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In forceUpdated to 31 Dec 2024Read it in Bahasa Malaysia
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Chapter VII · Amendment to the Finance (No. 2) Act 2023

33. Amendment of section 30

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Section 30 of the Finance (No. 2) Act 2023 is amended—

(a)

in subsection 157(1)—

(i)

in the definition of “Acceptable Financial

Accounting Standard”, by deleting the words

“Malaysia,”;

(ii)

in the definition of “Investment Entity”, by substituting for paragraph (a) the following paragraph:

“(a) an Investment Fund, a Real Estate

Investment Vehicle or an Insurance

Investment Entity;”; and

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(iii)

by inserting after the definition of “Main Entity”

the following definition:

‘ “Marketable Transferable Tax Credit”

means a tax credit, other than a Qualified

Refundable Tax Credit, which can be used to reduce liability for a Covered Tax in the jurisdiction that issues the tax credit and the tax credit is transferable—

(a)

in relation to the originator of a Marketable Transferable Tax Credit—

(i)

where the originator transfers the tax credit to an unrelated party, the transfer shall take place in the Financial Year in which the originator was eligible for the tax credit or within fifteen months of the end of that Financial Year at a price that equals or exceeds eighty per cent of the net present value of the tax credit; or

(ii)

where the tax credit is not transferred or transferred between related parties, similar tax credit may be traded between unrelated parties within fifteen months of the end of that Financial Year at a price that equals or exceeds eighty per cent of the net present value of the tax credit; and

(b)

in relation to the purchaser of a Marketable

Transferable Tax Credit, the purchaser, who is unrelated to the originator, may transfer the tax credit to another unrelated purchaser under the same or similar conditions as would apply to the originator at a price that equals or exceeds eighty per cent of the net present value of the tax credit in the

Financial Year in which it purchases the tax credit;’;

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Finance

(b)

in section 162, by substituting for subsection (2)

the following subsection:

“(2)  A Parent Entity’s Inclusion Ratio for a Low-Taxed

Constituent Entity for a Financial Year shall be determined in accordance with the following formula:

A

B

A where

A is the GloBE Income of the Low-Taxed

Constituent Entity for the Financial

Year; and

B is the amount of such income attributable to Ownership Interests held by other owners.”;

(c)

in section 164—

(i)

by renumbering the existing section as subsection (1); and

(ii)

by inserting after the renumbered subsection (1)

the following subsections:

“(2)  For the purposes of the Domestic

Top-up Tax, the Financial Accounting Net

Income or Loss of a Constituent Entity which is a member of a Multinational Enterprise

Group and located in Malaysia but not being a Permanent Establishment of a Main Entity shall be determined based on the financial statement of the Constituent Entity if—

(a)

all of the Constituent Entities of the

Multinational Enterprise Group which are located in Malaysia have the same Financial Year as the Ultimate

Parent Entity of the Multinational

Enterprise Group; and

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(b)

each of the Constituent Entities prepares its own financial statements and the financial statements—

(i)

are required to be kept or used under any written law of Malaysia; or

(ii)

are audited by an approved company auditor.

(3)

Where a Constituent Entity located in

Malaysia is a Permanent Establishment of a Main Entity, subsection (2) shall apply to the

Constituent Entity if, in addition to meeting the requirements in paragraphs 2(a) and (b), the Main Entity prepares separate financial statements for the Constituent Entity.

(4)

For the purposes of this section,

“approved company auditor” and “financial statement” have the meanings assigned to them in subsection 2(1) of the Companies

Act 2016.”;

(d)

in subsection 165(10), by inserting after the words

“Qualified Refundable Tax Credits” the words

“and Marketable Transferable Tax Credits”;

(e)

in section 169—

(i)

in subsection (5)—

(A)

in paragraph (c), by deleting the word

“and” at the end of the paragraph;

(B)

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

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Finance

(C)

by inserting after paragraph (d)

the following paragraph:

“(e) any amount of credit of a

Constituent Entity for the Financial

Year in respect of a Marketable

Transferable Tax Credit that is recorded as a reduction to the current tax expense.”; and

(ii)

in subsection (6)—

(A)

in paragraph (b), by substituting for the words “in respect of a Non-Qualified

Refundable Tax Credit” the words “other than a Qualified Refundable Tax Credit and Marketable Transferable Tax Credit”;

and

(B)

by substituting for paragraph (c)

the following paragraph:

“(c) any amount of credit or refund for Covered Taxes, except for a Qualified Refundable Tax Credit or Marketable Transferable Tax

Credit, to a Constituent Entity that is not treated as an adjustment to current tax expense in the financial accounts;”;

(f)

in subsection 173(6), by inserting after the word

“adjustment” the words “under subsections (1) to (5)”;

(g)

by deleting subsection 176(2);

(h)

in subsection 177(1)—

(i)

in the formula, in explanation C, by substituting for the words “subsection 169(3) or 181(1)”

the words “subsections 169(3) and (4) or subsection 181(1)”; and

(ii)

in the formula, in explanation D, by deleting the words “the Domestic Top-up Tax, being”;

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(i)

in subsection 180(9), by inserting after the words

“amortisation,” the words “impairment loss”;

(j)

in subsection 181(3), by substituting for the word

“paragraph” the word “section”;

(k)

by deleting subsection 192(12);

(l)

by substituting for section 197 the following section:

“Transitional relief for the Substance-based Income

Report

Read on from s 197