Section 2

any loan or credit made to the Government, State

Government (including any loan or credit made to a person other than the Government or State Government where the loan or credit is guaranteed by the

Government or State Government), local authority or statutory body; or

any loan or credit other than a loan or credit of the kind specified in paragraph (a), made to a person pursuant to an application received prior to 25 October 1996 where the amount of such loan or credit exceeds two hundred and fifty million ringgit, by a person pursuant to an application received prior to 25 October 1996

not resident in Malaysia:

Provided that—

the loan or credit has been approved by the

Minister of Finance; and

an officer authorized by subsections 136(1) to (4) to exercise any function of the Director General; or

an officer authorized under subsection 136(5) to exercise or assist in exercising any such function;

“basis period”, in relation to a person, a source of his and a year of assessment, means such basis period, if any, as is ascertained in accordance with section 21 or 21A;

“basis year” has the meaning assigned by section 20;

“body of persons” means an unincorporated body of persons (not being a company), including a Hindu joint family but excluding a partnership;

“building” includes any structure erected on land (not being plant or machinery);

“business” includes profession, vocation and trade and every manufacture, adventure or concern in the nature of trade, but excludes employment;

“business trust” has the same meaning assigned to it in the Capital

Markets and Services Act 2007 [Act 671];

“capital asset” means⎯

movable or immovable property situated outside Malaysia including any rights or interests thereof; or

movable property situated in Malaysia which is a share of a company incorporated in Malaysia not listed on the stock exchange (including any rights or interests thereof) owned

24 Laws of Malaysia ACT 53

by a company, limited liability partnership, trust body or co-operative society;

“Central Bank” means the Central Bank of Malaysia established under section 3 of the Central Bank of Malaysia Act 2009 [Act 701];

“chargeable income” in relation to a person and a year of assessment, means chargeable income ascertained in accordance with this Act;

“company” means a body corporate and includes any body of persons established with a separate legal identity by or under the laws of a territory outside Malaysia and a business trust;

“composite assessment” means a composite assessment made in accordance with section 96A;

“controlled company” means a company having not more than fifty members and controlled, in the manner described by section 139, by not more than five persons;

“co-operative society” means any co-operative society registered under any written law relating to the registration of co-operative societies in Malaysia;

“deferred annuity” means deferred annuity contracted on or after 1 January 2014 issued by insurers licensed under the Financial

Services Act 2013 [Act 758] or takaful operators registered under the

Islamic Financial Services Act 2013 [Act 759], and contains the

Retirement Saving Standards approved by the Central Bank;

“director”, in relation to a company, includes any person occupying the position of director (by whatever name called), any person in accordance with whose directions or instructions the directors are accustomed to act and any person who—

is a manager of the company or otherwise concerned in the management of the company’s business;

is remunerated out of the funds of that business; and

Income Tax 25

is, either on his own or with one or more associates within the meaning of subsection 139(7), the beneficial owner of (or able directly or through the medium of other companies or by any other indirect means to control) twenty per cent or more of the ordinary share capital of the company (“ordinary share capital” here meaning all the issued share capital of the company, by whatever name called, other than capital the holders whereof have a right to a dividend at a fixed rate but have no other right to share in the profits of the company);

“Director General” means the Director General of Inland Revenue referred to in section 134;

“electronic invoice” means an invoice or any document approved by the Director General, issued by a person in respect of goods sold or services performed as provided under section 82C;

“employee”, in relation to an employment, means—

where the relationship of master and servant subsists, the servant;

where that relationship does not subsist, the holder of the appointment or office which constitutes the employment;

“employer”, in relation to an employment, means—

where the relationship of master and servant subsists, the master;

where that relationship does not subsist, the person who pays or is responsible for paying any remuneration to the employee who has the employment, notwithstanding that that person and the employee may be the same person acting in different capacities;

“employment” means—

26 Laws of Malaysia ACT 53

employment in which the relationship of master and servant subsists;

any appointment or office, whether public or not and whether or not that relationship subsists, for which remuneration is payable;

“executor” means the executor, administrator or other person administering or managing the estate of a deceased person;

“foreign tax” means any tax on income (or any other tax of a substantially similar character) chargeable or imposed by or under the laws of a territory outside Malaysia in which the same income arose and in relation to paragraph 132(4)(d) or section 132A includes other taxes of every kind imposed by or under the laws of that territory;

“Hindu joint family” means what in any system of law prevailing in

India is known as a Hindu joint family or coparcenary;

“husband who elects” means the husband who is referred to in paragraph 45(2)(b);

“incapacitated person” means a minor or a person adjudged under any law to be in a state of unsoundness of mind (however described);

“individual” means a natural person;

“Inland Revenue Board of Malaysia” means the Inland Revenue

Board of Malaysia established under the Inland Revenue Board of

Malaysia Act 1995 [Act 533];

“input tax” has the same meaning assigned to it in the *Goods and

Services Tax Act 2014 [Act 762];

“Labuan business activity” has the meaning assigned to it in the

Labuan Business Activity Tax Act 1990 [Act 445];

*NOTE—The Goods and Services Act 2014 [Act 762] has since been repealed by the Goods and Services

Tax (Repeal) Act 2018 [Act 805] which comes into operation on 1 September 2018–see section 3 of

Act 805.

Income Tax 27

“Labuan company” means a Labuan entity as provided under subsection 2B(1) of the Labuan Business Activity Tax Act 1990;

“lease” includes a sublease, a tenancy for three years or less and any agreement for a lease or sublease;

“limited liability partnership” means a limited liability partnership registered under the Limited Liability Partnerships Act 2012 [Act 743];

“Malaysia” means the territories of the Federation of Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the territorial waters, and the airspace above such areas, and includes any area extending beyond the limits of the territorial waters of Malaysia, and the sea-bed and subsoil of any such area, which has been or may hereafter be designated under the laws of Malaysia as an area over which Malaysia has sovereign rights or jurisdiction for the purposes of exploring and exploiting the natural resources, whether living or non-living;

“market value”, in relation to any thing, means the price which that thing would fetch if sold in a transaction between independent persons dealing at arm's length;

“Minister” means the Minister for the time being charged with the responsibility for finance;

“output tax” has the same meaning assigned to it in the Goods and

Services Tax Act 2014;

“partnership” means an association of any kind (including joint adventures, syndicates and cases where a party to the association is itself a partnership) between parties who have agreed to combine any of their rights, powers, property, labour or skill for the purpose of carrying on a business and sharing the profits therefrom, but excludes a Hindu joint family although such a family may be a partner in a partnership, a limited liability partnership and any association which is established pursuant to a scheme of financing in accordance with the principles of Syariah;

28 Laws of Malaysia ACT 53

“permanent total disablement” has the same meaning assigned to it in the Employees’ Social Security Act 1969 [Act 4];

“person” includes a company, a body of persons, a limited liability partnership and a corporation sole;

“premises” means a building (or, where a building is divided into separate parts used or capable of being used as separate residential flats or otherwise as separate tenements, any one of those parts) and includes—

any other building or part of a building used or intended to be used in conjunction therewith as domestic offices or for some other ancillary purpose; and

any land attached thereto for use by way of amenity as garden or grounds;

“prescribed” means prescribed by rules made under section 154 or, in relation to a form other than the form mentioned in subsection 138(1), prescribed under section 152;

“private retirement scheme” means a retirement scheme approved by the Securities Commission in accordance with the Capital Markets and

Services Act 2007 [Act 671];

“public entertainer” includes—

a compere, model, circus performer, lecturer, speaker, sportsperson, an artiste or individual exercising any profession, vocation or employment of a similar nature; or

an individual who uses his intellectual, artistic, musical, personal or physical skill or character in, carrying out any activity in connection with any purpose through live, print, electronic, satellite, cable, fibre optic or other medium, for film or tape, or for television or radio broadcast, as the case may be;

Income Tax 29

“rent” includes any sum paid for the use or occupation of any premises or part thereof or for the hire of any thing;

“research and development” means any systematic, investigative and experimental study that involves novelty or technical risk carried out in the field of science or technology with the object of acquiring new knowledge or using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include―

quality control or routine testing of materials, devices or products;

research in the social sciences or the humanities;

routine data collection;

efficiency surveys or management studies;

market research or sales promotion;

routine modifications or changes to materials, devices, products, processes or production methods; or

cosmetic modifications or stylistic changes to materials, devices, products, processes or production methods;

“resident” means resident in Malaysia for the basis year for a year of assessment by virtue of section 7 or 8;

“royalty” includes any sums paid as consideration for, or derived from—

the use of, or the right to use in respect of, any copyrights, software, artistic or scientific works, patents, designs or models, plans, secret processes or formulae, trademarks or other like property or rights;

30 Laws of Malaysia ACT 53

the use of, or the right to use, tapes for radio or television broadcasting, motion picture films, films or video tapes or other means of reproduction where such films or tapes have been or are to be used or reproduced in Malaysia, or other like property or rights;

the use of, or the right to use, know-how or information concerning technical, industrial, commercial or scientific knowledge, experience or skill;

the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by—

satellite; or

the use of, or the right to use, visual images or sounds, or both, in connection with television broadcasting or radio broadcasting, transmitted by—

satellite; or

the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence;

a total or partial forbearance in respect of—

the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or (b) or any such knowledge, experience or skill as is mentioned in paragraph (c);

the alienation of any property, know-how or information mentioned in paragraph (a), (b) or (c) of this definition;

“Secretary” means the Secretary to the Special Commissioners;

“Securities Commission” means the Securities Commission established under section 3 of the Securities Commission Malaysia

Act 1993 [Act 498];

“serious disease” means acquired immunity deficiency syndrome,

Parkinson’s disease, cancer, renal failure, leukemia or other similar diseases;

“service director”, in relation to a company, means a director (not being a person to whom, together with his associates within the meaning of subsection 139(7), if any, there would be distributed, on the distribution of a dividend by the company, more than five per cent of the dividend) who is employed in the service of the company in a managerial or technical capacity, and is not, either on his own or with any associate within that meaning, the beneficial owner of (or able directly or through the medium of other companies or by any other indirect means to control) more than five per cent of the ordinary share capital of the company (“ordinary share capital” here having the same meaning as in the definition of “director” in this subsection);

“share”, in relation to a company, includes stock other than debenture stock;

“source” means a source of income;

32 Laws of Malaysia ACT 53

“Special Commissioners” means the Special Commissioners of

Income Tax referred to in section 98;

“statutory authority” means any authority or body established by or under a written law (not being an authority or body established under the *Companies Act 1965 [Act 125], or any written law of a corresponding kind in force before the commencement of that Act in any place comprised in Malaysia on 1 January 1968) to discharge any functions of a public nature, including the provision of public utility and similar services;

“statutory income”, in relation to a person, a source and a year of assessment, means statutory income ascertained in accordance with this Act;

“statutory order” means an order having legislative effect;

“stock exchange” has the meaning assigned to it in the

Capital Markets and Services Act 2007;

“stock in trade”, in relation to a business, means property of any description, whether movable or immovable, being either—

property such as is sold in the ordinary course of the business or would be so sold if it were mature or if its manufacture, preparation or construction were complete; or

materials such as are used in the manufacture, preparation or construction of any such property as is referred to in paragraph (a) of this definition, and includes any work in progress;

“sukuk” has the same meaning assigned to it in the Capital Markets and Services Act 2007;

*NOTE—The Companies Act 1965 [Act 125] has since been repealed by the Companies Act 2016

[Act 777] which comes into operation on 31 January 2017–see subsection 620(1) of Act 777.

Income Tax 33

“tax” means the tax imposed by this Act;

“total income”, in relation to a person and a year of assessment, means total income ascertained in accordance with this Act;

“treasury share” means a share of a company that was previously issued but was repurchased, redeemed or otherwise acquired by such company and not cancelled;

“trust body”, in relation to a trust, means the trust body provided for by section 61;

“wife” means a woman who (whether or not she has gone through any religious or other ceremony) is regarded by virtue of any law or custom as the wife of a man or as one of his wives;

“wife who elects” means the wife who is referred to in paragraph 45(2)(a);

“year of assessment”, subject to subsection (5), means calendar year.

Any reference in this Act to income shall, if the income is not described as being income of a particular kind, be construed as a reference to income generally or to gross, adjusted, statutory, aggregate, total or chargeable income as the context and circumstances may require.

Unless the context otherwise requires, “payable for” and

“receivable for”, when used in this Act with reference to a period, mean payable or receivable, as the case may be, for that period or any part thereof.

Where—

References in this Act to a year or years of assessment shall be construed (except where Schedule 9 provides otherwise) as references to a year or years of assessment in relation to which this Act has effect by virtue of subsection 1(3).

For the purposes of this Act—

Any reference in this Act to interest shall apply, mutatis mutandis, to gains or profits received and expenses incurred, in lieu of interest, in transactions conducted in accordance with the

Syariah.

Income Tax 35

Subject to subsection (7), any reference in this Act to the disposal of an asset or a lease shall exclude any disposal of an asset or lease by or to a person pursuant to a scheme of financing approved by the Central Bank, the Labuan Financial Services Authority or the

Malaysia Co-operative Societies Commission, or approved or authorized by, or lodged with, the Securities Commission as a scheme which is in accordance with the principles of Syariah where such disposal is strictly required for the purpose of complying with those principles but which will not be required in any other schemes of financing.

Any reference—