Malaysia legislation
Section 2
Section 2
(a)
incorporated in Malaysia under the ***Companies Act 1965
[Act 125]; and
(b)
resident in Malaysia in the basis year for a year of assessment;
*NOTE—The Farmers’ Association Act 1967 [Act 22 of 1967] has since been repealed by the Farmers’
Organization Act 1973 [Act 109] which comes into operation on 1 November 1973-see section 36 of Act 109.
**NOTE—see section 51 of Act A1468.
***NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016
[Act 777] which comes into operation on 31 January 2017- see subsection 620(1) of Act 777.
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“contract research and development company” means a company which is approved as a research and development status company under section 4H to provide research and development services in
Malaysia only to a company other than its related company;
“defined authority” means the Minister with the concurrence in writing of the Minister of Finance;
“halal food product” means a product which has obtained certification for recognized quality systems and standards, and halal certification evidenced by a certificate issued by a certification body as determined by the Minister of Finance;
“high technology company” means a company engaged in a promoted activity or in the production of a promoted product in areas of new and emerging technologies;
“hotel” means any accommodation, which includes a hotel, a motel, chalet or hostel, of the approved standard registered with the *Ministry of Tourism, Arts and Culture;
“hotel business” means the carrying on of a business in a hotel where such business provides sleeping accommodation and may include providing of food, drinks and other services or facilities and the granting of concessions of any part of such hotel for purposes connected with and incidental to the promotion of tourism;
“incurred” has the same meaning assigned to it in paragraphs 46
and 55 of Schedule 3 to the principal Act;
“in-house research” means research and development carried on in
Malaysia within a company for the purposes of its own business;
“input tax” has the meaning assigned to it in the Goods and Services
Tax Act 2014 [Act 762];
“integrated agricultural activity” means an activity which comprises the production of agricultural produce and the manufacturing of such
*NOTE—Previously known as “Ministry of Culture, Arts and Tourism”—see P.U. (A) 132/2019.
NOTE—This Act has been repealed by the Goods and Services Tax (Repeal) Act 2018 [Act 805]—see section 3 of Act 805.
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produce and includes any activity which is related and incidental to such activity;
“Minister”, except where there is a specific reference to the
Minister of Finance, means the Minister of International Trade and
Industry;
“output tax” has the meaning assigned to it in the Goods and
Services Tax Act 2014;
“pioneer business” means the business of a pioneer company relating to a promoted activity or promoted product of the company which is carried on by it in its tax relief period;
“pioneer certificate” means a pioneer certificate given under section 7 or any such certificate as amended;
“pioneer company” means a company certified by a pioneer certificate to be a pioneer company in relation to a promoted activity or promoted product in respect of which the tax relief period has not ended or has not ceased;
“pioneer factory” means a factory certified by a pioneer certificate to be a pioneer factory;
“post-pioneer business” means the business of a pioneer company deemed under section 15 to have been set up and commenced on the day following the end of its tax relief period;
“pre-pioneer business” means the business of a pioneer company relating to the promoted activity or promoted product of the company which is carried on by it before the beginning of the tax relief period;
“private higher educational institution” has the same meaning as defined in the Private Higher Educational Institutions Act 1996 [Act 555];
“production day” means the day specified as such in the pioneer certificate in accordance with section 7;
NOTE—This Act has been repealed by the Goods and Services Tax (Repeal) Act 2018 [Act 805]—see section 3 of Act 805.
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“promoted activity” means a manufacturing, agricultural, integrated agricultural, hotel, tourist or other industrial or commercial activity determined by the Minister in accordance with section 4 and includes the activity referred to in section 4A, 4B, 4D, 4E, 4F or subsection 5(1A);
“promoted product” means any product determined by the Minister in accordance with section 4 and includes the product referred to in section 4A, 4B, 4D, 4E, 4F or subsection 5(1A);
“reinvestment” means—
(a)
in relation to manufacturing activity, capital expenditure incurred in Malaysia as prescribed under paragraph 29(7)(a)
and subsection 29(8) for the purposes of expansion, modernization or automation of production facilities of the same promoted activity or promoted product;
(b)
in relation to hotel business, capital expenditure incurred in
Malaysia as prescribed under paragraph 29(7)(c) and subsection 29(8)
for the purposes of expansion, modernization or renovation of the same hotel business;
(c)
in relation to tourist project, capital expenditure incurred in
Malaysia as prescribed under paragraph 29(7)(d) and subsection 29(8) for the purposes of expansion or modernization of the same tourist project;
(d)
in relation to research and development activity or services, capital expenditure incurred in Malaysia as prescribed under subsections 29D(6) and (7), 29E(6) and (7), and 29F(6)
and (7) for the purposes of expansion or modernization for the same promoted activity; and
(e)
in relation to manufacturing related services, capital expenditure incurred in Malaysia as prescribed under paragraph 29(7)(e) and subsection 29(8) for the purposes of expansion or modernization for the same promoted activity.
“related company”, in relation to a company, means a company—
(a)
the operations of which are or can be controlled, either directly or indirectly, by the first-mentioned company;
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(b)
which controls or can control, either directly or indirectly, the operations of the first-mentioned company; or
(c)
the operations of which are or can be controlled, either directly or indirectly, by a person who control or can control, either directly or indirectly, the operations of the first-mentioned company:
Provided that a company shall be deemed to be a related company of another company if—
(i)
at least twenty percent of its issued share capital is beneficially owned, either directly or indirectly, by that other company; or
(ii)
at least twenty percent of its issued share capital of that other company is beneficially owned, either directly or indirectly, by the first mentioned company;
“research and development” means any systematic, investigative and experimental study that involves novelty or technical risk carried out in the field of science or technology with the object of acquiring new knowledge or using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include—
(a)
quality control or routine testing of materials, devices or products;
(b)
research in the social sciences or the humanities;
(c)
routine data collections;
(d)
efficiency surveys or management studies;
(e)
market research or sales promotion;
(f)
routine modifications or changes to materials, devices, products, processes or production methods; or
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(g)
cosmetic modifications or stylistic changes to materials, devices, products, processes or production methods;
“research and development company” means a company which is approved as a research and development status company under section 4H to provide research and development services in Malaysia to its related company or to any other company;
“research and development findings” means research and development findings in resource-based industry wholly owned by a public research institute or a public institute of higher learning in
Malaysia;
“shareholders’ funds” means the aggregate amount of a company’s paid up capital (in respect of preference shares and ordinary shares and not including any amount in respect of bonus shares to the extent they were issued out of capital reserve created by revaluation of fixed assets), reserves (other than any capital reserve which was created by revaluation of fixed assets and provisions for depreciation, renewals or replacements and diminution in value of assets), balance of share premium account (not including any amount credited therein at the instance of issuing bonus shares at premium out of capital reserve created by revaluation of fixed assets), and balance of profit and loss appropriation account;
“small company” unless expressly provided otherwise, means a company—
(a)
incorporated in Malaysia pursuant to the *Companies Act 1965 [Act 125]; and
(b)
resident in Malaysia in the basis year for a year of assessment, whose shareholders’ funds as at the date of grant of pioneer status and issue of pioneer certificate do not exceed an amount as may be declared, from time to time, by the Minister in a statutory order published in the Gazette;
*NOTE-The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016
[Act 777] which comes into operation on 31 January 2017- see subsection 620(1) of Act 777.
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“tax relief period”, in relation to a pioneer company, means the period ascertained in accordance with section 14 and any extension of that period under section 14A;
“technical or vocational training company” means a company which provides technical or vocational training in Malaysia;
“tourist project” means a project, other than a hotel business, exclusively carried out for purposes connected with the promotion of tourism and registered with the Ministry of Culture, Arts and Tourism.
(2)
Notwithstanding subsection (1), in the case of an industry other than a manufacturing industry, this Act shall apply with such modifications as may be necessary; and, in relation to any such industry, without prejudice to the generality of the foregoing—
(a)
references to construction may be disregarded where they are not appropriate;
(b)
references to a product may be construed as references to the activity or activities appropriate to the industry in question;
(c)
references to producing a product may be construed as references to carrying on that activity or those activities
(references to producing the relevant promoted product may be construed accordingly);
(d)
references to production day may be construed as references to the day on which a pioneer company commences to produce its relevant promoted product in marketable quantities or to carry on that activity or those activities on a commercial scale; and
(e)
references to a factory may be construed as references to the premises at which a promoted activity is carried on or, where such a construction is inappropriate, may be disregarded.
(3)
Section 136 of the principal Act shall apply to the Director
General’s functions under this Act as it applies to his functions under the principal Act.
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(4)
Where this Act provides for any income to be exempt from tax under the principal Act, the income in question shall be disregarded for the purposes of the principal Act.
(5)
Subject to subsections (1) to (4), where a word or expression used in this Act has its meaning defined (or has a meaning assigned to it) by any provision of the principal Act, either for the purposes of that
Act as a whole or for the purposes of any particular provision thereof, then, unless the context otherwise requires, that word or expression shall have in this Act the meaning so defined or assigned.
Application of incentives only to companies