Finance Act 2017

Section 5 and subparagraph 10(a)(i) are deemed to have effect from the year of assessment 2015.

Sections 12, 13, 20 and 21, subparagraph 27(a)(iii), and paragraphs 27(b) and 29(e) are deemed to have come into operation on 30 June 2013.

Paragraph 7(a) is deemed to have effect from 1 January 2010.

Paragraph 7(b), sections 8 and 9, subparagraphs 10(a)(ii),

, (iv), (v), (vi), (vii) and (viii), paragraph 10(b), sections 11, 14, 15, 16 and 17, and subparagraphs 27(a)(i) and (ii), and paragraphs 29(a), (b), (c), (d), (f), (g) and (h) have effect for the year of assessment 2017 and subsequent years of assessment.

Sections 18 and 25 come into operation on 1 January 2017.

Section 19 has effect for the year of assessment 2019 and subsequent years of assessment.

Paragraph 28(a) is deemed to have effect from the year of assessment 2016.

Amendment of section 2

in the definition of “Malaysia”—

by inserting after the words “subsoil of the territorial waters,” the words “and the airspace above such areas,”; and

Finance 9

by inserting after the words “sovereign rights”

the words “or jurisdiction”;

by substituting for the definition of “public entertainer”

the following definition:

‘ “public entertainer” includes—

a compere, model, circus performer, lecturer, speaker, sportsperson, an artiste or individual exercising any profession, vocation or employment of a similar nature; or

an individual who uses his intellectual, artistic, musical, personal or physical skill or character in, carrying out any activity in connection with any purpose through live, print, electronic, satellite, cable, fibre optic or other medium, for film or tape, or for television or radio broadcast, as the case may be;’; and

by substituting for the definition of “royalty” the following definition:

‘ “royalty” includes any sums paid as consideration for, or derived from—

the use of, or the right to use in respect of, any copyrights, software, artistic or scientific works, patents, designs or models, plans, secret processes or formulae, trademarks or other like property or rights;

the use of, or the right to use, tapes for radio or television broadcasting, motion picture films, films or video tapes or other means of reproduction where such films or tapes have been or are to be used or reproduced in Malaysia, or other like property or rights;

the use of, or the right to use, know-how or information concerning technical, industrial, commercial or scientific knowledge, experience or skill;

10

Act 785

the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by—

satellite; or

cable, fibre optic or similar technology;

the use of, or the right to use, visual images or sounds, or both, in connection with television broadcasting or radio broadcasting, transmitted by—

satellite; or

cable, fibre optic or similar technology;

the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence;

a total or partial forbearance in respect of—

the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or (b)

or any such knowledge, experience or skill as is mentioned in paragraph (c);

the reception of, or the granting of the right to receive, any such visual images or sounds as are mentioned in paragraph (d);

the use of, or the granting of the right to use, any such visual images or sounds as are mentioned in paragraph (e); or

the use of, or the granting of the right to use, some or all such part of the spectrum specified in a spectrum licence as is mentioned in paragraph (f); or

the alienation of any property, know-how or information mentioned in paragraph (a), (b)

or (c) of this definition;’.

Finance 11

Amendment of section 13

by substituting for the colon at the end of subparagraph 15A(iii)

a full stop; and

by deleting the proviso.

Amendment of section 34

by deleting subsections (3A) and (3b); and

in paragraph (6)(k)—

by substituting for the words “Ministry of

Information, Communication and Culture” the words “Minister charged with the responsibility for arts, culture or heritage”; and

in the proviso—

by substituting for the word “five” the word “seven”; and

by substituting for the word “two” the word “three”.

12

Act 785

Amendment of section 44

in subsection (6)—

by inserting after the words “local authority or an institution or organization” the words “or a fund”; and

in the proviso, by substituting for the words “or organization” the words “, organization or fund”;

in subsection (7), by inserting before the definition of

“institution” the following definition:

‘ “fund” means a fund administered and augmented by an institution or organization in Malaysia for the sole purpose of carrying out the objectives for which the fund is established or held and that fund is not established or held primarily for profit;’;

in paragraph (7A)(a)—

by inserting after the word “funds” the words “or that of the fund approved under subsection (6)”;

and

in the proviso, by substituting for the words “or organization” the words “, organization or fund”;

in paragraph (7b)(a), by substituting for the words “or organization” the words “, organization or fund”;

in paragraph (7b)(b), by substituting for the words “or organization” the words “, organization or fund”; and

in subsection (11b), by substituting for the words “or cost of contribution in kind made by the relevant person in the basis period for that year for any sports activity approved by the Minister or to any sports body approved by the Commissioner of Sports appointed under the Sports

Development Act 1997 [Act 576]” the words “made by the relevant person in the basis period for that year for any sports activity approved by the Minister”.

Finance 13

Amendment of section 45a

by renumbering the existing section 45A as subsection 45A(1);

and

by inserting after subsection (1) as renumbered the following subsection:

“(2) This section shall not apply where, in relation to paragraph (1)(b), the husband, other than a husband who is a disabled person, has an income which is derived from sources outside Malaysia and his gross income from those sources for a year of assessment is more than the amount of deduction allowed for a husband.”.

Amendment of section 46

in subsection (1)—

in the proviso to paragraph (h), by substituting for the word “five” the word “six”;

by deleting paragraph (i);

by deleting paragraph (j);

by deleting paragraph (l);

by deleting paragraph (m);

in paragraph (n), by deleting the word “and” at the end of the paragraph;

in paragraph (o), by substituting for the full stop at the end of the paragraph a semicolon; and

14

Act 785

by inserting after paragraph (o) the following paragraphs:

“(p) an amount expended or deemed expended under subsection (3) in that basis year by that individual—

for the purchase of books, journals, magazines, printed newspapers and other similar publications for the purpose of enhancing knowledge for his own use or for the use of his wife or child, or in the case of a wife, for her own use or for the use of her husband or child;

for the purchase of a personal computer, smartphone or tablet

(not being used for the purpose of his own business) for his own use or for the use of his wife or child, or in the case of a wife, for her own use or for the use of her husband or child;

for the purchase of sports equipment for any sports activity as defined under the Sports Development

Act 1997 (excluding motorized two-wheel bicycles) and gym memberships for his own use or for the use of his wife or child, or in the case of a wife, for her own use or for the use of her husband or child; and

for the payment of monthly bill for internet subscription under that individual’s name for his own use or for the use of his wife or child, or in the case of a wife, for her own use or for the use of her husband or child,

Finance 15

as evidenced by receipts issued in respect of the purchase or payment, as the case may be, and the total deduction under this paragraph is subject to a maximum amount of two thousand five hundred ringgit;

an amount limited to a maximum of one thousand ringgit expended in that basis year for that year of assessment by that individual for the purchase of breastfeeding equipment for that individual’s own use for a child of that individual aged two years old and below, as evidenced by receipts issued in respect of the purchase:

Provided that—

for the purpose of this paragraph, breastfeeding equipment refers to a breast pump kit and an ice pack, a breast milk collection and storage equipment, and a cooler set or bag;

the deduction under this paragraph shall not be allowed for a year of assessment immediately following that year of assessment; and

the maximum amount of deduction under this paragraph shall apply notwithstanding that that individual may have more than one child; and

an amount limited to a maximum of one thousand ringgit expended or deemed expended under subsection (3) in respect of the payment of child care fees to a child care centre registered with the

Director General of Social Welfare under the Child Care Centre Act 1984

[Act 308] or a kindergarten registered under the Education Act 1996 [Act 550]

16

Act 785

in that basis year by that individual for a child of that individual aged six years and below as evidenced by receipts issued by such child care centre or kindergarten:

Provided that—

where a wife living together with her husband is assessed separately for that year, the deduction under this paragraph shall only be allowed either to the husband or to the wife; and

t h e m a x i m u m a m o u n t o f deduction under this paragraph shall apply notwithstanding that that individual may have more than one child.”; and

in subsection (3), by substituting for the words “(i), (j),

, (l) and (m)” the words “(k), (p) and (r)”.

Amendment of section 47

by substituting, wherever appearing, except in subsection (23)—

for the words “family solidarity operator” the words “family takaful operator”;

for the words “family solidarity re-takaful business”

the words “family retakaful business”;

for the words “family solidarity re-takaful certificate”

the words “takaful certificate in relation to its family retakaful business”;

for the words “general business” the words “general takaful business”;

for the words “general certificate” the words

“general takaful certificate”;

for the words “an operator” and “the operator”

the words “a takaful operator” and “the takaful operator” respectively; and

for the word “participant” the words “takaful participant”;

in paragraph (2)(a), by substituting for the words

“family solidarity business” the words “family takaful business”;

in subsection (5)—

in subparagraph (a)(i), by substituting for the words “contributions” and “contribution” the words “takaful contributions” and “takaful contribution” respectively; and

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

“(ii) takaful contributions payable by the takaful operator in that period under retakaful contracts in connection with that business;”;

18

Act 785

in paragraph (6)(c), by substituting for the words ‘and

“operator” shall’ the words ‘and “takaful operator” shall’;

in subsection (7)—

in subparagraph (a)(i), by substituting for the word “contribution” wherever appearing the words “takaful contribution”; and

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

“(ii) takaful contributions payable by the takaful operator in that period under retakaful contracts in connection with any such Malaysian general takaful certificate;”;

in paragraph (8)(c), by substituting for the words

‘and “operator” shall’ the words ‘and “takaful operator”

shall’;

in subsection (13), by substituting for the word “contribution”

the words “takaful contribution”;

in subsection (23)—

by deleting the definition of “contribution”;

by deleting the definition of “family solidarity”;

by deleting the definition of “general business”;

by deleting the definition of “general certificate”;

by inserting before the definition of “investment”

the following definitions:

‘ “family takaful business” has the same meaning assigned to it under subsection 2(1)

of the Islamic Financial Services Act 2013;

“general takaful business” means all takaful business which is not family takaful business;

“general takaful certificate” means a certificate other than a family takaful certificate;’;

Finance 19

in the definition of “inward re-takaful”—

by substituting for the words “an operator”

wherever appearing the words “a takaful operator”; and

by substituting for the words “such operator”

the words “such takaful operator”;

in the definition of “inward re-takaful contract”, by substituting for the words “Malaysian certificate”

the words “Malaysian takaful certificate”;

by deleting the definition of “Malaysian certificate”;

by deleting the definition of “Malaysian family solidarity fund”;

by inserting before the definition of “offshore takaful” the following definitions:

‘ “Malaysian family takaful fund” means the takaful fund in respect of Malaysian family takaful certificate;

“Malaysian takaful certificate” has the same meaning assigned to it under subsection 2(1)

of the Islamic Financial Services Act 2013;’;

by deleting the definition of “operator”;

by deleting the definition of “participant”;

by substituting for the definition of “qard” the following definition:

‘ “qard” means a benevolent loan or other forms of financial support to the takaful fund from the shareholders’ fund made pursuant to section 95 of the Islamic Financial Services

Act 2013;’;

20

Act 785

by deleting the definition of “re-takaful”;

by inserting before the definition of “takaful” the following definition:

‘ “retakaful” has the same meaning assigned to it under subsection 2(1) of the Islamic

Financial Services Act 2013;’;

by substituting for the definition of “takaful certificate” the following definition:

‘ “takaful certificate” has the same meaning assigned to it under subsection 2(1) of the

Islamic Financial Services Act 2013;’; and

by inserting before the definition of “wakalah fee” the following definitions:

‘ “takaful contribution” has the same meaning assigned to it under subsection 2(1) of the

Islamic Financial Services Act 2013;

“takaful operator” has the same meaning assigned to it under subsection 2(1) of the

Islamic Financial Services Act 2013;

“takaful participant” has the same meaning assigned to it under subsection 2(1) of the

Islamic Financial Services Act 2013;’; and

in subsection (24), by substituting for the word “contributions”

wherever appearing the words “takaful contributions”.

Amendment of section 61a

by inserting after subsection (1) the following subsection:

“(1A) Where a person has furnished to the Director

General a return for a year of assessment in accordance with subsection 77(1) or 77A(1) and there is no chargeable income for that year of assessment, then if the person in respect of such return is aggrieved by the public ruling made under section 138A or any practice of the Director General generally prevailing at the time when the return is made—

the return shall be deemed to be a notification made by the Director General under subsection (1) on the day the return is furnished;

and

the notification deemed to have been made under paragraph (a) shall be deemed to have been notified to the person on the day on which the Director General is deemed to have made the notification.”;

in subsection (2), by inserting after the words

“subsection (1)” the words “or the return which is deemed under subsection (1A) to be a notification made by the

Director General”;

22

Act 785

in subsection (3), by inserting after the words “subsection (1)”

the words “or the return which is deemed under subsection (1A)

to be a notification made by the Director General”; and

by inserting after subsection (4) the following subsections:

“(5) Where a person has furnished to the Director

General a return for a year of assessment in accordance with subsection 77(1) or 77A(1) and there is no chargeable income for that year of assessment, then if the person in respect of such return alleges that—

there is an error or a mistake made by the person in that return, the person may make an application in writing to the Director

General for an amendment to be made in respect of such return; or

the amount that has been computed in the return is inaccurate by reason of—

any exemption, relief, remission, allowance or deduction granted for that year of assessment under this Act or any other written law published in the Gazette after the year of assessment in which the return is furnished;

the approval for any exemption, relief, remission, allowance or deduction is granted after the year of assessment in which the return is furnished; or

a deduction not allowed in respect of payment not due to be paid under subsection 107A(2) or 109(2), section 109A, or subsection 109b(2)

or 109F(2) on the day a return is furnished, the person may make an application in writing to the Director General for relief.

Finance 23

The application under subsection (5) shall be made—

in respect of paragraph (5)(a), within six months from the date the return is furnished;

in respect of subparagraphs (5)(b)(i) and (ii), within five years after the end of the year the exemption, relief, remission, allowance or deduction is published in the Gazette or the approval is granted, whichever is the later; or

in respect of subparagraph (5)(b)(iii), within one year after the end of the year the payment is made.

On receiving an application under subsection (5), the Director General shall inquire into the matter and may make amendment in respect of the amount that has been computed as appears to the Director General to be just and reasonable.

No amendment shall be allowed under subsection (7) in respect of an error or a mistake as to the basis on which the non-chargeability of the applicant ought to have been computed if the return or statement containing the error or mistake was in fact made on the basis of or in accordance with the public ruling made under section 138A or any practice of the Director General generally prevailing at the time when the return is made.

An application under subsection (5) shall be as nearly as may be in the same form as a notice of appeal under section 99.

Where the applicant is aggrieved by the Director

General’s decision on the application under subsection (5), the following provisions shall apply:

the applicant may within six month’s after being informed of the decision request, in writing, the Director General to send the application forward to the Special

Commissioners;

24

Act 785

the Director General shall within three months after receiving the request send the application forward as if he were sending an appeal forward pursuant to section 102;

and

the application shall thereupon be deemed to be an appeal and shall be disposed of accordingly.”.

Amendment of section 107c

In any prosecution under subsection (1) the burden of proving that a country-by-country report has been furnished shall be upon the accused person.

Where a person has been convicted of an offence under subsection (1), the court may make a further order that the person shall comply with the relevant provision of the rules under which the offence has been committed within thirty days, or such other period as the court deems fit, from the date the order is made.”.

New section 113a

makes an incorrect return, information return or report by omitting the information required to be provided in accordance with any rules made under paragraph 154(1)(c) to implement or facilitate the operation of an arrangement having effect under section 132b, on behalf of himself or another person; or

gives any incorrect information in relation to any information required to be provided in accordance with any rules made under paragraph 154(1)(c) to implement or facilitate the operation of an arrangement having effect under section 132b, on behalf of himself or another person,

26

Act 785

shall, unless he satisfies the court that the incorrect return, information return or report, or incorrect information was made or given in good faith, be guilty of an offence and shall, on conviction be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both.”.

New section 119b

In any prosecution under subsection (1), the burden of proving that any rules made under paragraph 154(1)(c)

to implement or facilitate the operation of an arrangement having effect under section 132b has been complied with shall be upon the accused person.

Where a person has been convicted of an offence under subsection (1), the court may make a further order that the person shall comply with the relevant provision of the rules under which the offence has been committed within thirty days or such other period as the court deems fit, from the date the order is made.”.

Finance 27

New section 131a

any exemption, relief, remission, allowance or deduction granted for that year of assessment under this

Act or any other written law is published in the

Gazette after the year of assessment in which the return is furnished;

the approval for any exemption, relief, remission, allowance or deduction is granted after the year of assessment in which the return is furnished; or

a deduction not allowed in respect of payment not due to be paid under subsection 107A(2) or 109(2), section 109A, or subsection 109b(2) or 109F(2) on the day the return is furnished, the person may make an application in writing to the Director

General for relief.

The application under subsection (1) shall be made—

in respect of paragraphs (1)(a) and (b), within five years after the end of the year the exemption, relief, remission, allowance or deduction is published in the Gazette or the approval is granted, whichever is the later; or

in respect of paragraph (1)(c), within one year after the end of the year the payment is made.

28

Act 785

On receiving an application under subsection (1), the

Director General shall inquire into the matter and may give by way of repayment of tax such relief as appears to the

Director General to be just and reasonable.

An application under subsection (1) shall be as nearly as may be in the same form as a notice of appeal under section 99.

Where the applicant is aggrieved by the Director

General’s decision on the application under subsection (1), the following provisions shall apply:

the applicant may within six months after being informed of the decision request, in writing, the

Director General to send the application forward to the Special Commissioners;

the Director General shall within three months after receiving the request send the application forward as if he were sending an appeal forward pursuant to section 102; and

the application shall thereupon be deemed to be an appeal and shall be disposed of accordingly.”.

Amendment of section 154

in Part I—

in paragraph 2A, in column “Rate of income tax”, by substituting for the words “20 per cent for the year of assessment 2015 and 19 per cent for the subsequent years of assessment” the words

“18 per cent”;

Finance 29

in paragraph 2D, in column “Rate of income tax”, by substituting for the words “20 per cent for the year of assessment 2015 and 19 per cent for the subsequent years of assessment” the words

“18 per cent”; and

in paragraph 4, by substituting for the words “an operator from inward re-takaful” the words “a takaful operator from inward retakaful”; and

in Part XII, by substituting for the words “family solidarity re-takaful business and inward family solidarity re-takaful business” the words “family retakaful business and inward family retakaful business”.

Amendment of Schedule 3

in paragraph 16b—

by renumbering the existing paragraph 16b as subparagraph 16b(1);

in subparagraph 16b(1) as renumbered, by substituting for the words “42A and 42b” the words “42A, 42b and 42C”;

by inserting after subparagraph 16b(1) the following subparagraphs:

“(2) Where part of the building used by that person referred to in paragraphs 37A, 37b, 37C, 37E, 37F, 37G, 37h,

42A, 42b and 42C for the purpose of letting of property is not more than one-tenth of the floor area of the whole building, the whole building qualifies as industrial building under those paragraphs.

Where part of the building used by that person referred to in subparagraph (2) is more than one-tenth of the floor area of the whole building, such part of the building shall not be treated as industrial building

30

Act 785

for the purpose of those paragraphs and any allowance to be made to that person under those paragraphs shall consist of so much of what would have been the amount of allowance claimed on the expenditure incurred on the floor area on the part of the building which is not used by that person for the purpose of letting of property.”; and

in subparagraph 37b(a), by substituting for the words

“paragraph 34A(1)(a)” the words “subsection 34A(1)”.

Amendment of Schedule 6

in paragraph 12b—

by substituting for the words “expenses incurred”

the word “deductions”; and

by substituting for the words “adjusted income”

the words “chargeable income”;

in subparagraph 13(1)—

in subsubparagraph (a), by substituting for the words “or organization” the words “, organization or fund”; and

by substituting for subsubparagraph (b) the following subsubparagraph:

“(b) a religious institution or organization in respect of any contribution received for charitable purposes in the basis year for a year of assessment provided such institution or organization is not operated or conducted primarily for profit and is established in Malaysia exclusively for the purpose of religious worship or the advancement of religion.”;

Finance 31

by deleting paragraph 18;

by deleting paragraph 27;

in paragraph 33—

by substituting for the words “the business of banking or finance in Malaysia and licensed under the Banking and Financial Institutions

Act 1989 or the Islamic Banking Act 1983” the words “banking business or Islamic banking business in Malaysia and licensed under the

Financial Services Act 2013 or the Islamic

Financial Services Act 2013, as the case may be”; and

by substituting for the words “Central Bank of Malaysia pursuant to section 37 of the

Banking and Financial Institutions Act 1989 and subsection 5(2) of the Islamic Banking Act 1983”

the words “Minister pursuant to section 12 of the Financial Services Act 2013 and section 12

of the Islamic Financial Services Act 2013”;

in paragraph 33A—

by renumbering the existing paragraph 33A as subparagraph 33A(1); and

by inserting after subparagraph 33A(1) as renumbered the following subparagraph:

“(2) The exemption under subparagraph (1) shall not apply to interest paid or credited to a company in the same group.”;

in paragraph 33b—

by renumbering the existing paragraph 33b as subparagraph 33b(1); and

32

Act 785

by inserting after subparagraph 33b(1) as renumbered the following subparagraph:

“(2) The exemption under subparagraph (1) shall not apply to—

interest paid or credited to a company in the same group;

interest paid or credited to—

a bank licensed under the Financial

Services Act 2013;

an Islamic bank licensed under the

Islamic Financial Services Act 2013;

or

a development financial institution prescribed under the Development

Financial Institutions Act 2002.”;

and

by substituting for paragraph 35A the following paragraph:

“35a. Income of a unit trust in respect of interest derived from

Malaysia and paid or credited by—

a bank licensed under the Financial Services Act 2013;

an Islamic bank licensed under the Islamic Financial

Services Act 2013; or

a development financial institution prescribed under the

Development Financial Institutions Act 2002:

Provided that in the case of a wholesale fund which is a money market fund, the exemption shall only apply to a wholesale fund which complies with the criteria as set out in the relevant guidelines of the Securities Commission Malaysia.”.