Section 4

Subject to this Act, the chargeable profits of a Labuan entity carrying on a Labuan business activity which is a Labuan trading activity for a year of assessment shall be the net profits as reflected in the audited accounts in respect of such Labuan trading activity of the

Labuan entity for the basis period for that year of assessment.

For the avoidance of doubt, the net profits referred to in subsection (2) shall not include any income derived from royalty and other income derived from an intellectual property right if it is receivable as consideration for the commercial exploitation of that right.

Laws of Malaysia ACT 445

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Any income derived from intellectual property right referred to in subsection (3) is subject to tax under the Income Tax Act 1967.

For the purpose of this section, “intellectual property right”

means a right arising from any patent, utility innovation and discovery, copyright, trade mark and service mark, industrial design, layout-design of integrated circuit, secret processes or formulae and know-how, geographical indication and the grant of protection of a plant variety, and other like rights, whether or not registered or registrable.

Filing of return of profits of Labuan entity charged to tax