FINANCE ACT 1998

Short title

This Act may be cited as the Finance Act 1998.

Tax) Act 1967 [Act 543], the Real Property Gains Tax Act 1976

[Act 169], the Stamp Act 1949 [Act 378], the Sales Tax Act 1972

[Act 64], the Customs Act 1967 [Act 235] and the Free Zones Act 1990 [Act 438] are amended in the manner specified in Chapters

II, III, IV, V, VI, VII and VIII respectively.

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Commencement of amendments to the Income Tax Act 1967

The Income Tax Act 1967, which in this Chapter is referred to as the “principal Act”, is amended by deleting section 3C.

The principal Act is amended by inserting after section 6B the following section:

“Tax rebate on fees 6C.

Income tax charged for each year of assessment upon the chargeable income of an individual shall be rebated in respect of any fee paid to the Government in the basis year for that year of assessment pursuant to any order made under section 3 of the Fees Act 1951 [Act 209], for the issue of an Employment Pass, Visit Pass (Temporary Employment)

or Work Pass before any set off is made under section 110

and any credit is allowed under section 132 or 133:

Provided that where the rebate exceeds the income tax charged (before any such rebate) for any year of assessment, the excess shall not be paid to that individual and shall not be available as a credit to set off his tax liability for any subsequent year of assessment.”.

Amendment of section 25 7.

Section 25 of the principal Act is amended—

Subsection 60E(4) of the principal Act is amended by substituting for the word “twelve” the word “six”.

Amendment of section 91 15.

Section 91 of the principal Act is amended—

Schedule 1 to the principal Act is amended—

“1A. Except where paragraph 2 provides otherwise, income tax shall be charged for a year of assessment on the chargeable income of a person (other than a company) not resident for the basis year for that year of assessment at the rate of 30 per cent on every ringgit of the chargeable income.”;

(aa) by deleting subparagraph (b); and

(bb) by substituting for the figure “30” the figure “28”; and

Amendment of Schedule 3 20.

Schedule 3 to the principal Act is amended in paragraph 37C by substituting for the word “re-exported” the words “distributed or re-exported and there shall be substituted for the amount of the allowance which would otherwise fall to be made to him under paragraph 12, 16 or 17 an allowance of an amount equal to one-tenth of the qualifying expenditure for that year and for each of the nine following years of assessment”.

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Finance

Amendment of Schedule 7A

21.

Schedule 7A to the principal Act is amended—

“1. Where a company which is resident in

Malaysia—

Provided that such expenditure shall not include capital expenditure incurred on plant or machinery which is provided wholly or partly for the use of a director, or an individual who is a member of the management, or administrative or clerical staff.”;

“2. An allowance under paragraph 1 or 1A shall be given in respect of capital expenditure incurred in the basis periods for five consecutive years of assessment beginning from the year of assessment for the basis period in which the capital expenditure was first incurred.”;

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“2A. Where an asset is disposed of at any time within two years from the date of acquisition of that asset, an allowance given under paragraph 1 or 1A in respect of that asset shall be deemed to have not been given to the company to which it would otherwise be entitled.”;

“3. Where an allowance is given to a company under paragraph 1 or 1A for a year of assessment, so much of the statutory income of that business of that company for that year of assessment as is equal to the amount of the allowance (or to the aggregate amount of any such allowances as the case may be) but not exceeding seventy per cent of the statutory income shall be exempt from tax for that year of assessment:

Provided that where the qualifying project is located within the States of Sabah, Sarawak, the Eastern Corridor of Peninsular Malaysia and such other areas which the

Minister may from time to time determine or where the qualifying project has achieved the level of productivity as prescribed by the Minister, the amount to be exempt shall be equal to the allowance (or to the aggregate amount of any such allowances as the case may be) but not exceeding the statutory income for that year of assessment.”;

“4. Where, by reason of the restriction of the allowance to seventy per cent of the statutory income or of an insufficiency or absence of statutory income from a business of the company for the basis period for a year of assessment, effect cannot be given or cannot be given in full to any allowance or allowances to which the company is entitled under this Schedule for that year of assessment in relation to the source consisting of that business, so much of the allowance or allowances as cannot be given for that year shall be given to the company under this Schedule for the first subsequent year of assessment for the basis period for

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Finance which there is statutory income from that business, and for subsequent years of assessment until the company has received the whole of the allowance or allowances to which it is so entitled.”;

“six”; and

“assessment or”;

“(b) for the period prescribed under section 29(2),

29A(3), 29B(2), 29c(2) or 29G(2) of the

Promotion of Investments Act 1986 [Act 327] in respect of a promoted activity or promoted product for which the company has been granted approval under section 27, 27A, 27B, or 27F of that Act;”; and

“(a) a project undertaken by a company, in expanding, modernising or automating its existing business in respect of manufacturing or processing of a product or any related product within the same industry or in diversifying its existing business into any related product within the same industry;”; and

‘ “disposed of” means sold, conveyed, transferred, assigned, or alienated with or without consideration;’;

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Malaysia” a semicolon; and

‘ “incurred” has the same meaning assigned thereto in paragraphs 46 and 55 of Schedule 3.’.

CHAPTER III

AMENDMENTS TO THE PETROLEUM (INCOME TAX)

ACT 1967

Commencement of amendments to the Petroleum (Income Tax)

Act 1967

22. (1) Except for sections 24, 27 and 28, this Chapter shall have effect for the year of assessment 1998 and subsequent years of assessment.

October 1997.

Amendment of section 16 23.

The Petroleum (Income Tax) Act 1967, which in this Chapter is referred to as the “principal Act”, is amended in section 16—

the word “nineteen”; and

“(7E) There shall be deducted from the relevant gross income an amount equal to the amount of expenditure incurred by the relevant chargeable person in the relevant period for sponsoring any arts or cultural activity approved by the Ministry of Culture, Arts and Tourism:

Provided that the amount deducted shall not exceed two hundred thousand ringgit.”.

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Finance

Amendment of section 18 24.

Subsection 18(1) of the principal Act is amended by inserting after paragraph (k) the following paragraph:

“(l) any sum paid by way of a bonus to an employee in excess of two twelfths of his wages or salary;”.

Amendment of section 22 25.

Section 22 of the principal Act is amended—

“(1B) The chargeable income of a chargeable person for a year of assessment shall consist of the amount of his assessable income for that year reduced by an amount equal to any gift of money or contribution in kind (the value to be determined by the relevant local authority)

made by him in the basis period for that year of assessment to the Government or State Government for the provision of facilities in public places for the benefit of disabled persons.

made by him in the basis period for that year of assessment to the National Art Gallery or any state art gallery.”.

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Amendment of section 23 26.

Subsection 23(1) of the principal Act is amended by substituting for the word “forty” the words “thirty-eight”.

Amendment of section 39 27.

Section 39 of the principal Act is amended—

the word “six”; and

the word “six”.

Amendment of section 50 28.

Subsection 50(2) of the principal Act is amended by substituting for the word “twelve” the word “six”.

CHAPTER IV

AMENDMENTS TO THE REAL PROPERTY GAINS TAX

ACT 1976

Commencement of amendments to the Real Property Gains

Tax Act 1976

29. (1) Section 30 shall come into force on 1 January 1999.

Amendment of section 15 30.

The Real Property Gains Tax Act 1976, which in this Chapter is referred to as the “principal Act”, is amended in subsection 15(1) by substituting for the word “twelve” the word “six”.

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Finance

Amendment of Schedule 2 31.

Schedule 2 to the principal Act is amended in paragraph 34A—

“(3) For the purposes of this paragraph, the acquisition price of a chargeable asset shall—

A x C,

B where

A is the number of shares deemed to be a chargeable asset;

B is the total number of issued shares in the relevant company at the date of acquisition of the chargeable asset; and

C is the defined value of the real property or shares or both owned by the relevant company at the date of acquisition of the chargeable asset;

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Amendment of Schedule 5 32.

Schedule 5 to the principal Act is amended by substituting for Part III the following Part:

“

PART III

In the case of an individual who is not a citizen and not a permanent resident, the following rates of tax shall apply:

Category of disposal

Rate of tax

Disposal within five years after the 30 per cent date of acquisition of the chargeable asset

Disposal in the sixth year after the 5 per cent date of acqusition of the chargeable asset or therefor

”.

CHAPTER V

AMENDMENT TO THE STAMP ACT 1949

Commencement of amendment to the Stamp Act 1949 33.

This Chapter shall be deemed to have come into force on 1

January 1998.

Amendment of section 55 34.

The Stamp Act 1949 is amended in subsection 55(2) by substituting for the words “one ringgit” the words “ten ringgit”.

CHAPTER VI

AMENDMENT TO THE SALES TAX ACT 1972

Commencement of amendment to the Sales Tax Act 1972 35.

This Chapter shall be deemed to have come into force on 17

October 1997.

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Finance

Amendment of section 14 36.

Section 14 of the Sales Tax Act 1972 is amended by substituting for the full stop at the end of that section a colon and by inserting thereafter the following proviso:

“Provided that, notwithstanding that any person is exempted under such order, such person may apply to be licensed as a licensed manufacturer, whereupon the provisions of this Act shall apply to such person.”.

CHAPTER VII

AMENDMENTS TO THE CUSTOMS ACT 1967

Commencement of amendments to the Customs Act 1967

37. (1) This Chapter, except paragraph 38(d) and sections 47, 48,

49, 51, 52 and 53, shall be deemed to have come into force on 17

October 1997.

Amendment of section 2 38.

The Customs Act 1967, which in this Chapter is referred to as the “principal Act”, is amended in subsection 2(1)—

‘ “export by air” includes exportation in any manner or by any means by air;’;

‘ “import by air” includes importation in any manner or by any means by air;’;

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the following definition:

‘ “licensed carrier” means a person approved by the Director General to operate vehicles by road for the carriage of any goods in transit or any dutiable goods under this Act or under the Excise Act 1976

[Act 176];’; and

‘ “value” in relation to imported goods means customs value as determined under subsection 142(35B);’.

Amendment of section 21 39.

The principal Act is amended by substituting for section 21

the following section:

“Time of importation and exportation when duty is imposed or repealed

21. When by virtue of an order made under subsection 11(1)

a customs duty is fixed on any goods which previously were not dutiable goods or any customs duty on goods is abolished or when the importation or exportation of any goods is prohibited or any such prohibition is abolished by an order made under section 31 and it becomes necessary for the purpose of this

Act to determine the time at which an importation or exportation of any goods made and completed shall be deemed to have had effect, such importation or exportation shall, notwithstanding anything in this Act contained, be deemed to be the time at which the goods are released by the proper officer of customs.”.

Amendment of section 24 40.

Section 24 of the principal Act is amended by inserting after the word “airport” the words “and such goods may be cleared at an inland clearance depot or an inland customs station”.

Amendment of section 29 41.

Section 29 of the principal Act is amended by inserting after the word “airport” the words “and such goods may be cleared at an inland clearance depot or an inland customs station”.

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Finance

Amendment of section 35 42.

Section 35 of the principal Act is amended—

“(c) if they have been cleared by a proper officer of customs at an inland clearance depot or at an inland customs station on their route out of

Malaysia through a customs port or airport.”.

Amendment of section 66 43.

The proviso to subsection 66(1) of the principal Act is amended—

“(c) where the bill of lading, airway bill, invoice or other document covering any such goods landed at a customs port or airport shows them to be consigned to a person at an inland clearance depot or at an inland customs station, such goods may be forwarded by rail or road to an inland clearance depot or to an inland customs station, and such goods shall be deemed for the purposes of this

Part, and Part IX, to have first arrived on reaching such inland clearance depot or inland customs station;”.

Amendment of section 80 44.

Subsection 80(2) of the principal Act is amended by substituting for paragraphs (a), (b), (c) and (d) the following paragraphs:

“(a) at an inland clearance depot or at an inland customs station or at a customs port where goods are loaded if export is by sea;

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General may allow the declaration to be made to a proper officer of customs at an inland clearance depot or at an inland customs station if such export by road is on their route to a customs port or airport or any other place approved by him;

New section 87A

45. The principal Act is amended under the heading “Non-dutiable goods” by inserting after section 87 the following section:

“Provisional declaration of exported goods 87A. (1) Notwithstanding sections 80(1), 84, 85, 86 and 87, the Director General may allow any document approved by him to be used as a provisional declaration, in lieu of the prescribed form, for goods if—

shall give a full and true account of the number, description and quantity, weight or measure, value and destination of such goods.

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Finance

New section 91A

46.

The principal Act is amended by inserting after section 91

the following section:

“Licensed carrier 91A. (1) The Director General may grant a licence to any person to act as a licensed carrier subject to such terms and conditions as he may deem fit to impose and may suspend or withdraw such licence.

General may require such security to be furnished as he may consider adequate to cover the customs duty payable on the goods moved and for the faithful and incorrupt conduct of such licensed carrier and of his agents and employees acting for him both as regards the customs and his employers.”.

New section 100A

47.

The principal Act is amended by inserting after section 100

the following section:

“Records of imported goods 100A. (1) Every person who has possession of documents and records pertaining to valuation of goods imported shall preserve for a period of six years following the importation of the goods all records that relate to the purchase of, importation of, cost of, value of, payment for and disposal of the goods.

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Amendment of section 115 48.

Paragraph 115(1)(b) of the principal Act is amended by substituting for subparagraph (i) the following subparagraph:

“(i) for property other than dutiable or uncustomed goods, its open market value, and for dutiable or uncustomed goods, their value, on the date on which the property or goods are so returned;”.

New section 125A

49.

The principal Act is amended by inserting after section 125

the following section:

“Confidentiality of information 125A. (1) Any information relating to valuation is confidential and any proper officer of customs or any person who in the ordinary course of his duties come into possession of or has control of or access to such information shall not—

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Finance

Amendment of section 133 50.

Subsection 133(1) of the principal Act is amended—

“(g) being so required under section 87A fails to make a declaration in the prescribed form, within the stipulated period thereunder, of goods exported,”.

Amendment of section 142 51.

Section 142 of the principal Act is amended by inserting after paragraph (35A) the following paragraph:

“(35B) to determine the customs value of imported goods;”.

New section 143A

52.

The principal Act is amended by inserting after section 143

the following section:

“Appeal on valuation of imported goods 143A. (1) Notwithstanding section 143, any person aggrieved by a decision of the Director General on the valuation of imported goods may appeal therefrom to the court.

Director General another amount; or

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CHAPTER VIII

AMENDMENTS TO THE FREE ZONES ACT 1990

Commencement of amendments to the Free Zones Act 1990 53.

This Chapter shall come into force on a date to be appointed by the Minister by notification in the Gazette.

Amendment of section 2 54.

The Free Zones Act 1990, which in this Chapter is referred to as the “principal Act”, is amended in subsection 2(1) by substituting for the definition of “value” in relation to imported goods the following definition:

‘ “value” in relation to imported goods has the meaning assigned to it under section 2 of the Customs Act 1967 [Act 438].’.

Amendment of section 27 55.

Paragraph 27(1)(b) of the principal Act is amended by substituting for subparagraph (i) the following subparagraph:

“(i) for property other than dutiable or uncustomed goods, its open market value, and for dutiable or uncustomed goods, their value, on the date on which the property or goods are so returned;”.

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Finance

Act 578

LIST OF AMENDMENTS

Amending law

Short title

In force from

– NIL –

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Act 578

LIST OF SECTIONS AMENDED

Section

Amending authority

In force from

– NIL –

KUALA LUMPUR