Direct Taxation
IRB issues PR on appeals, 12 January 2018
The Inland Revenue Board (IRB) has published a public ruling (PR) on “Appeal against an Assessment and Application for Relief” (PR No 12/2017) dated 29 December 2017.
This PR replaces PR No. 8/2015 dated 22 October 2015 and has provided updated information on new provisions as follows:
- Appeals and relief application against nontaxable cases under S 97A of the Income Tax Act 1967, and
- The relief application not in respect of error or mistake under section 131A of the Income Tax Act 1967.
Kindly refer to the IRB website for further details.
Source: IRB website, 12 January 2018
LABUAN BUSINESS ACTIVITY TAX (COUNTRY BY COUNTRY REPORTING) REGULATIONS 2017 [P.U. (A) 409/2017]
The above Regulations were gazetted on 26 December 2017.
County-by-Country Reporting (CbC Reporting)
Please click on the following link for an overview of CbC Reporting.
http://www.oecd.org/tax/beps/country-by-country-reporting.htm
The table below which sets out the Contents of the above Regulations, provides an overview of these Regulations.
| Regu-lation # | Heading | Notes |
| 1 | Citation | The citation is as shown above |
| 2 | Interpretation | Provides definitions of terms used in these Regulations. (Definitions of words which are underlined in this Table are found in regulation 2.) |
| 3 | Application | These Regulations apply to an MNE Group which meets with the conditions that are specified in subregulations 3(a) and 3(b). |
| 4 | Country-by-Country Report
(CbC Report) |
The information contained in a CbC Report with respect to an MNE Group are stated in subregulation 4(1). This includes information relating to the MNE Group’s earnings (profit or loss), capital, number of employees and assets, as well as identification of each constituent entity (CE) of the MNE Group and the relevant tax jurisdictions for each CE. The information is required to be reported from 1 January 2017.
Reporting is done by way of a prescribed form under S21A of the Labuan Business Activity Tax Act 1990 on an electronic medium, or through an electronic transmission in extensible markup language format. |
| 5 | Filing Obligation | The ultimate holding entity of an MNE Group which is a Labuan entity (LE) carrying on a Labuan business activity will file a CbC Report (in accordance with regulation 4) with the Director General (DG) with respect to its reporting financial year within the period specified in regulation 7. |
| 6 | Notification | Any CE of an MNE Group which is a LE carrying on a Labuan business activity must notify the DG in writing if it is the ultimate holding entity on or before the last day of the reporting financial year. Where such CE is NOT the reporting entity (ultimate holding entity), it must notify the DG of the identity and tax residence of the reporting entity by the same deadline.
The penalty for failing to comply with the above requirements is a fine (upon conviction of the offence) of not more than RM 1 million, or imprisonment for a term not exceeding 2 years, or to both. |
| 7 | Time for filing | The CbC Report must be filed not later than 12 months after the last day of the reporting financial year. |
| 8 | Use and confidentiality of Country-by-Country Report information | States the ways in which the CbC Report may be used by the DG (“for the purposes of assessing high level transfer pricing (TP) risks and other base erosion and profit shifting related risks in Malaysia…”) and the way in which it is not to be used (“as a substitute for a detailed TP analysis…..”)
The DG must preserve confidentiality of information contained in the Report at least to the same extent that would apply if such information were provided to the DG under the provisions of the Convention on Mutual Administrative Assistance in Tax Matters. |
| 9 | Failure to file CbC Report | Any failure to comply with the requirements of regulations 4, 5 or 7 is an offence. The penalty is the same as provided in regulation 6. In addition, any person convicted of the offence may be ordered by the court to comply with the relevant provisions of these Regulations within 30 days from the date the order is made or such other period as the court deems fit. |
| 10 | Incorrect reports | Any person who makes an incorrect report by omitting information which accords with the requirements of regulation 4, or gives incorrect information in relation to the information required under regulation 4, commits an offence. The penalty is the same as provided in regulation 6. |
To read the Regulations in full at the official website of the Attorney-General’s Chambers.
Income Tax (Set-off for Tax Charged on Actuarial Surplus under Takaful Business) Rules 2017 [PU (A) 410/2017]
The Rules provide the formula to ascertain the portion of actuarial surplus transferred from the family fund to the shareholders’ fund of a takaful operator that qualifies for the tax charged set-off as provided in s 110C of the Income Tax Act 1967.
The Order is deemed to have effect from year of assessment 2015.
Labuan Business Activity Tax (Country-by-Country Reporting) Regulations 2017 [PU (A) 409/2017]
The Regulations cover, among others, the conditions that require a multinational corporation group to perform Country-by-Country Reporting (CbCR), details that should be reported in a CbCR, filing obligations, time for filing, use of confidentiality of the CbCR information and failure to file CbCR.
Stamp Duty (Exemption) (No 2) Order 2017 [PU (A) 408/2017]
The Order provides that a contract note executed for the sale and purchase transaction of a structured warrant or exchange-traded fund approved by the Securities Commission Malaysia under the Capital Markets and Services Act 2007 in Burse Malaysia Securities Berhad is exempted from stamp duty.
The exemption applies to contract notes executed on or after 1 January 2018 but not later than 31 December 2020.
The Order comes into operation on 1 January 2018.
Finance (No. 2) Act 2017 (Act 801 of 2017)
The Act amends s 21A, 44, 60AA, 107C, 112, 120, 127, 140A, Sch 1, Sch 3 and Sch 6 to the Income Tax Act 1967.
Income Tax (Amendment) Act 2017 (Act A1556 of 2017)
The Act amends s 112A, 113A and 119B of the Income Tax Act 1967. The amendments come into operation on 30 December 2017.
Income Tax (Advance Pricing Arrangement) (Amendment) Rules 2017 [PU (A) 449/2017]
The Rules insert a new r 23 to the Income Tax (Advance Pricing Arrangement) Rules 2012. The Rules come into operation on 1 January 2018.
Real Property Gains Tax
Finance (No. 2) Act 2017 (Act 801 of 2017)
The Act amends s 21B, Sch 2 and Sch 5 to the Real Property Gains Tax Act 1976.
Labuan Business Activity Tax (Amendment) (No. 2) Act 2017 (Act A1555 of 2017)
The Act amends s 21 of the Labuan Business Activity Tax Act 1990. The amendments come into operation on 30 December 2017.
Income Tax (Advance Pricing Arrangement) (Amendment) Rules 2017 [P.U.(A) 449/2017]
The above Rules which amends the Income Tax (Advance Pricing Arrangement) Rules 2012 [P.U.(A) 133/2012], was gazetted on 29 December 2017 and came into operation on 1 January 2018.
The Income Tax (Advance Pricing Arrangement) Rules 2012 [P.U.(A) 133/2012] are amended by inserting after rule 22 the following rule:
“Fee and other payment
- (1) A taxpayer shall pay-
(a) in respect of an application for advanced pricing arrangement under rule 5-
(i) a non-refundable application fee of five thousand ringgit which shall accompany the application; and
(ii) any expenses as the Director General may determine; and
(b) in respect of an application for renewal of advance pricing arrangement under rule 20-
(i) a non-refundable application fee of five thousand ringgit which shall accompany the application; and
(ii) any expenses as the Director General may Determine.
(2) Fee and payment specified in paragraphs (1)(a) and (b) shall be payable notwithstanding that taxpayer withdraws the application.”.
To read the Rules at the official website of the Attorney-General’s Chambers.
Filing programme for income tax return forms for YA 2018, 05 January 2018
Individuals
The due date for individuals who do not carry on a business to submit their tax return is 30 April 2018. For individuals who carry on a business, the due date is 30 June 2018.
Individuals who chose to e-file their tax returns are given a grace period of 15 days. Those who submit their tax returns through post are given a grace period of three working days.
Companies, limited liability partnerships, trust bodies and co-operative societies which are dormant and/or have not commenced business
The due date to submit the relevant tax returns is the last day of the seventh from the closing date of accounts.
Companies that e-file their e-Form C are granted a grace period of one month.
Employers’ return (Form E)
The due date for employers to submit the Form E is 31 March 2017. Those who chose to e-file their tax returns are given a grace period of up to 30 April 2017. Those who submit their tax returns through post are given a grace period of three working days.
The filing programme also provides updated information on the CP8D information layout.
Kindly visit the IRB website for further details.
Source: Chartered Tax Institute of Malaysia website, 3 January 2018
IRB updates content on Common Reporting Standard (CRS) for the Automatic Exchange of Financial Account Information, 05 January 2018
The Inland Revenue Board (IRB) has updated its CRS content pursuant to the issuance of the Income Tax (Automatic Exchange of Financial Information) (Amendment) Rules 2017. The IRB has also added information on:
- Special provision for pre-existing individual account
- Reportable jurisdiction
- Reporting.
The IRB has included a link to the OECD’s Standard for Automatic Exchange of Financial Account Information in Tax Matters, Second Edition under its “Further Information” section.
Kindly visit the IRB website for further details.
Source: IRB website, 3 January 2018
IRB updates content on Mutual Agreement Procedure, 05 January 2018
The Inland Revenue Board (IRB) updated the Mutual Agreement Procedure (MAP) guidelines for year 2017.
Kindly visit the IRB website for further details.
Source: IRB website, 3 January 2018
Finance (No. 2) Act 2017 gazetted, 04 January 2018
The Finance (No. 2) Act 2017 (Act 801) that received Royal Assent on 27 December 2017 has been published in the Gazette on 29 December 2017. The Act amends the Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Goods and Services Tax Act 2014, and the Finance Act 2013.
The following amending acts have been gazetted as well:
- Income Tax (Amendment) Act 2017 (Act 1556)
- Labuan Business Activity Tax (Amendment) (No. 2) Act 2017 (Act 1555).
The abovementioned amending acts received Royal Assent on 27 December 2017 and published in the Gazette on 29 December 2017. The date of commencement of the abovementioned amending acts is 30 December 2017.
Source: Federal Gazette Portal of the Attorney General’s Chambers, 29 December 2017
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