FINANCE ACT 2013

subparagraph 4(a)(ii), sections 20 and 22, and paragraph 35(a)

come into operation on the coming into operation of this Act.

subparagraphs 4(a)(iv), (v) and (vi), sections 7, 8, 9, 14,

15, 23, 24, 25, 27, 28 and 29, paragraphs 33(b) and (c), and paragraphs 35(c), 35(f) and 37(a) in relation to limited liability partnership come into operation on the coming into operation of the Limited Liability Partnerships Act 2012 [Act 743].

subparagraph 4(a)(vii), sections 5, 10, 13, 18, paragraphs 33(a)

and (d), paragraphs 35(d) and (e), paragraphs 38(a), (b), (c), (d),

sections 6 and 30, and paragraph 33(e) come into operation on 1 January 2013.

sections 11, 12, 16, 26, 31, 32 and 34, paragraph 35(b), section 36 and paragraph 38(f) come into operation on 1 January 2014.

section 17 has effect for the years of assessment 2012,

2013, 2014, 2015, 2016 and 2017.

sections 19 and 21, and paragraph 37(b) have effect for the year of assessment 2012 and subsequent years of assessment.

9

Finance amendment of section 2

in subsection (1)—

by inserting after the definition of “business”

the following definition:

‘ “business trust” has the same meaning assigned to it in the capital markets and services Act 2007[Act 671];’;

in the definition of “partnership”, by inserting after the words “a partner in a partnership” the words “, a limited liability partnership”;

in subsection (9), by inserting after the words “shall exclude” the words “a business trust and”; and

by inserting after subsection (10) the following subsection:

“(11) in relation to a business trust, any reference in this Act to shares or ordinary share capital, shareholders and dividend shall be read as including a reference to units or derivatives of units, unit holders and distributions, respectively.”.

new section 4b

by substituting for the full stop at the end of paragraph

a semicolon; and

by inserting after paragraph (k) the following paragraph:

“(l) subject to section 109g but notwithstanding any other provisions of this Act, income tax shall be charged for a year of assessment upon the income of an individual consisting of a withdrawal of his contribution made to a private retirement scheme where the withdrawal is made by that individual before reaching the age of fifty-five

(other than by reason of death or permanently leaving malaysia) at the appropriate rate as specified under Part xVi of schedule 1.”.

11

Finance amendment of section 8

by inserting after subsection (1) the following subsection:

“(1a) Notwithstanding subsection (1), for the purposes of this Act—

a limited liability partnership carrying on a business is resident in malaysia for the basis year for a year of assessment if at any time during that basis year the management and control of its business or of any one of its businesses, as the case may be, are exercised in malaysia;

any other limited liability partnership is resident in malaysia for the basis year for a year of assessment if at any time during that basis year the management and control of its affairs are exercised in malaysia by its partners;

a business trust is resident in malaysia for the basis year for a year of assessment if the trustee manager of that business trust is resident in malaysia and a trustee manager of a business trust is resident for the basis year for a year of assessment if—

the trustee manager in his capacity as such carries on such business trust in malaysia; and

in subsection (2), by inserting after the word “company”

wherever appearing the words “, limited liability partnership, business trust”.

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Act 755

amendment of section 21

in the shoulder note, by inserting after the word

“company” the words “, limited liability partnership”;

and

by inserting after the word “company” the words “, limited liability partnership”.

amendment of section 21A

in the shoulder note, by inserting after the word

“company” the words “, limited liability partnership”;

and

by inserting after the word “company” wherever appearing the words “, limited liability partnership” except in subsection (5).

amendment of section 24

in subsection (3), by substituting for the word “five”

wherever appearing the word “four”;

in subparagraph (4)(a)(i), by substituting for the word

“five” wherever appearing the word “four”;

in paragraph (4)(b), by substituting for the word “five”

the word “four”;

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Finance

in paragraph (4)(c), by substituting for the word “five”

wherever appearing the word “four”; and

in the proviso to subsection (5), by substituting for the word “five” wherever appearing the word “four”.

amendment of section 27

in paragraph (2)(b), by substituting for the word “five”

the word “four”;

in paragraph (2)(c), by substituting for the word “five”

wherever appearing the word “four”; and

in the proviso to subsection (3), by substituting for the word “five” wherever appearing the word “four”.

new section 34d

the amount of deduction referred to in subsection (1)—

for the purpose of subsection (2), the cost of acquiring treasury shares which are transferred to its employee shall be determined on the basis that the treasury shares acquired by the company at an earlier point in time are deemed to be transferred first.

Where any amount payable by an employee for any treasury shares transferred to him exceeds the cost to the company of acquiring the treasury shares transferred as provided under subsection (3), the amount of the excess shall be credited to an account to be kept by the company for the purpose of this section.

Where there is any balance in the account kept by the company under subsection (4) and any treasury shares are subsequently transferred by the company to any employee under subsection (1), the cost to the company of acquiring the treasury shares as determined under subsection (3) shall be reduced—

for the purpose of this section, a company transfers treasury shares held by it to an employee when the employee acquires the legal and beneficial interest in the treasury shares.

Where a holding company transfers treasury shares held by it to any employee employed at any time by a subsidiary company of the holding company who has the right to acquire such shares—

by deleting the word “or” at the end of subparagraph (l)

in paragraph (m), by substituting for the full stop at the end of the paragraph the words “; or”;

by inserting after paragraph (m) the following paragraph:

“(n) any remuneration or any similar payment paid to a partner of a limited liability partnership where such remuneration or payment is not specified or provided in the limited liability partnership agreement made in accordance with section 9 of the Limited Liability Partnerships Act 2012.”.

amendment of section 44

in subparagraph (3)(a)(i), by substituting for the word

“four” the word “six”; and

in subparagraph (3)(a)(ii), by substituting for the words “four thousand ringgit” the words “six thousand ringgit”.

amendment of section 60AA

the adjusted loss from a source or sources of an operator for that year of assessment other than from a source consisting of a family fund, shall be available as deduction against the aggregate statutory income (excluding the statutory income from a source consisting of a family fund) of an operator; and

any unabsorbed loss ascertained under subsection 44(4) or (5) for that year of assessment shall not be deducted against the statutory income of the family fund of the operator for the subsequent years of assessment.”.

17

Finance amendment of section 60g

by or on behalf of a limited liability partnership for the purposes of this Act shall lie jointly and severally—

with the compliance officer who is appointed amongst the partners of the limited liability partnership; or

by or on behalf of a business trust for the purposes of this Act shall lie jointly and severally with the trustee manager of such business trust.

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for the purpose of this section, “compliance officer”

has the meaning assigned to it in section 27 of the Limited

Liability Partnerships Act 2012.”.

amendment of section 77

in the shoulder note, by inserting after the word

“company” the words “, limited liability partnership”;

and

by inserting after the word “company” the words “, limited liability partnership”.

amendment of section 77A

in the shoulder note, by inserting after the word

“company” the words “, limited liability partnership”;

and

by inserting after the word “company” wherever appearing the words “, limited liability partnership”.

amendment of section 91

in subsection (1), by substituting for the word “six” the word “five”;

in the proviso to subsection (2), by substituting for the word “six” the word “five”; and

in subsection (4), by substituting for the word “six” the word “five”.

amendment of section 103

in subsection (1), by inserting after the word “company”

the words “, limited liability partnership”;

in subsection (4), by inserting after the words “4a applies,” wherever appearing the words “limited liability partnership,”;

in subsection (7), by inserting after the word “company”

the words “, limited liability partnership”; and

in subsection (8), by inserting after the word “company”

wherever appearing the words “, limited liability partnership”.

new sections 109g and 109h

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.

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

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.

in this section, “payer” refers to a private retirement scheme provider as approved under section 139q of the capital markets and services Act 2007 to provide and manage a private retirement scheme.

appeal by the payer 109h. (1) A payer referred to in sections 109, 109b or 109f may, within thirty days (or any period extended by the Director general) from the date an amount is due to be made to the Director general under that section, appeal to the special commissioners by reason that such amount is not liable to be paid under this Act and the provision of this Act relating to appeals shall apply accordingly with any necessary modification.

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Finance

Where an amount is due from the payer to a non-resident person, this section shall not apply or cease to apply if—

in Part 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

Rate of

Income Tax for every ringgit of the first 5,000 0 per cent for every ringgit of the next 15,000 2 per cent

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Act 755

Chargeable Income

Rate of

Income Tax for every ringgit of the next 15,000 6 per cent for every ringgit of the next 15,000 11 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 26 per cent”;

in paragraph 2—

by substituting for the comma at the end of subparagraph (e) a semicolon; and

by inserting after paragraph 2c the following paragraphs:

“2d. subject to paragraphs 2e, 2f and 3, income tax shall be charged for a year of assessment on the chargeable income of a limited liability partnership resident in malaysia which has a total contribution of capital (whether in cash or in kind) of two million five hundred thousand ringgit and less at the beginning of the basis period for a year of assessment at the following rates:

Chargeable Income

Rate of

Income Tax for every ringgit of the first 500,000 20 per cent for every ringgit exceeding 500,000 25 per cent 2e. the provisions of paragraph 2d shall not apply to a limited liability partnership referred to in that paragraph if more than—

fifty per cent of the capital contribution (whether in cash or in kind) of the limited liability partnership is directly or indirectly contributed by a company;

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

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Finance

fifty per cent of the capital contribution (whether in cash or in kind) of the limited liability partnership and fifty per cent of the paid up capital in respect of ordinary shares of the company is directly or indirectly owned by another company.

by substituting for Part iV the following Part:

“Part IV

Notwithstanding Part i, income tax shall be charged for a year of assessment upon the chargeable income of every co-operative society at the following rates:

Chargeable Income

Rate of

Income Tax for every ringgit of the first 30,000 0 per cent for every ringgit of the next 30,000 5 per cent for every ringgit of the next 40,000 10 per cent for every ringgit of the next 50,000 15 per cent for every ringgit of the next 100,000 20 per cent for every ringgit of the next 250,000 22 per cent for every ringgit of the next 250,000 24 per cent for every ringgit exceeding 750,000 25 per cent”;

and

by inserting after Part xV the following Part:

“Part xVi

Notwithstanding Part i, income tax shall be charged for a year of assessment on any amount of contribution withdrawn by an individual from a private retirement scheme before that individual reaches the age of 55 (other than by reason of death or permanently leaving malaysia) at the rate of 8 per cent on every ringgit of that contribution withdrawn.”.

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Act 755

amendment of schedule 2

by deleting paragraph 26;

in paragraph 27, by substituting for the word “six” the word “five”;

in subparagraph 38(2), by substituting for the words

“divisible profits of partnership” the words “divisible profits of partnership, or in relation to a limited liability partnership, means the right to a share of more than one-half of the capital contribution whether in cash or in kind of the limited liability partnership and in relation to business trust, means the right to not less than fifty per cent of residual profits of the business trust available for distribution, or not less than fifty per cent of any residual assets of the business trust available for distribution on a winding up”;

in paragraph 38a, by substituting for subparagraph (2)

the following subparagraph:

“(2) for the purpose of this paragraph—

“unit trust” has the same meaning assigned to it in section 61a; and

“company” means a company which holds not less than fifty per cent of residual profits of the unit trust available for distribution, or not less than fifty per cent of any residual assets of the unit trust available for distribution on a winding up.”; and

by inserting after paragraph 61 the following paragraph:

“61A. (1) Notwithstanding paragraph 48 or 61, as the case may be, but subject to this paragraph, where in the basis period for a year of assessment an asset for which qualifying capital expenditure has been incurred is classified as asset held for sale in accordance with generally accepted accounting principles, such asset shall be deemed to have ceased to be used for the purposes of that paragraph.

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Finance

Where subparagraph (1) applies and the asset is sold in the basis period the asset is classified as asset held for sale, the disposal value of the asset for the purposes of this schedule shall be an amount equal to its market value at the date it was classified as asset held for sale or the net proceeds of the sale, whichever is greater.

Where in the basis period for a year of assessment an asset for which qualifying capital expenditure has been incurred is classified as asset held for sale in accordance with generally accepted accounting principles, such asset shall be deemed to have ceased to be used for the purposes of paragraph 48 or 61, as the case may be, in the following basis period—

for the purpose of subsection (3), the disposal value of the asset shall be—

Where paragraph (4) applies, in determining the residual expenditure of such asset for that following basis period, the total qualifying expenditure incurred by that person shall be reduced by an amount of annual allowance which would have been made to him for that following basis period as if the asset had been in use in that following basis period for the purpose of business of his.

Where an asset deemed ceased to be used in accordance with subparagraph (3)(b) is brought into use by the person in a business of his in a basis period for any year of assessment after the basis period the asset is deemed ceased to be used—

in this paragraph, “market value” in the case of an industrial building, means the market value as determined by a valuation officer employed by the government.”; and

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Act 755

by inserting after paragraph 12b the following paragraph:

“12c. Any profit paid, credited or distributed to partners by a limited liability partnership.”; and

by inserting after paragraph 20 the following paragraph:

“20A. Any income of a life insurer or takaful operator from an investment made out of a life fund or family fund in respect of a deferred annuity established in accordance with the

Retirement savings standards approved by the central Bank of malaysia.”.

amendment of schedule 7A

in subparagraph 1(b), by deleting after the words

“subparagraph 8(a)” the words “or (b)”;

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Finance

by deleting paragraph 1c;

in paragraph 2, by substituting for the words “1, 1a or 1c” the words “1 or 1a”;

in paragraph 2a, by substituting for the words “1, 1a or 1c” the words “1 or 1a”;

in paragraph 3, by substituting for the words “1, 1a or 1c” the words “1 or 1a”;

in paragraph 6, by substituting for the word “six” the word “five”;

by deleting subparagraph 8(d);

by deleting subparagraph 9(g); and

by deleting subparagraph 9(gg).

PARt ii sAViNgs AND tRANsitioNAL application of this Part

shall for the year of assessment 2013 be deducted in accordance with subsection 43(2) of the principal Act against the aggregate statutory income of that person from a source consisting of a business; or

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Act 755

where there is no aggregate statutory income from that source consisting of a business for the year of assessment 2013, the amount shall be deducted against the adjusted income of that person from a source other than a source consisting of a business for the year of assessment 2013

and subsequent years of assessment until the amount is fully deducted.

the amount of allowance in respect of interest from a source consisting of a business which has not been so made to a person for year of assessment 2012 as ascertained under paragraph 75 of schedule 3 to the principal Act prior to the coming into operation of sections 5 and 10 of this Act—

for the purpose of subsection (6), the authorized person shall keep and retain the books, records and documents in connection with the issue of such licence for a period of seven years from the year in which such licence is issued.

Any authorized person who fails to comply with the conditions imposed in the licence under subsection (2) shall be liable to a fine of not less than four thousand ringgit and not more than ten thousand ringgit.”.

amendment of section 9

any banker, dealer or insurer to compound for the payment of duty on unstamped cheques, contract notes or policies of insurance drawn or drawn up and issued on forms to be supplied or adopted by the said banker, dealer or insurer;

the Registrar of companies to compound for the payment of duty on unstamped Articles of Association and memorandum of Association lodged with the said Registrar; and

the principal officer of tenaga Nasional Berhad to compound for the payment of duty on the unstamped tNB electricity supply form issued and supplied by the tenaga Nasional Berhad.

the said authorized persons shall levy upon or charge to the person to whom such instruments referred to in subsection (1) are issued the stamp duty mentioned in the first schedule.

the said authorized person shall pay on the 1st day of each calendar month in each year to the collector the amount due and collected thereon as duties on such unstamped

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Act 755

instruments and where he fails to pay the amount on each date specified or within fourteen days immediately thereafter, he shall in addition to the amount due pay a further amount of two hundred ringgit or ten per centum of the amount due whichever is the greater and any amount due shall be recoverable as a debt due to the government.

the said authorized person shall deposit with the collector, as security for the due payment to the collector of any moneys payable under subsection (2), such sum, if any, as the minister of finance may direct.

instruments in respect of which payment of duty by way of composition has been made under this section, notwithstanding any other provision of this Act, shall be deemed to be duly stamped.

Where any person has been authorized to compound for the payment of duty on unstamped instrument as mentioned under paragraph 1(a), (b) or (c), the collector or any person authorized by him in writing, may, at all reasonable times, inspect any stocks of unstamped instrument held by such person and any books, records and documents kept by him in connection with the issue of such instrument.

for the purpose of subsection (6), the person mentioned in subsection (1) shall keep and retain the books, records and documents in connection with the issue of such Articles of Association and memorandum of Association for a period of seven years from the year in which such Articles of

Association and memorandum of Association are issued.”.

new section 60A

sections 49, 50 and 52 come into operation on 1 January 2014.

amendment of section 18

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

“Provided that—

this paragraph shall not apply if the payer has paid the amount of deduction of tax and the increased amount which is equal to ten

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Act 755

per cent of that deduction which are due and payable under the provisions of that law; and

by inserting after subsection (2) the following subsection:

“(3) Paragraph (1)(h) shall not apply if for a year of assessment a person is exempt under section 65c or the Promotion of investments Act 1986 [Act 327], in respect of all income of that person from all sources not being exemption on income equal to capital expenditure incurred.”.

amendment of section 39

in subsection (1), by substituting for the word “six” the word “five”;

in paragraph (2)(b), by substituting for the word “six”

the word “five”; and

in subsection (4), by substituting for the word “six” the word “five”.

amendment of section 50