Malaysia legislation

Section 2

of *PETROLEUM (INCOME TAX) ACT 1967

Section 2

(a)

an officer authorized by subsection 69(1) or (2) to exercise any function of the Director General; or

(b)

an officer authorized under subsection 69(5) to exercise or assist in exercising any such function;

“barrel” means 42 U.S. gallons or 9702 cubic inches, being equivalent to 34.9726 Imperial gallons;

“basis period”, in relation to a chargeable person and a year of assessment, means such basis period, if any, as is ascertained in accordance with section 5;

“building” includes any structure erected on land (not being plant or machinery);

“cash payment” means such payment as may be made by

Petroliam

Nasional

Berhad under section 4

of the

Petroleum Development Act 1974 [Act 144];

“casinghead petroleum spirit” means any liquid hydrocarbons obtained in Malaysia from natural gas by separation or by any chemical

Petroleum (Income Tax)

or physical process but before the same has been refined or otherwise treated;

“chargeable income” means chargeable income ascertained in accordance with this Act;

“chargeable person” means—

(i)

Petroliam Nasional Berhad,

(ii)

Malaysia-Thailand Joint Authority,

(iii)

in relation to each petroleum agreement, any other person carrying on petroleum operations thereunder, severally;

“chargeable petroleum”, in relation to a chargeable person, means petroleum won or obtained by that chargeable person from his petroleum operations;

“chargeable tax” means chargeable tax ascertained in accordance with and imposed by this Act;

“company” means a body corporate and includes any body of persons established with a separate legal identity by or under the laws of a place outside Malaysia;

“crude oil” means any oil won in Malaysia including oil extracted by destructive distillation from bituminous shales or other stratified deposits either in its natural state or after the extraction of water, sand or other foreign substance therefrom but before any such oil has been refined or otherwise treated;

“Director General” means the Director General of Inland Revenue referred to in section 67;

“disposal” and “disposed of”, in relation to petroleum owned by a chargeable person, mean respectively—

(a)

delivery, without sale, of that petroleum to a refinery for refining by or on behalf of that chargeable person, and

(b)

delivered, without sale, to a refinery for refining by or on behalf of that chargeable person;

“electronic invoice” has the meaning assigned to it in the

Income Tax Act 1967 [Act 53];

“entertainment” includes—

(a)

the provision of food, drink, recreation or hospitality of any kind; or

(b)

the provision of accommodation or travel in connection with or for the purpose of facilitating entertainment of the kind mentioned in paragraph (a), by a chargeable person or an employee of his, with or without any consideration paid whether in cash or in kind, in promoting or in connection with petroleum operations carried on by that chargeable person;

“Inland Revenue Board of Malaysia” means the Inland Revenue

Board of Malaysia established under the Inland Revenue Board of

Malaysia Act 1995 [Act 533];

“input tax” has the meaning assigned to it in the *Goods and Services

Tax Act 2014 [Act 762];

“Joint Development Area” has the meaning assigned thereto by the

Malaysia-Thailand Joint Authority Act 1990 [Act 440];

“Malaysia” means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the territorial waters and the airspace above such areas, and includes any area extending beyond the limits of the territorial waters of Malaysia,

*NOTE—The Goods and Services Tax Act 2014 [Act 762] has since been repealed by the Goods and Services Tax (Repeal) Act 2018 [Act 805] which comes into operation on 1 September 2018–see section 3 of Act 805.

Petroleum (Income Tax)

and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia as an area over which Malaysia has sovereign rights or jurisdiction for the purposes of exploring and exploiting the natural resources, whether living or non-living;

“market value”, in relation to any thing, means the price which that thing would fetch if sold in a transaction between independent persons dealing at arm’s length;

“Minister” means the Minister of Finance;

“natural gas” means gas obtained in Malaysia from bore holes and wells and consisting primarily of hydrocarbons;

“output tax” has the meaning assigned to it in the *Goods and

Services Tax Act 2014;

“partnership” means an association or arrangement of any kind

(including, but not limited to, joint ventures, syndicates and cases where a party to the association or arrangement is itself a partnership)

between parties who have agreed to combine any of their rights, powers, property, labour or skill for the purposes of carrying on petroleum operations and sharing any petroleum production or any profit derived therefrom;

“person” includes a company, a partnership or other body of persons and a corporation sole;

“petroleum” means any mineral oil or relative hydrocarbon and natural gas existing in its natural condition and casinghead petroleum spirit including bituminous shales and other stratified deposits from which oil can be extracted;

“petroleum agreement” means an agreement for exploring, prospecting or mining for petroleum entered into between

Petroliam Nasional Berhad or the Malaysia-Thailand Joint Authority and any other person whereby the parties thereto share any petroleum production or any profit derived therefrom;

“petroleum operations” means—

(a)

searching for and winning or obtaining of petroleum in

Malaysia by or on behalf of any person for his own account or on a joint account with any other person by any drilling, mining, extracting or other like operations or process, in the course of a business carried on by that person engaged in such operations, and all operations incidental thereto, and any sale or disposal by or on behalf of that person of petroleum so won or obtained, and includes the transportation within Malaysia by or on behalf of that person of petroleum so won or obtained to any point of sale or delivery or export, but does not include—

(i)

any transportation of petroleum outside Malaysia;

(ii)

any process of refining or liquefying of petroleum;

(iii)

any dealings with products so refined or liquefied; or

(iv)

service involving the supply and use of rigs, derricks, ocean tankers and barges; and

(b)

any sale or disposal by Petroliam Nasional Berhad within

Malaysia of petroleum obtained from outside of Malaysia and includes the transportation within Malaysia by, or on behalf of, Nasional Berhad of such petroleum to any point of sale or delivery within Malaysia;

“prescribed” means prescribed by rules made under section 83 or, in relation to a form other than the form mentioned in subsection 71(1), prescribed under section 82;

“rent” includes any sum paid for the use or occupation of any premises or part thereof or for the hire of any thing;

Petroleum (Income Tax)

“secondary recovery” means a method or process which has as its object the production of quantities of hydrocarbons by the application of external energy to the underground reservoir which is carried out—

(a)

subsequent to the earlier recovery process for the purposes of additional and accelerated recovery of those hydrocarbons; or

(b)

for the initial recovery or extraction of those hydrocarbons;

“Secretary” means the Secretary to the Special Commissioners;

“Special Commissioners” means the Special Commissioners of

Petroleum Income Tax referred to in section 42;

“statutory income” means statutory income ascertained in accordance with this Act;

“statutory order” means an order having legislative effect;

“stock in trade” of a chargeable person means his chargeable petroleum which he holds in his stock and which he has not—

(i)

delivered to a plant for refining or liquefying;

(ii)

exported; or

(iii)

sold.

“tax” means the tax imposed by this Act;

“year of assessment” means calendar year.

(2)

For the purposes of this Act, where a person, other than

Petroliam Nasional Berhad or the Malaysia-Thailand Joint Authority, carries on petroleum operations under more than one petroleum agreement, he shall be regarded as a separate chargeable person in respect of each of those agreements.

(3)

Where a partnership is succeeded by another at any time during the period of its petroleum agreement, and at least one of the original parties to that agreement who was a member of the succeeded partnership is a member of the succeeding partnership, both partnerships shall be treated for the purposes of this Act as one continuing partnership.

(4)

For the purposes of this Act—

(a)

(i)

notwithstanding subsection (3), where a partnership carries on petroleum operations under two or more petroleum agreements and the areas under those agreements are contiguous, the petroleum operations in those areas shall be treated as being carried on under one petroleum agreement if all the members of that partnership are the same original parties to the petroleum agreements and approved by the Director

General:

Provided that where a partnership is succeeded under subsection (3), this paragraph shall apply to an area under the petroleum agreement, including any expansion thereof which are contiguous prior to the succession of the partnership:

Provided further that where an area under a petroleum agreement is contiguous with agreement areas which are contiguous under existing petroleum agreements, that first mentioned area shall be treated as contiguous with the existing petroleum agreements areas for the purposes of this paragraph if the members of the partnership of the first mentioned petroleum agreement are the same as the original parties to the existing petroleum agreements; and

(ii)

agreement areas which would otherwise be contiguous with each other shall be treated as being contiguous with each other notwithstanding that any part of those agreement areas has been surrendered to

Petroleum (Income Tax)

Petroliam Nasional Berhad or the Malaysia-Thailand

Joint Authority; or

(b)

where prior to 21 October 1988 a partnership has more than one petroleum agreement and there is no change in the members of the partnership after that date in respect of those petroleum agreements, that partnership shall be regarded as carrying on petroleum operations under one petroleum agreement.

(5)

For the purposes of this Act, the date of production in relation to a petroleum agreement with the Malaysia-Thailand Joint Authority means the date of first commercial production of petroleum under that agreement.

Read in full context — *PETROLEUM (INCOME TAX) ACT 1967 →