Malaysia legislation
Section 3A
Section 3A
(a)
the original parties to the petroleum agreement are the same; and
(b)
the amount of qualifying exploration expenditure of the first mentioned chargeable person is from an agreement area where chargeable petroleum is not being produced.
(2)
The amount of qualifying exploration expenditure incurred by the first-mentioned chargeable person to be allowed as deduction against the gross income of the second-mentioned chargeable person shall be determined in accordance with the following formula:
A x C
——
B where
A is the gross income of the second-mentioned chargeable person from a petroleum operation;
B is the total gross income of the second-mentioned chargeable person from petroleum operations; and
C is the qualifying exploration expenditure; and in the case where the qualifying exploration expenditure exceeds the amount of gross income of petroleum operations or the gross income in respect of a petroleum operation of the second-mentioned chargeable person, the excess of the expenditure shall be allowed to be deducted from the gross income of that petroleum operations for the subsequent years of assessment of the second-mentioned chargeable person and any excess thereof shall not be used by another chargeable person in another petroleum agreement where the original parties to the petroleum agreement are the same.
(3)
Subparagraph (1) shall not apply to chargeable persons carrying on petroleum operations—
(a)
in the Joint Development Area; or
Petroleum (Income Tax)
(b)
in an area under any agreement or arrangement made by the Government with the government of any territory outside Malaysia for the joint exploration and exploitation of petroleum in overlapping areas referred to in subsection 65B(1).
(4)
Any amount deducted under subparagraphs (1) and (2) shall be disregarded for the purpose of ascertaining the adjusted income—
(a)
of the first-mentioned chargeable person; or
(b)
where subparagraph (2) applies, of the second-mentioned chargeable person.