Malaysia legislation
Section 7
Section 7
The principal Act is amended by inserting immediately after section 54A the following new section 54B:
“Abatement of chargeable income of resident companies carrying on sea transport undertakings 54B. (1) (a) Subject to the conditions referred to in subsection (2), a company shall have its chargeable income in respect of a business of transporting passengers or cargo by sea to which paragraph 54(2)(a) applies (hereinafter referred to as that business) abated by fifty per cent for twelve years of assessment (hereinafter referred to as that period) commencing from the year of assessment immediately following the expiration of its exemption period under section 54A; and
(b)
as soon as any amount of the chargeable income of that business has been abated, it shall be credited to an account
(that account being referred to as the exempt account) and paragraph 5 (except sub-paragraph (1) thereof) and paragraph 6 of Schedule 7A shall apply as if any reference in those
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paragraphs to any income exempted or which has become exempt under paragraph 3 were a reference to income credited to the exempt account.
(2)
The total dividend (including any dividend paid out of the exempt account) paid, credited or distributed in a basis period shall not exceed fifteen per cent of the paid up capital as at the first day of such basis period;
(b)
any excess of the audited net profit for the basis period over such dividend less any tax payable for that year of assessment shall be credited to a fleet acquisition reserve which shall not be reduced other than for the purposes of paragraph (c);
(c)
during that period the company shall undertake a programme to increase the tonnage of its fleet of ships or vessels and shall for this purpose incur capital expenditure on the acquisition of ships or vessels which at the end of every four consecutive basis periods (hereinafter referred to as the relevant period) shall not be less than seventy-five per cent of such fleet acquisition reserve; and
(d)
where at any time during a basis period any of the conditions have not been complied with or where the Director
General is of the opinion that any expenditure deemed to have been incurred has not in fact been incurred, this section shall be deemed never to have had effect for that relevant period.
(3)
For the purposes of this section, capital expenditure is deemed to have been incurred—
(i)
when expenditure is made;
(ii)
on the signing of a contract for the purchase of a ship or vessel; or
(iii)
when a similar commitment is undertaken and it is proved to the satisfaction of the Director General that such commitment is for the actual purchase of a ship or vessel.”.
Amendment of section 60 8.
Section 60 of the principal Act is amended—
(a)
by substituting for subsection (2) the following new subsection (2):
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“(2) For the purposes of this section—
(a)
subject to paragraph (b), where an insurer carries on life business in conjunction with general business, the life business and the general business shall be treated as separate insurance businesses;
(b)
where an insurer carries on inward re-insurance business, the inward re-insurance business and the general business
(excluding the inward re-insurance business and offshore insurance business) shall be treated as separate general businesses;
(ii)
where an insurer carries on offshore insurance business, the offshore insurance business and the general business
(excluding the offshore insurance business and inward re-insurance business) shall be treated as separate general businesses.”;
(b)
by inserting immediately after subsection (5A) the following new subsection (5B):
“(5B) The adjusted income for the basis period for a year of assessment from the offshore insurance business of an insurer resident for that basis year for that year of assessment shall consist of an amount arrived at by applying subsection (5) as if references therein to “general business” and “general policies ”were references to “offshore insurance business” and “offshore insurance policies” respectively.”;
(c)
by inserting immediately after subsection (6A) the following new subsection (6B):
“(6B) The adjusted income for the basis period for a year of assessment from the off-shore insurance business of an insurer not resident for the basis year for that year of assessment shall, where that business is wholly or partly carried on in Malaysia, consist of an amount arrived at by applying subsection (6) as if references therein to “general business” and “Malaysian general policies” were references to “offshore insurance business” and “offshore insurance policies”
respectively.”;
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(d)
by substituting for the words “or (6A)” appearing in the proviso to subsection (7) the words “, (6A) or (6B)”;
(e)
by substituting for the words “and in section 60A” appearing in subsection (11) the words “, section 60A and section 60B”; and
(f)
by substituting for the full stop at the end of the definition of “Malaysian general policy” and “Malaysian life policy”
in subsection (11) a semicolon and by adding immediately thereafter the following new definitions:
“ “offshore insurance ” means insurance of a risk under a general policy where the risk is outside Malaysia and the policy of insurance is issued by an insurer resident in Malaysia or by a branch in Malaysia of an insurer not resident in Malaysia, and where any risk is in transit in
Malaysia it shall be deemed to be outside Malaysia;
“offshore insurance policies ” means policies issued in respect of offshore insurance.”.
New section 60B and renumbering of section 60B as section 60C