tax (CbCR) Rules 2016 [P.U. (A) 357/2016], the CbCR Report shall be filed in a prescribed form on an electronic medium, or through an electronic transmission in XML format.

Reporting of CbCR information will be in accordance to the OECD’s CbCR XML Schema.  Submission of the CbCR Reporting is through the LHDNM’s IT platform.  Information on this IT platform will constantly be updated by the LHDNM.

The LHDNM has also uploaded the OECD’s Guidance on the Implementation of Country-by-Country Reporting: BEPS Action 13 (Updated November 2017) on its website.

IRB issues practice notes on effective date of withholding tax exemption, 13 December 2017

The Inland Revenue Board (IRB) has issued the Practice Note No 3/2017 to clarify how the effective date of Income Tax Exemption (No. 9) Order 2017 will be implemented with regard to services performed outside Malaysia before and after the Exemption Order comes into operation.

Kindly visit the IRB’s website for further information.

Source: IRB’s website, 7 December 2017

IRB issues PR on plant or machinery not subject to controlled sales, 13 December 2017

The Inland Revenue Board (IRB) has published a public ruling (PR) on “Disposal of Plant or Machinery Part I — Other Than Controlled Sales” (PR No 7/2017) dated 12 December 2017.

The PR explains tax treatment for the disposal of plant and machinery that is not subject to controlled sales.

Kindly refer to the IRB website for further details.

Source: IRB website, 12 December 2017

IRB uploads content on CbCR, 11 December 2017

The Inland Revenue Board (IRB) has updated content on Country-by-Country Reporting (CbCR) to include the links to the:

• Guidance on the Implementation of Country-by-Country Reporting: BEPS Action 13 — updated on November 2017
• Country-by-Country Reporting XML Schema and User Guide
• Country-by-Country Reporting Status Message XML Schema and User Guide.

Kindly visit the IRB website for further details.

Source: IRB website, 7 December 2017 

Indirect Tax Updates December 

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