Malaysia legislation
Section 171
Section 171
(a)
the amount of deferred tax expense with respect to items excluded from the computation of GloBE
Income or Loss under Chapter 5 of this Part;
(b)
the amount of deferred tax expense with respect to
Disallowed Accruals and Unclaimed Accruals;
(c)
the impact of a valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset;
(d)
the amount of deferred tax expense arising from a re-measurement with respect to a change in the applicable domestic tax rate; and
(e)
the amount of deferred tax expense with respect to the generation and use of tax credits.
(2)
The Total Deferred Tax Adjustment Amount is adjusted by—
(a)
increasing it by the amount of any Disallowed Accrual or Unclaimed Accrual paid during the Financial
Year;
(b)
increasing it by the amount of any Recaptured Deferred
Tax Liability determined in a preceding Financial
Year which has been paid during the Financial Year;
and
(c)
reducing it by the amount that would be a reduction to the Total Deferred Tax Adjustment Amount due to recognition of a loss deferred tax asset for a current year tax loss, where a loss deferred tax asset has not been recognised because the recognition criteria are not met.
Finance (No. 2)
(3)
A deferred tax asset that has been recorded at a rate lower than the Minimum Rate may be recast at the Minimum Rate in the Financial Year such deferred tax asset becomes a GloBE
Loss, if the taxpayer can demonstrate that the deferred tax asset is attributable to a GloBE Loss and the Total Deferred
Tax Adjustment Amount in subsection (2) is reduced by the amount that a deferred tax asset is increased due to being recast under this subsection.
(4)
To the extent a deferred tax liability, that is not a
Recapture Exception Accrual, is taken into account under this section and such amount is not paid within the five subsequent Financial Years, the amount must be recaptured pursuant to this section.
(5)
The Amount of the Recaptured Deferred Tax Liability determined for the current Financial Year shall be treated as a reduction to Covered Taxes in the fifth preceding Financial
Year and the Effective Tax Rate and Multinational Top-up
Tax of such Financial Year shall be recalculated under the rules of subsection 181(1).
(6)
The Recaptured Deferred Tax Liability for the current
Financial Year is the amount of the increase in a category of deferred tax liability that was included in the Total Deferred
Tax Adjustment Amount in the fifth preceding Financial Year that has not reversed by the end of the last day of the current
Financial Year, unless such amount relates to a Recapture
Exception Accrual.
(7)
For the purposes of this section—
“Disallowed Accrual” means—
(a)
any movement in deferred tax expense accrued in the financial accounts of a Constituent Entity which relates to an uncertain tax position; and
(b)
any movement in deferred tax expense accrued in the financial accounts of a Constituent Entity which relates to distributions from a Constituent Entity;
Act 851
“Recapture Exception Accrual” means the tax expense accrued attributable to changes in associated deferred tax liabilities, in respect of—
(a)
cost recovery allowances on tangible assets;
(b)
the cost of a licence or similar arrangement from the government for the use of immovable property or exploitation of natural resources that entails significant investment in tangible assets;
(c)
research and development expenses;
(d)
de-commissioning and remediation expenses;
(e)
fair value accounting on unrealised net gains;
(f)
foreign currency exchange net gains;
(g)
insurance reserves and insurance policy deferred acquisition costs;
(h)
gains from the sale of tangible property located in the same jurisdiction as the Constituent Entity that are reinvested in tangible property in the same jurisdiction; and
(i)
additional amounts accrued as a result of accounting principle changes with respect to categories under paragraphs (a) to (h);
“Unclaimed Accrual” means any increase in a deferred tax liability recorded in the financial accounts of a Constituent
Entity for a Financial Year that is not expected to be paid within the time period set forth in subsections (4) to (6) and for which the Filing Constituent Entity makes an Annual
Election not to include in Total Deferred Tax Adjustment
Amount for such Financial Year.
Finance (No. 2)
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The GloBE Loss Election