What is FINANCE ACT 2009?

*FINANCE ACT 2009 is Malaysia Act, cited as Act 693 2009, currently marked in force and first recorded in 2009.

Is FINANCE ACT 2009 still in force?

Yes — FINANCE ACT 2009 is currently in force.

When did FINANCE ACT 2009 take effect?

FINANCE ACT 2009 was first recorded in 2009.

How many sections does FINANCE ACT 2009 have?

FINANCE ACT 2009 contains 86 sections.

Where can I read the official version of FINANCE ACT 2009?

The official text of FINANCE ACT 2009 is published at lom.agc.gov.my.

FINANCE ACT 2009 (No. 693)

PRELIMINARY

Short title

Section 1

This Act may be cited as the Finance Act 2009.

Section 2

Amendment of Acts

The Income Tax Act 1967 [Act 53], the Stamp Act 1949 [Act 378], the Petroleum (Income Tax) Act 1967 [Act 543] and the Labuan

Offshore Business Activity Tax Act 1990 [Act 445] are amended in the manner specified in Chapters II, III, IV and V respectively.

8 Laws of Malaysia ACT 693

AMENDMENTS TO THE INCOME TAX ACT 1967

Commencement of amendments to the Income Tax Act 1967

Section 3

(2)

Sections 4, 6, 7, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23,

24, 27, 29, 38, paragraphs 42(a) and (b), paragraphs 43(b), (c), (d), (e)

and (f), paragraph 45(b), paragraphs 46(a), (c), (d), (f) and (g) and subparagraphs 46(e)(i) and (ii) have effect for the year of assessment 2009 and subsequent years of assessment.

(3)

Sections 8, 9, 26, 28, 30, 31, 33, 34, 35, 36, paragraph 43(a), section 44, paragraph 46(b) and sections 47, 48, 49 and 50 come into operation on the coming into operation of this Act.

(4)

Sections 5, 10, 15, 25, 37, 39, 40 and 41 and paragraph 42(d)

come into operation on 1 January 2009.

(5)

Paragraph 42(c) has effect from 1 January 2009 to 31

December 2011.

(6)

Subparagraph 46(e)(iii) has effect for the year of assessment 2009 and 2010.

(7)

Section 32 has effect for the year of assessment 2010 and subsequent years of assessment.

Amendment of section 2

Section 4

The Income Tax Act 1967, which is referred to as the “principal

Act” in this Chapter, is amended in section 2 by inserting after the definition of “aggregate income” the following definition:

Finance 9

‘ “amended return” means an amended return made in accordance with section 77B;’.

Section 5

Amendment of section 6

(a)

in paragraph (i), by substituting for the words “only for a period of five years commencing from the year of assessment 2007” the words “, in respect of subparagraphs

(a)

and (c) of that Part for a period of three years from the year of assessment 2009 and in respect of subparagraph

(b)

of that Part for a period of five years commencing from the year of assessment 2007”;

(b)

by substituting for the full stop at the end of paragraph (j)

a semicolon; and

(c)

by inserting after paragraph (j) the following paragraph:

“(k) subject to section 109F but notwithstanding any other provisions of this Act, income tax shall be charged for each year of assessment upon the income of a non-resident person charged under paragraph 4(f) at the appropriate rate as specified under Part XIII of Schedule 1.”.

Amendment of section 6A

Section 6

Subsection 6A(2) of the principal Act is amended by substituting for the words “three hundred and fifty” wherever they appear the words

“four hundred”.

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Section 7

Amendment of section 7

Section 7 of the principal Act is amended by inserting after subsection (1A) the following subsection:

“(1B) Notwithstanding subsection (1), where a person who is a citizen and—

(a)

is employed in the public services or service of a statutory authority; and

(b)

is not in Malaysia at any day in the basis year for that particular year of assessment by reason of—

(i)

having and exercising his employment outside

Malaysia; or

(ii)

attending any course of study in any institution or professional body outside Malaysia which is fully-sponsored by the employer, he is deemed to be a resident for the basis year for that particular year of assessment and for any subsequent basis years when he is not in

Malaysia.”.

Amendment of section 15

Section 8

Paragraph 15(a) of the principal Act is amended by substituting for the words “or a State Government” the words “, a State Government or a local authority”.

Section 9

Amendment of section 15A

Subparagraph 15A(i) of the principal Act is amended by substituting for the words “or a State Government” the words “, a State

Government or a local authority”.

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Section 10

New section 15B

The principal Act is amended by inserting after section 15A the following section:

“Derivation of gains or profits in certain cases

Section 15B

Gross income in respect of gains or profits to which paragraph 4(f) applies shall be deemed to be derived from

Malaysia—

(a)

if responsibility for the payment of such gains or profits lies with the Government, a State Government or a local authority;

(b)

if responsibility for the payment of such gains or profits lies with a person who is a resident for that basis year;

or

(c)

if the payment of such gains or profits is charged as an outgoing or expense in the accounts of a business carried on in Malaysia.”.

Amendment of section 25

Section 11

Section 25 of the principal Act is amended—

(a)

in subsection (1), by inserting after the words “subsection

(1A)

” the words “or (2A)”;

(b)

in subsection (2), by substituting for the words “section 3

and subsection (5)” the words “section 3 and subsections

(2A)

and (5)”;

(c)

by inserting after subsection (2) the following subsection:

“(2A) Where gross income from an employment in relation to director’s fee or bonus is receivable in respect of

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the whole or part of the relevant period, that gross income shall, when received in any relevant period, be treated as the gross income of the relevant person for the second mentioned relevant period.”; and

(d)

in subsection (3), by substituting for the words “or (2)” the words “, (2) or (2A)”.

Amendment of section 32

Section 12

Section 32 of the principal Act is amended—

(a)

in subparagraph (1A)(b)(i), by substituting for the words

“Bursa Malaysia” the words “any stock exchange”; and

(b)

by inserting after subsection (3) the following subsection:

“(4) For the purposes of this section, the amount of gross income from the employment mentioned in paragraphs (2)(a), (b) and (3)(c) shall not include the amount of gross income in respect of any right to acquire shares in a company ascertained under subsection (1A).”.

Amendment of section 34

Section 13

Paragraph 34(6)(h) of the principal Act is amended by inserting after the words “housing,” the words “conservation or preservation of environment, enhancement of income of the poor,”.

Section 14

Amendment of section 34A

(a)

in subsection (1)—

Finance 13

(i)

by substituting for the words “research—” the words “research approved by the Minister.”; and

(ii)

by deleting paragraphs (a) and (b);

(b)

in subsection (2), by substituting for the words “paragraph

(1)

(a)

” the words “subsection (1)”; and

(c)

by deleting subsection (3).

Amendment of section 39

Section 15

Paragraph 39(1)(j) of the principal Act is amended by inserting after the words “section 109B” the words “or 109F”.

Section 16

Amendment of section 44

(a)

in subsection (6), by substituting for the proviso the following proviso:

“Provided that the amount to be deducted from the aggregate income for the relevant year in respect of any gift of money made to any institution or organization approved for the purposes of this section by the Director

General shall not exceed—

(a)

in the case of a person other than a company, seven per cent of the aggregate income of that person in the relevant year; or

(b)

in the case of a company, ten per cent of the aggregate income of that company in the relevant year.”;

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(b)

in subsection (11B), by substituting for the proviso the following proviso:

“Provided that the amount to be deducted pursuant to this subsection shall not exceed—

(a)

in the case of a person other than a company, the difference between the amount of seven percent of the aggregate income of that person in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11C)

for that relevant year; or

(b)

in the case of a company, the difference between the amount of ten per cent of the aggregate income of that company in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11C) for that relevant year.”; and

(c)

in subsection (11C), by substituting for the proviso the following proviso:

“Provided that the amount to be deducted pursuant to this subsection shall not exceed—

(a)

in the case of a person other than a company, the difference between the amount of seven percent of the aggregate income of that person in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11B)

for that relevant year; or

(b)

in the case of a company, the difference between the amount of ten per cent of the aggregate income of that company in the relevant year and the total amount that has been deducted pursuant to the proviso to subsections (6) and (11B) for that relevant year.”.

Finance 15

Amendment of section 44A

Section 17

Subsection 44A(1) of the principal Act is amended by substituting for the words “fifty per cent” the words “seventy per cent”.

Section 18

Amendment of section 53

(a)

by substituting for subsection (3) the following subsection:

“(3) In this section, “trade association” means any association of persons, of partnerships or of persons and partnerships formed with the main object of—

(a)

safeguarding or promoting the business of its members; or

(b)

developing and advancing the profession of its members.”; and

(b)

by inserting after subsection (3) the following subsection:

“(4) Notwithstanding any other provisions of this Act, a trade association shall, for the purposes of this section, be deemed to be a body of persons and not a partnership.”.

New section 53A

Section 19

The principal Act is amended by inserting after section 53 the following section:

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“Club, association or similar institution

Section 53A

(2)

Any income of the body of persons from transaction with members and any outgoing or expenses or capital allowances attributable to such income shall be disregarded for the purpose of this Act.

(3)

The gross income of a body of persons for the basis period for the year of assessment shall include the amount of gross income for that period from the investment made out of any of the fund of the body of persons.

(4)

The body of persons shall maintain a separate account in respect of income derived from its members and non-members.

(5)

Where the amount of outgoing or expenses to be allowed or capital allowances to be made to the body of persons are common to income from transaction with members and non-members, the amount of outgoing or expenses that shall be allowed or capital allowances that shall be made to that body of persons in respect of income relating to transaction with non-members shall be an amount as determined by applying the method as may be prescribed under this Act.

(6)

In this section, “members”, in relation to a body of persons, means those persons who are entitled to vote at a general meeting of the body at which effective control is exercised over its affairs.”.

Amendment of section 54A

Section 20

Section 54A of the principal Act is amended—

(a)

by inserting after subsection (1) the following subsection:

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“(1A) Where subsection (1) applies, a person who is entitled to an allowance under Schedule 3 and who has not made any claim under paragraph 77 of that Schedule in respect of such allowance, the amount of such allowance shall be deemed to have been made to him for the purpose of ascertaining his statutory income under subsection (1).”; and

(b)

in paragraph (2)(a), by inserting after the words “capital allowances claimed” the words “or deemed to have been made under subsection (1A)”.

New section 77B

Section 21

The principal Act is amended by inserting after section 77A the following section:

“Amendment of return

Section 77B

(2)

An amended return under subsection (1) shall only be made after the due date for the furnishing of the return in accordance with subsection 77(1) or 77A(1), but not later than six months from that date.

(3)

For the purposes of this section, the amended return shall—

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(a)

specify the amount or additional amount of chargeable income and the amount of tax or additional tax payable on that chargeable income;

(b)

specify the amount of tax payable on the tax which has or would have been wrongly repaid to him;

(c)

specify the increased sum ascertained in accordance with subsection (4); or

(d)

contain such particulars as may be required by the

Director General.

(4)

The tax or additional tax payable under subsection (1)

shall—

(a)

if the amended return is furnished within a period of sixty days after the due date for the furnishing of the return in accordance with subsection 77(1) or 77A(1), be increased by a sum equal to ten per cent of the amount of such tax or additional tax; or

(b)

if the amended return is furnished after the period of sixty days from the due date for the furnishing of the return in accordance with subsection 77(1) or 77A(1)

but not later than six months from that date, be increased by a sum which shall be determined in accordance with the following formula:

B + [(A + B) x 5%]

where A is the amount of such tax payable or additional tax payable; and

B is ten per cent of the amount of such tax payable or additional tax payable, and the amount of the increased sum shall constitute part of the amount of tax or additional tax payable under subsection (1).

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(5)

The amendment under subsection (1) shall only be made once.

(6)

Where—

(a)

a return for a year of assessment has been furnished in accordance with subsection 77(1) or 77A(1); and

(b)

the Director General has made an assessment for that year of assessment under section 91, no amendment shall be allowed under this section.”.

New section 91A

Section 22

The principal Act is amended by inserting after section 91 the following section:

“Deemed assessment on the amended return

Section 91A

(a)

in the amount of tax or additional tax payable on the chargeable income; or

(b)

in the amount of tax which has been or would have been wrongly repaid, the tax or additional tax and the chargeable income being the respective amounts as specified in the amended return.

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(2)

For the purpose of this Act, where the Director General is deemed to have made an assessment or additional assessment under subsection (1)—

(a)

the amended return referred to in that subsection shall be deemed to be a notice of assessment or additional assessment; and

(b)

the deemed notice of assessment or additional assessment shall be deemed to have been served on the person on the day on which the Director General is deemed to have made the assessment or additional assessment.”.

Amendment of section 93

Section 23

Section 93 of the principal Act is amended by substituting for the words “subsection 90(1)” the words “subsections 90(1) and 91A(1)”.

Section 24

Amendment of section 96

Subsection 96(1) of the principal Act is amended by substituting for the words “subsection 90(1)” the words “subsections 90(1)

and 91A(1)”.

Section 25

New section 97A

The principal Act is amended by inserting after section 97 the following section:

“Notification of non-chargeability

Section 97A

(2)

Where a person is dissatisfied with the notification made by the Director General under subsection (1), he may within thirty days from the date of being so notified, appeal to the Special Commissioners as if the notification were a notice of assessment and the provisions of this Act relating to appeals shall apply accordingly with such necessary modifications.

(3)

If no notice of appeal against a notification made by the

Director General under subsection (1) has been given within the time specified under that subsection or any extended period thereof, the notification shall be final and conclusive for the purposes of this Act.

(4)

Nothing in this section shall prejudice the exercise of any power conferred on the Director General by section 91.”.

Amendment of section 98

Section 26

Subsection 98(3) of the principal Act is amended by substituting for the words “one of those persons to be the Chairman” the words

“from amongst those persons a Chairman and such number of Deputy

Chairman”.

Section 27

Amendment of section 103

(a)

by inserting after subsection (1) the following subsections:

“(1A) Where an assessment or additional assessment has been made under section 91A, the tax or additional tax payable under the assessment shall be due and payable on the day the amended return is furnished

22 Laws of Malaysia ACT 693

whether or not that person appeals against the assessment or additional assessment:

Provided that where the amended return is furnished within a period of sixty days after the due date and the amount of tax due and payable has not been paid within the period of sixty days from the due date, so much of the tax as is unpaid upon the expiration of that period shall without any further notice being served be further increased by a sum equal to five per cent of the tax so unpaid, and that sum shall be recoverable as if it were tax due and payable under this Act.”; and

(b)

in subsection (9), by inserting after the words “sum under subsection” the words “(1A),”.

Amendment of section 104

Section 28

Section 104 of the principal Act is amended—

(a)

in paragraph (1)(b), by substituting for the words “103(3),

(4)

, (5), (6), (7) or (8)” the words “103(1A), (3), (4), (5),

(6)

, (7) or (8), or subsection 107B(4) or 107C(10)”;

(b)

in paragraph (1)(c), by substituting for the words “or 109B(2),” the words “, 109B(2) or 109F(2),”; and

(c)

in subsection (6)—

(i)

by substituting for the full stop at the end of the definition of “immigration officer” a semicolon;

and

(ii)

by inserting after the definition of “immigration officer” the following definition:

‘ “person” includes any person who is a director within the meaning of section 75A.’.

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Amendment of section 106

Section 29

Subsection 106(3) of the principal Act is amended by substituting for the words “subsection 103(3)” the words “subsection 103(1A), (3)”.

Section 30

Amendment of section 107A

Section 107A of the principal Act is amended by inserting after subsection (4) the following subsection:

“(4A) Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (1) is increased by a sum under subsection (2), the Director General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the

Director General shall repay the same.”.

Section 31

Amendment of section 107B

Section 107B of the principal Act is amended by inserting after subsection (5) the following subsection:

“(6) Notwithstanding the foregoing subsections, where the amount of instalments unpaid or the amount of the difference in tax is increased by a sum under subsection (3) or (4), as the case may be, the Director General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay the same.”.

Section 32

Amendment of section 107C

(a)

in subsection (4A), by substituting for the words “Where a company” the words “Subject to subsections (4B) and (4C), where a company”;

24 Laws of Malaysia ACT 693

(b)

by inserting after subsection (4A) the following subsections:

“(4B) The provision of subsection (4A) shall not apply to a company referred to in that subsection if more than—

(a)

fifty per cent of the paid up capital in respect of ordinary shares of the company is directly or indirectly owned by a related company;

(b)

fifty per cent of the paid up capital in respect of ordinary shares of the related company is directly or indirectly owned by the first mentioned company; or

(c)

fifty per cent of the paid up capital in respect of ordinary shares of the first mentioned company and the related company is directly or indirectly owned by another company.

(4C)

For the purpose of subsection (4B), “related company” means a company which has a paid up capital in respect of ordinary shares of more than two million and five hundred thousand ringgit at the beginning of the basis period for a year of assessment.”;

(c)

in subsection (8), by inserting after the word “(7)” the words “but subject to subsection (8A)”; and

(d)

by inserting after subsection (8) the following subsection:

“(8A) Where the Director General directs a company to make payment by instalments under subsection (8)

before the sixth month of the basis period for a year of assessment of that company, the total amount of that instalments shall be deemed for the purpose of this section to be the estimate of tax payable by that company for that year of assessment:

Finance 25

Provided that, subject to any revision under subsection (7), that instalments shall be payable in accordance with subsections (8) and (9).

(8B)

Where subsection (8A) applies and for a year of assessment, a company has furnished a revised estimate under subsection (7), reference to the amount of instalments which is payable in subsection (7) shall be construed as reference to the amount of instalments which is payable under subsection (8) prior to the revised estimate.”.

Amendment of section 109

Section 33

Section 109 of the principal Act is amended—

(a)

in subsection (1), by substituting for the proviso the following proviso:

“Provided that the Director General may under special circumstances allow extension of time for tax deducted to be paid over.”; and

(b)

by inserting after subsection (3) the following subsection:

“(3A) Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (1) is increased by a sum under subsection (2), the Director

General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay the same.”.

Amendment of section 109B

Section 34

Section 109B of the principal Act is amended—

26 Laws of Malaysia ACT 693

(a)

in subsection (1), by substituting for the proviso to that subsection the following proviso:

“Provided that the Director General may under special circumstances allow extension of time for tax deducted to be paid over.”; and

(b)

by inserting after subsection (3) the following subsection:

“(3A) Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (1)

is increased by a sum under subsection (2), the Director

General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay the same.”.

Amendment of section 109D

Section 35

Section 109D of the principal Act is amended—

(a)

in subsection (2), by substituting for the proviso the following proviso:

“Provided that the Director General may under special circumstances allow extension of time for tax deducted to be paid over.”; and

(b)

by inserting after subsection (4) the following subsection:

“(4A) Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (2)

is increased by a sum under subsection (3), the Director

General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay the same.”.

Finance 27

Amendment of section 109E

Section 36

Section 109E of the principal Act is amended—

(a)

by substituting for subsection (3) the following subsection:

“(3) The Director General may in relation to subsection (2) under special circumstances allow extension of time for the amount of tax deducted to be paid over.”; and

(b)

by inserting after subsection (6) the following subsection:

“(7) Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (2) is increased by a sum under subsection (4), the Director General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director

General shall repay the same.”.

New section 109F

Section 37

The principal Act is amended by inserting after section 109E the following section:

“Deduction of tax from gains or profits in certain cases derived from Malaysia

Section 109F

(2)

Where the payer fails to pay any amount due from him under subsection (1), the amount which he fails to pay shall be increased by a sum equal to ten per cent of the amount which he fails to pay, and that amount and the increased sum shall be a debt due from him to the Government and shall be payable forthwith to the Director General.

(3)

Where in pursuance of this section any amount is paid to the Director General by the payer or recovered by the

Director General from the payer—

(a)

the Director General shall, in the manner provided by section 110, apply that amount towards payment of the tax charged on the person to whom the payer was liable to pay the payments to which the amount relates; and

(b)

if the payer has not deducted that amount in paying the payment under subsection (1) with respect to which the amount relates, he may recover that amount from that person as a debt due to the payer.

(4)

Notwithstanding the foregoing subsections, where the amount due from the payer under subsection (1) is increased by a sum under subsection (2), the Director General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay the same.

(5)

Section 110 shall apply mutatis mutandis to tax deducted under this section.”.

Finance 29

Deletion of section 130

Section 38

The principal Act is amended by deleting section 130.

Section 39

New section 138C

The principal Act is amended by inserting after section 138B the following section:

“Advance Pricing Arrangement

Section 138C

(a)

the Director General may enter into an advance pricing arrangement with that person; or

(b)

in the case where section 132 applies, the competent authorities may enter into an advance pricing arrangement, in order to determine the transfer pricing methodology to be used in any future apportionment or allocation of income or deduction to ensure the arm’s length transfer prices in relation to that transaction.

(2)

An application under subsection (1) shall be made in the prescribed form and shall contain particulars as may be required by the Director General.

(3)

The transactions referred to in subsection (1) shall be construed as a transaction between—

(a)

persons one of whom has control over the other;

(b)

individuals who are relatives of each other; or

30 Laws of Malaysia ACT 693

(c)

persons both of whom are controlled by some other person.

(4)

In this section, “relative” and “transaction” have the same meanings assigned to them under subsection 140(8).”.

New section 140A

Section 40

The principal Act is amended by inserting after section 140 the following section:

“Power to substitute the price and disallowance of interest on certain transactions

Section 140A

(2)

Subject to subsections (3) and (4), where a person in the basis period for a year of assessment enters into a transaction with an associated person for that year for the acquisition or supply of property or services, then, for all purposes of this

Act, that person shall determine and apply the arm’s length price for such acquisition or supply.

(3)

Where the Director General has reason to believe that any property or services referred to in subsection (2) is acquired or supplied at a price which is either less than or greater than the price which it might have been expected to fetch if the parties to the transaction had been independent persons dealing at arm’s length, he may in determination of the gross income, adjusted income or adjusted loss, statutory income, total income or chargeable income of the person, substitute the price in respect of the transaction to reflect an arm’s length price for the transaction.

(4)

Where the Director General, having regard to the circumstances of the case, is of the opinion that in the basis period for a year of assessment the value or aggregate of all

Finance 31

financial assistance granted by a person to an associated person who is a resident, is excessive in relation to the fixed capital of such person, any interest, finance charge, other consideration payable for or losses suffered in respect of the financial assistance shall, to the extent to which it relates to the amount which is excessive, be disallowed as a deduction for the purposes of this Act.

(5)

The transactions or the financial assistance referred to in subsection (2) or (4) respectively, shall be construed as a transaction or financial assistance between—

(a)

persons one of whom has control over the other;

(b)

individuals who are relatives of each other; or

(c)

persons both of whom are controlled by some other person.

(6)

In this section, “relative” and “transaction” have the same meanings assigned to them under subsection 140(8).”.

Amendment of section 154

Section 41

Subsection 154(1) of the principal Act is amended—

(a)

in paragraph (eb), by inserting after the words “or 138B”

the words “, or to any arrangement under section 138C”;

and

(b)

by inserting after paragraph (ec) the following paragraph:

“(ed) implementing and facilitating the operation of section 140A;”.

32 Laws of Malaysia ACT 693

Amendment of Schedule 1

Section 42

Schedule 1 to the principal Act is amended—

(a)

in Part 1—

(i)

by substituting for paragraph 1 the following paragraph:

“1. Except where paragraphs 1A, 2, 2A and 3 provide otherwise, income tax shall be charged for a year of assessment upon the chargeable income of every person at the following rates:

Chargeable Income

RM

Rate of Income Tax

For every ringgit of the first 2,500 0 per cent

For every ringgit of the next 2,500 1 per cent

For every ringgit of the next 15,000 3 per cent

For every ringgit of the next 15,000 7 per cent

For every ringgit of the next 15,000 12 per cent

For every ringgit of the next 20,000 19 per cent

For every ringgit of the next 30,000 24 per cent

For every ringgit exceeding 100,000 27 per cent”;

(ii)

in paragraph 1A, by substituting for the words “28

per cent” the words “27 per cent”;

(iii)

in paragraph 2A, by substituting for the words

“paragraph 3” the words “paragraphs 2B, 2C and 3”;and

Finance 33

(iv)

by inserting after paragraph 2A the following paragraphs:

“2B. The provisions of paragraph 2A shall not apply to a company referred to in that paragraph if more than–

(a)

fifty per cent of the paid up capital in respect of ordinary shares of the company is directly or indirectly owned by a related company;

(b)

fifty per cent of the paid up capital in respect of ordinary shares of the related company is directly or indirectly owned by the first mentioned company; or

(c)

fifty per cent of the paid up capital in respect of ordinary shares of the first mentioned company and the related company is directly or indirectly owned by another company.

Section 2C

For the purpose of paragraph 2B, “related company” means a company which has a paid up capital in respect of ordinary shares of more than two million and five hundred thousand ringgit at the beginning of the basis period for a year of assessment.”;

(b)

in Part IV, in column “Rate of income tax”—

(i)

by substituting for the words “3 per cent” the words “2 per cent”; and

(ii)

by substituting for the words “28 per cent” the words “27 per cent”;

(c)

in Part X—

(i)

in subparagraph 1(a), by substituting for the words

“15%” the words “10%”; and

(ii)

in subparagraph 1(c), by substituting for the words

“20%” the words “10%”; and

(d)

by inserting after Part XII the following Part:

34 Laws of Malaysia ACT 693

Notwithstanding Parts I and II but subject to Parts X, XI and XII, income tax shall be charged on the income of a non-resident person consisting of gains or profits falling under paragraph 4(f) which is derived from Mal...

Amendment of Schedule 3

Section 43

Schedule 3 to the principal Act is amended—

(a)

by inserting after paragraph 2C the following paragraph:

“2D. For the purpose of paragraph 1, the capital expenditure incurred by a person on the provision of machinery or plant shall not include any amount paid to a non-resident person in consideration of services rendered in connection with the installation or operation of that machinery or plant, if tax has not been deducted therefrom and paid to the Director General under paragraph 109B(1)(a) of the Act:

Provided that this paragraph shall not apply if the person has paid the amount referred to in subsection 109B(2).”;

(b)

by inserting after subparagraph 19A(2) the following subparagraphs:

“(3) The proviso to subparagraph (1) shall not apply to a company resident in Malaysia which has a paid up capital in respect of ordinary shares of two million and five hundred thousand ringgit and less at the beginning of the basis period for a year of assessment.

(4)

A company referred to in subparagraph (3) shall not include a company where more than—

(a)

fifty per cent of the paid up capital in respect of ordinary shares of the second mentioned company is directly or indirectly owned by a related company;

(b)

fifty per cent of the paid up capital in respect of ordinary shares of the related company is directly or indirectly owned by the second mentioned company; or

Finance 35

(c)

fifty per cent of the paid up capital in respect of ordinary shares of the second mentioned company and the related company is directly or indirectly owned by another company.

(5)

For the purpose of subparagraph (4), “related company” means a company which has a paid up capital in respect of ordinary shares of more than two million and five hundred thousand ringgit at the beginning of the basis period for a year of assessment.”;

(c)

in paragraph 36—

(i)

by substituting for the full stop at the end of the paragraph a colon; and

(ii)

by inserting the following proviso:

“Provided that this paragraph shall not apply in respect of any amount incurred under paragraph 67C.”;

(d)

in the title before paragraph 37B, by deleting the words “or training”;

(e)

in paragraph 37B—

(i)

by deleting the words “, industrial training or training”;

(ii)

by substituting for the colon a full stop;

(iii)

by deleting the proviso;

(iv)

in subparagraph (a), by inserting after the semi colon the word “or”; and

(v)

by deleting subparagraphs (b) and (d); and

(f)

by inserting after paragraph 67B the following paragraph:

“67C. (1) For the purpose of this Schedule, where—

36 Laws of Malaysia ACT 693

(a)

a person has incurred qualifying plant expenditure in respect of an asset for the purposes of a business of his and in the basis period for a year of assessment the asset is disposed of; and

(b)

pursuant to any written law or agreement, that person is subsequently required to dismantle and remove the asset and restore the site on which the asset is located, the residual expenditure under paragraph 68 of this Schedule shall be deemed to include any amount incurred for dismantling and removing the asset and restoring the site.

(2)

Notwithstanding paragraph 61, in this paragraph “disposed of” means discarded, destroyed or ceased to be used for the purposes of the business.

(3)

This paragraph shall not apply if the asset which has been dismantled and removed is subsequently used for any other business of that person or any other person.

(4)

The amount incurred in subparagraph (1) shall not include any amount paid to a non-resident which are subject to section 109B, if tax has not been deducted therefrom and paid to the Director

General under that section:

Provided that this paragraph shall not apply if the person has paid the amount referred to in subsection 109B(2).”.

Amendment of Schedule 5

Section 44

Paragraph 1 of Schedule 5 to the principal Act is amended—

(a)

in subparagraph (2), by inserting after the word

“Chairman” the words “or Deputy Chairman”;

(b)

by substituting for subparagraph (3) the following subparagraph:

“(3) Two or more hearing of appeals may be heard concurrently at any one time.”; and

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(c)

by inserting after subparagraph (3) the following subparagraph:

“(4) If the Chairman or Deputy Chairman has not been appointed or is not present at the hearing of the appeals, the Special

Commissioners present at the hearing of the appeals shall choose one of their number, who shall be a person with experience of the kind mentioned in subparagraph (1), to preside at the hearing.”.

Amendment of Schedule 6

Section 45

Schedule 6 to the principal Act is amended—

(a)

in paragraph 25C—

(i)

by substituting for the words “or service excellence award” the words “, service excellence, innovation or productivity award”; and

(ii)

by substituting for the words “one thousand ringgit”

the words “two thousand ringgit”; and

(b)

in subparagraph 28(1), by substituting for the words

“Without prejudice to the provisions of section 130, income of” the words “Income of”.

Amendment of Schedule 7A

Section 46

Schedule 7A to the principal Act is amended—

(a)

by substituting for the words “twelve months” wherever they appear in paragraphs 1, 1A and 1C the words “thirty-six months”;

(b)

by substituting for paragraph 1B the following paragraph:

“1B. (1) Where a company has incurred capital expenditure in respect of an asset for the purposes of a qualifying project and that asset is acquired by a person (in this paragraph referred to as “the acquirer”)

38 Laws of Malaysia ACT 693

from that company or from any other person (in this paragraph referred to as “the disposer”) and at the time of the acquisition—

(a)

the disposer of the asset is a person over whom the acquirer of the asset has control;

(b)

the acquirer of the asset is a person over whom the disposer of the asset has control;

(c)

some other person has control directly or indirectly over the disposer and acquirer of the asset; or

(d)

the acquisition is effected in consequence of a scheme of reconstruction or amalgamation of companies, this Schedule shall not apply to the acquirer in respect of the asset.

(2)

In this paragraph—

“asset” means a factory, plant or machinery referred to in paragraph 1, or plant, machinery or building referred to in the definition of “capital expenditure” in paragraph 9;

“control”, in relation to a company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first mentioned company are conducted in accordance with the wishes of that person.”;

(c)

in paragraph 2A, by substituting for the words “two years”

the words “five years”;

(d)

by substituting for subparagraph 7(b) the following subparagraph:

“(b) for the period prescribed under the relevant provisions of the

Promotion of Investments Act 1986 in respect of a promoted activity or promoted product for which the company has been granted approval for investment tax allowance under the relevant provisions of that Act;”;

(e)

in paragraph 8—

Finance 39

(i)

in subparagraph (a), by deleting the words “or processing”;

(ii)

by deleting subparagraph (b);

(iii)

by substituting for subparagraph (d) the following subparagraph:

“(d) a project undertaken by a person—

(i)

in transforming his business of rearing chicken and ducks from an opened house to a closed house system; or

(ii)

in expanding his existing business of rearing chicken and ducks in a closed house system, as verified by the Minister responsible for agriculture and agro-based industry.”;

(f)

in paragraph 9—

(i)

by inserting after the definition of “incurred” the following definition:

‘ “manufacturing” means—

(a)

conversion by manual or mechanical means of organic or inorganic materials into a new product by changing the size, shape, composition, nature or quality of such materials;

(b)

assembly of parts into a piece of machinery or products; or

(c)

mixing of materials by a chemical reaction process including biochemical process that changes the structure of a molecule by the breaking of the intra molecular bonds or by altering the spatial arrangement of atom in the molecule, but does not include—

40 Laws of Malaysia ACT 693

(aa) the installation of machinery or equipment for the purpose of construction;

(bb) a simple packaging operations such as bottling, placing in boxes, bags and cases;

(cc)

a simple fixing;

(dd)

a simple mixing of any products;

(ee)

a simple assembly of parts;

(ff)

any activity to ensure the preservation of products in good condition during transportation and storage;

(gg) any activity to facilitate shipment and transportation;

(hh) any activity of packaging or presenting goods for sale; or

(ii)

any activity that may be prescribed by the

Minister, notwithstanding the above interpretation;’;

(ii)

by substituting for the full stop at the end of the definition of “operation” a semicolon; and

(iii)

by inserting after the definition of “operation” the following definition:

‘ “simple” generally describes an activity which does not need special skills, machines, apparatus or equipment especially produced or installed for carrying out the activity.’; and

(g)

in paragraph 11, by substituting for the words “twelve months” wherever they appear the words “thirty-six months”.

Finance 41

SAVINGS AND TRANSITIONAL PROVISIONS

Application of this Part

Section 47

(2)

Where there is any inconsistency between any provision of this

Part and any provision of the principal Act, that provision of the principal Act shall be void to the extent of the inconsistency.

Statement to Director General

Section 48

(2)

The failure of a company to comply with subsection (1) shall be an offence under subsection 120(1) of the principal Act.

(3)

A statement under this section may be furnished to the Director

General in accordance with section 152A of the principal Act.

(4)

Where in relation to a year of assessment 2008, 2009, 2010,

2011, 2012, 2013 or 2014 a company fails to render a statement in accordance with this section or section 45 of the Finance Act 2007 the

Director General may compute the amount of excess referred to in section 48 of the Finance Act 2007 or section 49 and shall serve on the

42 Laws of Malaysia ACT 693

company a written requisition in the prescribed form calling upon the company to pay an amount equal to that excess and an amount of an increase not exceeding the amount equal to that excess, and the amount equal to that excess and the increase on that amount shall be a debt due from the company to the Goverment and that debt shall be payable forthwith to the Director General upon the service of the requisition.

(5)

Any debt due under this section shall be recoverable as if it were tax due and payable under the principal Act.

Amount in excess of 108 balance

Section 49

(2)

Where any amount of debt due and payable under subsection

(1)

has not been paid by the due date, the amount of debt unpaid shall, without any further notice being served, be increased by an amount equal to ten per cent of the debt so unpaid, and the amount unpaid and the increase on amount unpaid shall be a debt due from the company to the Government and that debt shall be payable immediately to the

Director General.

(3)

This section shall apply where no dividend is paid pursuant to section 40 of the Finance Act 2007.

(4)

This section shall apply notwithstanding the company has exercised an irrevocable option under section 50 of the Finance Act 2007.

(5)

Any debt due under this section shall be recoverable as if it were tax due and payable under the principal Act.

Finance 43

Set-off for tax deducted

Section 50

A person is not entitled to a set-off in accordance with section 51

of the Finance Act 2007 if the dividend paid to that person is not paid in cash.

AMENDMENTS TO THE STAMP ACT 1949

Commencement of amendments to the Stamp Act 1949

Section 51

This Chapter comes into operation on 1 January 2009.

Section 52

Amendment of section 2

The Stamp Act 1949, which is referred to as the “principal Act”

in this Chapter, is amended in section 2—

(a)

in the definition of “duly stamped”, by substituting for the proviso the following proviso:

“Provided that a stamp certificate or official receipt for the proper amount or amount of initial duty may be attached or affixed to any instrument in lieu of the stamp, and the instrument shall be deemed to be duly stamped;”; and

(b)

by inserting after the definition of “small and medium enterprise” the following definition:

‘ “stamp certificate” means a certificate that is issued electronically in respect of any instrument chargeable with duty denoting the amount of duty paid in respect of that instrument;’.

44 Laws of Malaysia ACT 693

Amendment of section 7

Section 53

Section 7 of the principal Act is amended by substituting for subsection (1) the following subsection:

“(1) Subject to any rules made under paragraph 82(b), all duties with which any instruments are chargeable under this Act shall be paid, and payment shall be indicated on such instrument by—

(a)

means of an adhesive stamp;

(b)

affixing an official receipt to such instrument; or

(c)

attaching a stamp certificate to such instrument.”.

New section 11A

Section 54

The principal Act is amended by inserting after section 11 the following section:

“Replica

Section 11A

(2)

For the purpose of subsection (1), the Collector shall indorse on the replicate of the instrument that full and proper duty with which the original is chargeable had been paid upon payment of a fee of one hundred ringgit for each replicate of an instrument.”.

Finance 45

Amendment of section 12

Section 55

The principal Act is amended by substituting for section 12 the following section:

“12. The duplicate or counterpart of an instrument chargeable with duty (except the counterpart of an instrument chargeable as a lease, such counterpart not being executed by or on behalf of any lessor or grantor) shall not be deemed to be duly stamped unless—

(a)

it is stamped as an original instrument;

(b)

it appears by a certificate indorsed by the Collector on the duplicate or counterpart that full and proper duty has been paid on the original instrument; or

(c)

there is denoted on the stamp certificate issued for the duplicate or counterpart that payment of the stamp duty has been paid in respect of the original instrument.”.

Amendment of section 36

Section 56

Section 36 of the principal Act is amended by substituting for subsection (1) the following subsection:

“(1) All instruments chargeable with duty and executed by any person in Malaysia (except an instrument which by virtue of section 47 cannot be stamped after execution) shall be brought to the Collector and the Collector shall assess the duty, if any, with which in his judgment the instrument is chargeable.”.

Section 57

Amendment of section 37

46 Laws of Malaysia ACT 693

(a)

in subsection (1), by deleting the words “is in his opinion one of a description chargeable with duty,”;

(b)

in subsection (2), by deleting the words “in his opinion”;

and

(c)

by inserting after subsection (4) the following subsection:

“(5) This section shall only apply to instrument where indorsement is required to be made on that instrument pursuant to any written law.”.

Amendment of section 40

Section 58

Section 40 of the principal Act is amended by substituting for the words “When the opinion of the Collector with respect to the amount of duty with which an instrument is chargeable has been required” the words “Where an instrument is brought to the Collector pursuant to subsection 36(1)”.

Section 59

Amendment of section 48

The principal Act is amended by substituting for section 48 the following section:

“48. The payment of any penalty prescribed under section 43

or 47A shall be denoted on the instrument concerned—

(a)

by a stamp duly cancelled;

(b)

by means of an impressed stamp;

(c)

by affixing an official receipt to the instrument; or

(d)

by attaching a stamp certificate to the instrument, and shall be certified by the Collector.”.

Finance 47

New section 50A

Section 60

The principal Act is amended by inserting after section 50 the following section:

“Error in assessment, etc.

Section 50A

No assessment shall be affected by—

(a)

any erroneous or under assessment of the duty or penalty by the Collector; or

(b)

the failure to assess that duty or penalty by the Collector, and the correct amount of duty or penalty due on the instrument shall be debts due to the Government and shall be recoverable by any of the ways and means in force for the time being for the recovery of debts due to the Government.”.

Amendment of section 57

Section 61

Section 57 of the principal Act is amended—

(a)

in paragraph (f)—

(i)

by substituting for the colon at the end of subparagraph (v) a semicolon; and

(ii)

by inserting after subparagraph (v) the following subparagraph:

“(vi) in the case of an instrument executed by any party implementing a sale under a duly stamped agreement for sale and purchase but afterwards became cancelled, annulled, rescinded or is otherwise not performed:”;

and

48 Laws of Malaysia ACT 693

(b)

in the proviso, by inserting after paragraph (a) the following paragraph:

“(aa) that the application for relief is made within two months from the date the instrument of transfer is rejected by the Registrar of Titles; or”.

Amendment of section 59A

Section 62

Section 59A of the principal Act is amended by inserting after the words “official receipt” the words “or a stamp certificate”.

Section 63

New sections 77A and 77B

The principal Act is amended by inserting after section 77 the following sections:

“Electronic medium

Section 77A

(a)

to obtain an assessment of stamp duty and any penalty, if any, on an instrument;

(b)

to pay stamp duty and any penalty, if any, on an instrument by electronic funds transfer or otherwise, in accordance with the assessment;

(c)

to obtain a stamp certificate in relation to the assessment; or

(d)

to obtain an indorsement of stamp duty in a case where section 37 applies.

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(2)

In this section, “registered person” means any person who applies to the Collector to register to use the electronic medium.

(3)

All conditions and specifications relating to the use of electronic medium shall be determined by the Collector.

Electronic assessment and stamping of instruments

Section 77B

(2)

A registered person must, on receipt of a stamp certificate issued for the instrument by the Collector, immediately attach the stamp certificate to the instrument.”.

Amendment of section 82

Section 64

Section 82 of the principal Act is amended by inserting after paragraph (a) the following paragraph:

“(aa) to prescribe the stamp certificate and official receipt to be issued under this Act for the payment of stamp duty, to provide for matters relating to issue and validity of the stamp certificate and official receipt;”.

Section 65

Amendment of First Schedule

The First Schedule to the principal Act is amended by substituting for item 22(1) the following item:

Item

Description of Instrument

Proper Stamp Duty

“22

BOND,

COVENANT,

LOAN,

SERVICES, EQUIPMENT LEASE

50 Laws of Malaysia ACT 693

Item

Description of Instrument

Proper Stamp Duty

AGREEMENT OR INSTR UMENT of any kind whatsoever:

(1)

(a)

being the only or principal or primary security for any annuity

(except upon the original creation thereof by way of sale or security, and except a superannuation annuity), for the term of life or any other indefinite period for every RM100 and also for any fractional part of

RM100 of the annuity or sum periodically payable

RM1.00

(b)

for any sum or sums of money, not being interest for any principal sum secured by a duly stamped instrument, nor rent reserved by a lease or tack.

The same ad valorem duty as a charge or mortgage for such total amount.”.

AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967

Commencement of amendments to the Petroleum (Income Tax)

Act 1967

Section 66

This Chapter has effect for the year of assessment 2010 and subsequent years of assessment.

Section 67

Amendment of section 16

The Petroleum (Income Tax) Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in subsection 16(7B) by

Finance 51

inserting after the words “housing,” the words “conservation or preservation of environment, enhancement of income of the poor,”.

Section 68

New section 41A

The principal Act is amended by inserting after section 41 the following section:

“Notification of non-chargeability

Section 41A

(2)

Where a chargeable person is dissatisfied with the notification made by the Director General under subsection (1), he may within thirty days of being so notified, appeal to the

Special Commissioners as if the notification were a notice of assessment and the provisions of this Act relating to appeals shall apply accordingly with such necessary modifications.

(3)

If no notice of appeal against a notification made by the

Director General under subsection (1) has been given within the time specified under that subsection or any extended period thereof, the notification shall be final and conclusive for the purposes of this Act.

(4)

Nothing in this section shall prejudice the exercise of any power conferred on the Director General by section 39.”.

52 Laws of Malaysia ACT 693

Amendment of Second Schedule

Section 69

The Second Schedule to the principal Act is amended by inserting after paragraph 2 the following paragraph:

“2A. For the purpose of paragraph 1, the capital expenditure incurred by a chargeable person on the provision of machinery or plant shall not include any amount paid to a non-resident person in consideration of services rendered in connection with the installation or operation of that machinery or plant which tax is deductible under the provision of the law for the time being in force in

Malaysia relating to income tax, if tax has not been deducted therefrom and paid to the Director General in accordance therewith:

Provided that this paragraph shall not apply if the chargeable person has paid the amount of deduction of tax and the increased amount which equal to ten per cent of that deduction which are due and payable under the provisions of that law.”.

Section 70

Amendment of Third Schedule

(a)

in subparagraph (2), by inserting after the word

“Chairman” the words “or Deputy Chairman”;

(b)

by substituting for subparagraph (3) the following subparagraph:

“(3) Two or more hearing of appeals may be heard concurrently at any one time.”; and

(c)

by inserting after subparagraph (3) the following subparagraph:

“(4) If the Chairman or Deputy Chairman has not been appointed or is not present at the hearing of the appeals, the Special

Commissioners present at the hearing of the appeals shall choose one of their number, who shall be a person with experience of the kind mentioned in subparagraph (1) to preside at the hearing.”.

Finance 53

AMENDMENT TO THE LABUAN OFFSHORE BUSINESS ACTIVITY

TAX ACT 1990

Commencement of amendment to the Labuan Offshore Business

Activity Tax Act 1990

Section 71

This Chapter is deemed to have effect for the year of assessment 2009 and subsequent years of assessment.

Section 72

Amendment of section 3A

Act 1990 is amended by inserting after the words “the Director

General” the word “within”.

54

Act 693

LIST OF AMENDMENTS

Amending law

Short title

In force from

Act 719

Finance Act 2011

-

09-01-2009

55

Act 693

LIST OF SECTIONS AMENDED

Section

Amending authority

In force from

48

Act 719 09-01-2009

49

Act 719 09-01-2009

*FINANCE ACT 2009

About this act

CHAPTER I

CHAPTER II

PART I

(2)

(3)

(4)

(5)

(6)

(7)

(a)

(a)

(b)

(b)

(c)

(a)

(b)

(i)

(ii)

(a)

(b)

(c)

(a)

(1A)

(b)

(2A)

(c)

(d)

(a)

(b)

(a)

(i)

(ii)

(b)

(1)

(c)

(a)

(a)

(b)

(b)

(a)

(b)

(c)

(a)

(b)

(a)

(a)

(b)

(b)

(2)

(3)

(4)

(5)

(6)

(a)

(b)

(2)

(3)

(a)

(b)

(c)

(d)

(4)

(a)

(b)

(5)

(6)

(a)

(b)

(a)

(b)

(2)

(a)

(b)

(2)

(3)

(4)

(a)

(b)