Income Tax Act 1967 (revised 1971) (2023)

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IMPRESSION

PUBLISHED BY

DER COMMISSIONER OF LAW REVIEW, MALAYSIA

UNDER THE AUTHORITY OF THE LAW REVIEW ACT 1968 IN COLLABORATION WITH THE MALAYAN LAW JOURNAL SDN BHD AND PERCETAKAN NASIONALMALAYSIA BHD

2006

Leu 53

INCOME TAX ACT 1967

Including all changes from January 1, 2006053d .FM Page 1 Thursday, April 6, 2006 12:07

PREPARED FOR PUBLICATION BY

MALAYAN LAW JOURNAL SDN BHD

AND PRINTED BY

MALAYSIA NATIONAL PRINTING LIMITED

THE KUALA LUMPUR BRANCH

2006

INCOME TAX ACT 1967

First enacted ... ... ... ... ... 1967 (Act No. 47 of 1967) Revised ... ... ... ... ... ... 1971 (Act 53 w.e.f. October 21, 1971)

EARLIER REPRINTS

First reprint ... ... ... ... ... 1980

Second reprint ... ... ... ... 1993

Third reprint ... ... ... ... ... 2002

053 .FM Page 2 Thursday 6 April 2006 12:07 p.m

MALAYSIAN LAWS

Leu 53

ARRANGEMENT OF SECTIONS

INCOME TAX ACT 1967

PART ONE

PRELIMINARY

section

1. Short title and beginning

2. Interpretation PART II

TAXATION AND GENERAL FEATURES

VAT

3. Collection of Income Tax3A. (deleted)

3B. Offshore Business Tax Exemption3C. (deleted)

4. Taxable Income Classes4A. Special taxable income brackets

5. How to determine the taxable income

6. Tax Rates6A. tax refund

6B. Small Business Loan Tax Reduction

6C. Reduction of taxes on fees

7. Residence: Individuals

8. Residence: Businesses and corporations of persons

9. (deleted)

10. (Deleted)053d.FM Page 3 Thursday 6 April 2006 12:07

4 Malaysian Law ACT 53

section

11. (Deleted)

12. Deriving Business Income in Certain Cases

13. General provisions on earned income13A. (deleted)

14. General Provisions on Dividend Income

15. Derivation of interest and royalty income in certain cases15A. Derivation of special income classes in certain cases

16. Voluntary pensions, etc.

17. Derivation of pensions, etc. PART III

Calculation of eligible income

Chapter 1 - Preliminary

18. Interpretation of Part III

19. Supplemental Provisions Concerning the Interpretation of Part III, Chapter 2 - Base Years and Base Periods

20. Base Years

21. Base period of any person other than a corporation, trust or cooperative

21A. Assessment period of a corporation, trust or cooperative Chapter 3 - Gross Income

22. Gross income in general

23. Interpretation of §§ 24 to 28

24. Base period to which a company's gross sales refer

25. Reference period to which the gross income of an employment relates

26. Base period to which gross profit relating to dividends relates

27. Base period to which the gross receipts relate in terms of interest etc

28. Assessment period to which the gross income not provided for in Sections 24 to 27 relates

29. Base period to which cash receipts relate

30. Special Provisions for Gross Income of a Company 053d .FM Page 4 Thursday April 6, 2006 12:07 pm

income tax 5

section

31. (Deleted)

32. Special Provisions for Gross Income from Employment Chapter 4 – Adjusted Income and Adjusted Loss

33. Adjusted income in general

34. Special Provisions for Adjusted Income of a Company34A. Special deduction for research costs

34B. Special deduction for contributions to an accredited research institute or payments for the use of services of an accredited research institute or company

35. Trade file

36. Power to order special treatment in the calculation of trading income in certain cases

37. (Deleted)

38. Special Provisions for Adjusted Employment Income38A. Limitation on the deduction of entertainment expenses

39. Deductions not allowed

40. Adjusted Loss

41. Determination of a company's adjusted income or adjusted loss for an accounting period

Chapter 5 - Legal Income

42. Legal Income Chapter 6 - Total Income and Total Income

43. Total Revenue

44. Total Revenue44A. Group relief for companies

Chapter 7 - Compensatory Income

45. Eligible Income and Aggregated Husband and Wife Income45A. deduction for husband

46. Natural and Hindu Joint Family Deduction46A. Deduction for individuals on interest expense

47. Deduction for wife or ex-wife053e .FM Page 5 Thursday April 6, 2006 12:07 pm

6 Malaysian Law ACT 53

section

48. Deduction for children

49. Deduction for Insurance Premiums

50. Application of Section 49 when husband and wife live together

51. The deduction must be claimed Chapter 8 - Special Cases

52. Amendment of Part III in certain special cases

53. Business Associations

54. Sea and Air Transport Company54A. Promotional Prize Exemption

54B. (deleted)

55. Partnerships in general

56. Consecutive partnerships

57. Provisions applicable when the company is an affiliate of another company

58. Income from partnership other than commercial partnership

59. Partnership Losses

60. Insurance business 60A. Internal reinsurance: eligible return, reduced rate and tax-free dividend

60AA. Application of Sections 60 and 60A to a Takaful Transaction 60AB. Taxable Life Fund Payable Income60B. Offshore insurance: taxable income, reduced rate and tax-free dividends60C. banking

60D (deleted)

60E. (deleted)

60F. holding company

60FA. Investment holding company listed on Bursa Malaysia60G. Foreign fund management company

60H. closed society

61. Trusts general053e .FM Page 6 Thursday 6 April 2006 12:07

income tax 7

section

61A. Exemption from real estate investment trust fund

62. Discretion

63. Trust Annuities63A. Special deduction for qualifying investments63B. Special deduction for expenses

63C. Special leasing treatment the leasing of property from a real estate investment trust or property trust fund

63D. Income of a trust company from the leasing of land is not income from commercial operations.

64. Real estate under management

65. Settlements65A. cooperatives

TEIL IV

RESPONSIBLE PERSON

66. Personal enforceability: general principle

67. Agent Liability and Enforceability

68. Power to Appoint a Representative

69. Disabled

70. Non-residents

71. Commanders of ships and captains of aircraft

72. Hindu joint families

73. Trustee

74. Executor

75. Companies and corporations of persons75A. director's responsibility

76. Rulers and Overlords PART V

RETURNS

77. Refund of income by a person who is not a corporation, trust or cooperative

053 .FM Page 7 Thursday 6 April 2006 12:07 p.m

8 Malaysian Law ACT 53

section

77A. Income refund by any corporation, trust or cooperative

78. Authority to Demand Certain Returns and Book Productions

79. Power to request statements from bank accounts, etc

80. Authorization to access buildings and documents etc.

81. Power to Request Information

82. Obligation to record and provide documentation82A. Obligation to keep documents for calculation of taxable and taxable income

83. Employer return

84. Return in relation to persons other than the drafter of the statement

85. Return by inmates

86. Returning through partnership

87. Power to Request Additional Consideration

88. Returns are deemed to have been made with due authorization

89. Change of Address PART VI

REVIEWS AND RESOURCES

Chapter 1 - Reviews

90. Reviews in general

91. Evaluation and additional evaluations in certain cases

92. Early assessments

93. Form and implementation of evaluations

94. Registration of reviews

95. Relief from double taxation

96. Self Liberation96A. composite rating

97. Purpose of EvaluationChapter 2 - Resources

98. The Special Commissioners and the Clerk053e .FM Page 8 Thursday April 6, 2006 12:07 pm

income tax 9

section

99. Right to Complain

100. Extension of the appeal period

101. Review by the Chief Executive Officer

102. Disposal of Resources PART VII

TAX COLLECTION AND REFUNDS

103. Payment of Tax103A. (deleted)

104. Rescue of people leaving Malaysia

105. Refusal of customs clearance in certain cases

106. Earnings per share

107. Tax deduction for salaries and pensions107A. Tax deduction from the contract payment

107B. Payment in installments

107C. Estimation of taxes and installments to be paid for companies

108. Dividend Tax Deduction

109. Deduction of Interest or Royalties in Certain Cases109A. Application of sections 109 and 110 to income of a public entertainer

109B. Special income bracket tax deduction in certain cases from Malaysia

109C. Tax deduction for interest paid to a resident109D. Tax deduction on distribution of income from a Trusat entity

110. Compensation for tax deducted110A. No right of an offshore company to compensation

111. Return of Overdue Payments111A. Non-Recovery Claim of an Offshore Company PART VIIA

TAX REFUND FUND

111B. Establishment of a tax refund fund

111C. Inapplicability of Section 14A of the Financial Procedures Act 1957053e .FM Page 9 Thursday 6 April 2006 12:07pm

10 Malaysian Laws ACT 53

PART VIII

INJURIES AND PENALTIES

section

112. Failure to Provide a Return or Enforcement Notice

113. False Returns

114. Deliberate evasion

115. Leave Malaysia without paying taxes

116. Obstruction of officials

117. Breach of trust

118. Offenses committed by employees

119. Unauthorized Collection 119A. Failure to keep records

120. Other offenses

121. Additional provisions for criminal offenses in Articles 113, 115, 116, 118 and 120

122. Tax due despite filing a claim, etc

123. (Deleted)

124. Power to aggravate offenses and reduce or waive penalties

125. Recovery of Penalties Ordered in Part VIII

126. Jurisdiction of the lower court PART IX

EXEMPTIONS, DECREES AND OTHER DECREES

127. Tax exemptions: general127A. termination of liberation

128. (Deleted)

129. Tax Exemption129A. another relief

130. Assistance to non-resident citizens

131. Liberation from error or error

132. Double Taxation Convention

133. Unilateral Double Tax Relief 053 .FM Page 10 Thursday, April 6, 2006 12:07 p.m. Income Tax 11

PART IX

SPECIAL INCENTIVE RELIEF

section

133A. special incentive relief

PART X

ADDITIONALLY

Chapter 1 - Administration

134. The Director General and his team

135. Power of the Minister to give instructions to the Director-General

136. Delegation of duties by the Director General

137. Identification of employees

138. Certain materials must be kept confidential. Chapter 2 - Controlled Entities and Powers to Protect Revenue in Certain Transactions

139. Controlled companies

140. Power to Disregard Certain Transactions

141. Powers in Relation to Certain Transactions by Non-Residents Chapter 3 – Miscellaneous

142. Probationary Period Rules

143. Errors and deficiencies in notices, notices and other documents

144. Authority to determine where to send returns etc

145. Delivery of Notices

146. Certification of notices and other documents

147. Free shipping

148. Provisions on authorizations and instructions from the Minister or Director General

149. Cancellation of rules and orders submitted to Dewan Rakyat

150. Power to Approve a Pension or Provident Fund, Scheme or Partnership

151. Refund and reimbursement procedures

152. Forms053e .FM Page 11 Thursday 6 Apr 2006 12:07pm12 Malaysian Law ACT 53

section

152A. electronic means

153. Restriction on self-portrayal as a tax agent, tax advisor, etc.

154. Power to Make Rules 154A. Power to Enter into a Tax Responsibility Agreement

155. Revocations

156. Transitional and Salvage Provisions ANNEX 1

APPENDIX 2

APPENDIX 3

ANNEX 4

APPENDIX 4A (Excluded)

APPENDIX 4B

APPENDIX 4C (excluded)

APPENDIX 5

ANNEX 6

ANNEX 7

ANEXO 7A

ANEXO 7B

APPENDIX 8

APPENDIX 9

053 .FM Page 12 Thursday 6 April 2006 12:07 p.m.13

MALAYSIAN LAWS

Leu 53

INCOME TAX ACT 1967

An Income Tax Collection Act.

[By Malaysia - September 28, 1967]

PART ONE

PRELIMINARY

Short title and beginning

1. (1) This Act may be referred to as the Income Tax Act 1967. (2) (omitted).

(3) This law comes into force for the assessment year 1968 and the following assessment years.

Interpretation

2. (1) In this Act, unless the context otherwise requires, - “adjusted income” in relation to a source and base period means the adjusted employee provident fund income calculated in accordance with this Act;

"Adjusted Loss" in relation to a Source and Base Period means the Adjusted Loss calculated under this Act; “Total Income” for a person and year of assessment means the total income calculated under this Act;

"Approved Loan" means...

(a) any loan or credit made by any government, state government (including any loan or credit made by any person other than the government or the state

government, if the loan or credit is guaranteed by the government or state government), local authority or public body; or

053e.FM Page 13 Thursday April 6, 2006 12:07 p.m.14 Malaysian Laws ACT 53

(b) any loan or credit, other than a loan or credit of the kind referred to in paragraph (a), granted to any person pursuant to an application received before October 25, 1996, if the amount of such loan or credit exceeds two hundred and fifty million ringgit,

by a person pursuant to an application received prior to October 25, 1996 who is not a resident of Malaysia:

Provided that--

(i) the loan or credit has been approved by the Treasury Secretary; and

(ii) the loan or credit agreement was made in Malaysia or where the loan or credit agreement was made with the prior approval of the Minister

outside Malaysia;

"approved headquarters" has the meaning given to it in Section 60E;

“Approved Plan” means the Employees Provident Fund or any retirement or provident fund, plan or partnership approved by the Chief Executive in accordance with Section 150;

"Assessment" means any assessment or further assessment made under this Act;

"Authorized Officer" means, within the limits of his powers - (a) an officer authorized under subsection 136(1) through (4) to perform a function of director-general; or (b) an officer authorized under subsection 136(5) to perform or assist in the performance of such function; “Base Period” in relation to an individual, a source thereof and an assessment year means the base period, if any, as determined pursuant to Section 21 or 21A;

“Base Year” has the meaning given in Section 20; “Incorporation” means an unincorporated association of persons (which is not a corporation), including a Hindu family association, but not including an association;

"Building" includes any structure (other than plant or machinery) constructed on land;

053 .FM Page 14 Thursday, April 6, 2006 12:07 p.m. Income Tax 15

"Business" includes profession, vocation, and trade, and any manufacturing, adventure, or concern of the nature of trade, but excludes employment;

“Central Bank” means the Central Bank of Malaysia established under Section 3 of the Central Bank of Malaysia Act 1958 [Act 519];

"taxable income" in relation to an individual and a year of assessment means the taxable income assessed under this Act;

"Office" means the Secretary of the Special Commissioners; “Corporation” means a legal entity and includes any corporation of persons incorporated with a separate legal personality by or under the laws of any territory outside of Malaysia;

“Composite Assessment” means a composite assessment in accordance with Section 96A;

“Controlled Company” means a company of not more than fifty members and controlled by not more than five persons as described in Section 139;

“Cooperative” means any cooperative incorporated under a written law relating to the registration of cooperatives in Malaysia;

"Director" in relation to a company includes any person holding the office of director (however called the name), any person under whose direction or direction directors are accustomed to act and any person who - (the ) a manager of the company or otherwise involved in the management of the affairs of the company;

(b) is paid out of the funds of that entity; and (c) alone or with one or more associates as defined in subsection 139(7) of

beneficial owner (or able to control, directly or through other entities, or otherwise indirectly) twenty percent or more of

Share capital of the company ("share capital" means here the entire issued share capital of the company, by any name, except

Capital whose holders are entitled to dividends

at a fixed rate, but have no other right to share in the profits of the company);

“General Manager” means the general manager of InlandRevenue referred to in Section 134;

"Employee" in relation to employment means - (a) when the relationship is between superior and servant, the employee;

(b) if that relationship no longer exists, the holder of the appointment or position to which the

Work;

"Employer" in relation to employment means - (a) when the relationship is between master and servant, the master;

(b) if that relationship no longer exists, the person paying or responsible for paying

Compensation to the employee who

Employment, although that person and the worker may be the same person acting in different capacities;

"Employment" means...

a) employment in which the relationship is between boss and servant;

(b) any appointment or position, public or otherwise, whether related or not, for which compensation is due;

“Executor” means the executor, trustee or other person administering or administering the estate of a deceased person; “Foreign Tax” means any income tax (or any other tax of a substantially similar character) levied or imposed by or under the laws of any territory outside of Malaysia;

"Hindu Common Family" means what is known in any prevailing legal system in India as a Hindu common family or community;

"Chosen Husband" means the husband referred to in paragraph 45(2)(b);

053 .FM Page 16 Thursday, April 6, 2006 12:07 p.m. Income Tax 17

“Disabled Person” means a minor or a person who is classified as mentally ill under any law (as described);

"Individual" means a natural person;

„Inland Revenue Board of Malaysia“ bedeutet Inland Revenue Board of Malaysia estabelecido sob o Inland Revenue Board of Malaysia Act 1995 [Lei 533];

"Lease" includes a sublease, a lease of three years or less and any lease or sublease;

"Malaysia" means the territories of the Federation of Malaysia, the territorial seas of Malaysia and the seabed and subsoil of the territorial seas of Malaysia and includes any area extending beyond the limits of the territorial waters of Malaysia and the seabed and sea subsoil of that area falling under Malaysian has been or may be designated by law as an area over which Malaysia has sovereign rights for the purpose of exploration and exploitation of living or non-living natural resources; "Market Value" means, in relation to anything, the price that such item would fetch if sold in a transaction between arms and arm's length dealing in normal market conditions;

“Minister” means the Minister currently responsible for Finance;

“Offshore Business Activity” has the meaning given to it by the Labuan Offshore Business Activity Tax Act 1990 [Act 445];

"Offshore Company" has the meaning given to it by the Labuan Offshore Business Activity Tax Act 1990;

“Partnership” means an association of any kind (including joint ventures, syndicates and where part of the association is itself a partnership) between parties who have agreed to share their rights, powers, property, labor or ability to combine with the purpose of conducting a business and sharing the resulting profits, however, precludes a common Hindu family, although such family may be partners in a partnership;

"Person" includes a corporation, a group of people and a legal entity;

"Facilities" means a building (or, if a building is divided into separate parts that are or may be used as separate parts, Thursday 6 April 2006 12:07 PM18 Malaysian Laws ACT 53

apartments or otherwise as separate rental houses, all such parts) and includes:

(a) any other building or part of a building used or intended to be used in connection with it

home office or for another ancillary purpose; and

(b) associated land for garden or land use;

“required” means required by the regulations made in Section 154 or, in respect of a form other than that referred to in subsection 138(1), required in Section 152;

"Public Entertainer" means a performer, radio or television performer, musician, athlete or individual pursuing a profession, vocation or occupation of a similar nature;

"Rent" includes all sums paid for the use or occupancy of any property or part thereof, or for the rental of anything; “Resident” means resident of Malaysia in the base year for a year of assessment under Section 7 or 8;

"Royalty" includes--

(a) Amounts paid as consideration for use or for the right to use -

(i) any copyright, artistic or scientific work, patent, design or model, plan, secret process or

Formulas, brands or tapes for radio or

TV broadcasts, movies,

Films or videotapes or other means of

Playback where have such films or tapes

have been or will be used or reproduced

Malaysia or other similar property rights or rights;

(ii) know-how or information about

technical, commercial, commercial or scientific

knowledge, experience or ability;

(b) income from the disposal of any property, know-how or information as referred to in paragraph (a) of this definition;

(c)(d) (Excluded by Act 293);

053 .FM Page 18 Thursday, April 6, 2006 12:07 p.m. Income Tax 19

“Securities Commission” means the Securities Commission established pursuant to Section 3 of the Securities Commission Act 1993 [Act 498];

"Services director" in relation to a company means a director (who is not a person to whom, together with his employees within the meaning of subsection 139(7), if any, would be distributed in the distribution of a dividend by the company, more than five percent of the Dividend) who works in the service of the company in a managerial or technical capacity and is not the beneficial owner (or directly qualified) on his own account or in connection with a partner or through companies or through other indirect means of control) exceeds five percent of the common stock of the company (“stock” has the same meaning as in the definition of “director” in this subsection);

"Shares" in relation to a company include shares other than bonds;

“Source” means a source of income;

“Special Commissioners” means the Special Income Tax Commissioners referred to in Section 98;

"Regulatory Authority" means any authority or body created by or under any written act (other than a authority or body created by the Companies Act 1965 [Act 125] or any written law of an equivalent kind which before the entry into force of this Act, was established at any included place in Malaysia on January 1, 1968) for the performance of any function of a public nature, including the provision of public utilities and similar services; "legal income" in relation to person, source and year of assessment means the legal income calculated under this Act;

“Regulation” a regulation having legislative effect; "Commercial Inventory" in relation to an enterprise means property of any kind, movable or immovable, which is (a) property sold or would be sold in the ordinary course of business when mature, or when its manufacture, preparation or construction were

Completely; or

053e.FM Page 19 Thursday 6 Apr 2006 12:07:20 Malaysian Law ACT 53

(b) materials used in the manufacture, preparation or construction of any property within the meaning of paragraph (a) of this definition,

and includes all work in progress;

"Tax" means the tax imposed under this Act;

"Total Income", relating to a person and year of assessment, means the total income determined under this Act; “Trustee” means, in relation to a Trust, the trustee provided for in Section 61;

"Wife" means a woman who (whether or not she has undergone a religious or other ceremony) is, by law or custom, considered the wife of a man or one of his wives; “Electing Wife” means the wife referred to in paragraph 45(2)(a);

Subject to paragraph 5, "assessment year" means the calendar year.

(2) Any reference in this Act to income, where income is not designated as income of a specific type, shall be construed as a reference to income in general or to gross, adjusted, statutory, aggregated, total or taxable income for context and circumstances may require.

(3) Unless the context otherwise requires, “pay for” and “receive for” when used in this Act in reference to a period mean due or to be received for that period or any part thereof, as the case may be .

(4) Wo--

(a) two or more companies are associated within the meaning of Section 6 of the Companies Act, 1965;

(b) a company is affiliated with another company which is itself affiliated with a third company;

(d) each of two or more entities is affiliated with at least one of the two or more entities to which paragraph (c) applies,

053 .FM Page 20 Thursday, April 6, 2006 12:07 p.m. Income Tax 21

all the companies in question are part of the same group within the meaning of this law.

(5) References in this Act to one or more assessment years (unless otherwise provided in Schedule 9) shall be construed as references to one or more assessment years to which this Act applies under Subsection 1(3). (6) For the purposes this law –

(a) the reference to taxes in paragraph 79(e) shall be understood as a reference to any tax imposed by any of the repealed statutes (“Repealed statutes” in this subsection have the same meaning as in Schedule 9);

(b) the reference to this Act in Section 81, Section 116(c) and Section 153 shall be construed as a reference to each of the repealed Acts; and

Functions under any repealed law exercised by virtue of that law.

(7) Any reference in this Law to interest applies mutatismutandis to profits received or profits incurred and expenses incurred instead of interest in transactions carried out in accordance with the Syariah.

(8) Subject to subsection (7), any reference in this Act to the disposal of an asset or lease excludes any disposal of an asset or lease by or for any person under a financing plan approved by the Central Bank or the Securities, a system which allows the Syariah policies where such disposal is strictly necessary to comply with those policies but is not required under other funding schemes.

PART II

TAXATION AND GENERAL FEATURES

VAT

income tax collection

3. Subject to and in accordance with this Act, a tax designated as income tax is payable on 053e .FM Page 21 Thursday 6 April 2006 12:07 PM22 Malaysian Laws ACT 53 for each year of assessment

a person's income accrued or derived in Malaysia or received in Malaysia from outside Malaysia.

3A (Repressed by Law 451).

Tax exemption in relation to offshore business activities

3B. Contrary to Section 3, no taxes are levied on income from an offshore business activity of an offshore company under this Act.

3C. (Repressed by Law 578).

Income classes on which taxes are levied

4. Subject to this Act, income chargeable under this Act is income from:

(a) income or profits from any business for any period;

(b) income or gains from employment;

(d) rents, royalties or awards;

(e) annuities, annuities or other periodic payments not covered by any of the preceding paragraphs;

(f) Income or gains not covered by any of the preceding paragraphs.

Special taxable income brackets4A. Notwithstanding Section 4 and subject to this Act, the income of a non-Malaysia resident in the base year for any assessment year in respect of

(i) Amounts paid in consideration for services rendered by the person or his employee in connection with the use of any property or rights attached thereto or the installation or operation of any plant, machinery or other

devices bought by these people;

053 .FM Page 22 Thursday, April 6, 2006 12:07 p.m. Income Tax 23

(ii) Amounts paid in consideration for technical advice, assistance or services related to technical management or administration of any kind

scientific, industrial or commercial enterprise, company, project or undertaking; or

(iii) Rent or other payments made under an agreement or arrangement for the use of tangible property originating in Malaysia are taxable under this Act.

Form of calculation of taxable income

§ 5. (1) A person's taxable income to be taxed for a year of assessment shall be determined in accordance with this Act as follows:

(a) First, the base period for each of your sources for that year is determined in accordance with Chapter 2 of Part III;

(b) thereafter your gross income from each source for that year's base period shall be determined in accordance with Chapter 3 of this part;

(c) below, your adjusted income from each source (or, in the case of a source consisting of a corporation, your adjusted income or adjusted loss from that source) for the base period for that year is determined in accordance with Chapter 4 of this part;

(d) thereafter your legal income from any source for that year will be determined in accordance with Chapter 5 of this part;

(e) thereafter your total income for that year and your total income for that year will be determined in accordance with Chapter 6 of this Part; and

(f) thereafter his taxable income for that year shall be determined in accordance with Chapter 7 of this Part: Provided that in determining the taxable income of a Malaysia resident individual, interest accrued or derived from 053e is excluded. FM Page 23 Thursday April 6, 2006 12:07 pm24 Malaysian Laws ACT 53

Malaysia and received from a person referred to in subsection 109C(4) in connection with interest paid or credited to that person. (2) For the purposes of this Act, all of a person's income from any source or sources and any adjusted loss of a person from any source or sources consisting of an enterprise may be assessed for any period (including an assessment year), although--

(a) the data subject may have ceased to possess that source or any of those sources prior to that period; or (b) during that period, that source or one of those sources may have ceased to generate gross income or gross income at all.

(3)(4) (Excluded by Law 337).

tax rates

6. (1)(a) Except as provided in this Subsection and subject to Section 6A, income tax for each year of assessment shall be assessed on each person's taxable income in that year at the appropriate rate set out in Part I of the Schedule; (b) subject to Section 109 but notwithstanding any other provision of this Act, if

(i) the income of a non-Malaysian resident in the base year for a year of assessment consists of interest (other than interest on an approved loan or interest of the type referred to in paragraph 33 of Part 1, Schedule 6) or royalties derived therefrom

Malaysia; order

(ii) the income of a person (other than a corporation) who is not a resident of Malaysia in the base year for any assessment year consists of compensation or otherwise

Income from services rendered or

rendered in Malaysia by a public artist,

income tax is payable on them at the appropriate rate in accordance with Part II of Schedule 1;

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(d) income tax is levied for each year of assessment on the taxable income of each association in that year at the appropriate rate set out in Part IV of Schedule 1; (e) subject to Section 109B but notwithstanding any other provision of this Act, income tax shall be payable for each year of assessment on a person's income assessed under Section 4A at the appropriate rate of tax set out in Part V of Schedule 1; (f) subject to Section 109C but notwithstanding any other provision of this Act, income tax shall be payable for each year of assessment on income of a Malaysia resident individual consisting of interest (other than interest exempted under this Act or any issued order). thereafter) collected in a Malaysian order and received from a person referred to in subsection 109C(4) at the reasonable rate set forth in Part VI of Schedule 1;

(g) (Excluded by Act 624);

(h) for each year of assessment, income tax is payable on the chargeable income of a foreign fund management company arising from the provision of fund administration services to foreign investors in that year as specified in Part IX of Schedule 1; (i) subject to Section 109D but notwithstanding any other provision of this Act, income tax will be payable for each year of assessment to a non-resident Unitholder consisting of income distributed by the Unit Fund referred to in Section 61A at the rate set out in Part X of Schedule 1.

(2) The Minister, if satisfied that it is the Government's intention to encourage the introduction of a bill amending the tax rates in the Dewan Rakyato, may declare by ordinance that those tax rates should be so changed; and if that is the case, subject to the provisions of paragraphs 3 and 4, this Act shall come into force as if those widely differing rates had come into force at the beginning of the first year of assessment for which the Bill provides for a change in those rates.

(3) Any request under subsection (2) shall be submitted to the Dewan Rakyat as soon as practicable after its filing and shall cease to have effect -

053e.FM Page 25 Thursday 6 Apr 2006 12:07pm26 Malaysian Law ACT 53

(a) at the end of a period of three months (or such longer period as may be determined by decision of the Dewan Rakyat) commencing on the date of application; or

(b) upon the enactment (after the date of application) of a law with different tax rates,

what happens first

(4) If an order under subsection (2) loses its effect under subsection (3) -

(a) the amount of any taxes payable

(i) was billed for a review by

reference to the order; and

(ii) is payable (whether due or past due and payable or not) but not payable on the date of

order stops working

shall be deemed corrected by the amount

would have been paid if the order had not been placed; and

(b) that much of any tax paid by any person pursuant to the Order in excess of the tax payable under applicable law immediately after the date on which the Order ceases to be in force shall be returned by the Director-General if such person - -

(i) within one year of that date, makes a claim in the prescribed manner; and

(ii) provide the Director-General with additional details of the claim as Director-General

may request.

(5) In subsections (2) and (3), any reference to tax rates includes a reference to the rebate rate specified in Schedule 1.

tax refund

6A (1) Subject to this Section, the income tax levied for each year of assessment on each individual's taxable income in the base year of that year shall be refunded for that year.

Assessment year according to paragraphs (2), (3) and (3A), before offsetting according to § 110 and crediting according to § 132 or 133 takes place.

(2) A discount of the following amount is granted for a trial year:

(a) three hundred and fifty ringgit in the case of an individual who has received a deduction under paragraph 46(1)(a) for that year of assessment if his chargeable income for that year of assessment does not exceed thirty-five thousand ringgit;

(b) three hundred and fifty ringgit in the case of an individual who has received a deduction under subsection 47(1) or (2) for that year of assessment and his chargeable income is for that year of assessment

Estimate no more than thirty-five thousand

Ringgit;

(c) three hundred and fifty ringgit in the case of a wife who received a deduction under Section 45A for the year of assessment in which she was charged

the income for that assessment year does not exceed thirty-five thousand ringgit.

(3) For any zakat, fitrah or any other Islamic religious debt payable and paid in the base year for that assessment year, a rebate shall be granted for an assessment year and evidenced by a receipt issued by an appropriate religious authority after a written law was established. (3A) A rebate of 500 ringgit is granted to a person for a trial year in respect of a receipted purchase of a personal computer in the base year for that trial year:

Provided that no discount is granted to that person under this subsection -

(a) for the next four examination years;

(b) where the pc was used for

purposes of your business; or

(4) If the aggregate amount of the deduction under paragraphs (2), (3) and (3A) exceeds the income tax assessed (before deduction) for any year of assessment, the excess will not be paid to the individual or made available as credit against your Tax liability in this assessment year or in a later year.

Small Business Loan Tax Reduction

6B. (1) Subject to this Section, income tax levied for each year of assessment on the taxable income of a person making a loan to a small business shall be refunded at an amount equal to two percent pro rata per annum or such other rate of tax from time to time Time prescribed by the Secretary of State on the outstanding balance of the loan before a section 110 offset is made and a section 132 or 133 credit is allowed: Provided if the rebate exceeds the calculated income tax (before deductions) in any year of assessment, the deductible not paid to that person and is not available as a credit against tax liability for that year of assessment, but is available as a credit for offsetting against tax revenue due for a subsequent year of assessment.

(2) “Small Business Loan” means a loan conforming to guidelines established from time to time by an appropriate authority appointed by the Minister.

Reduction of taxes on fees

6C. Income tax levied on an individual's taxable income for each year of assessment is returned pursuant to an order made under Section 3 of the Taxes Act 1951 [Act 209] on any tax paid to the Government in the base year for that year of assessment. , for issuance of an Employment Pass, VisitPass (Temporary Employment), or Work Pass before compensation is made under Section 110 and credit is allowed under Section 132 or 133:

Provided that the deduction exceeds the calculated income tax (before deductions) for a year of assessment, the excess will not be paid to that individual and will not be available as a credit against his or her tax liability for a subsequent year of assessment.

053 .FM Page 28 Thursday, April 6, 2006 12:07 p.m. Income Tax 29

Residence: individual

7. (1) For the purposes of this Act, an individual is a resident of Malaysia in the base year for a given assessment year if: (a) he resides in Malaysia in that base year for a period or periods totaling one hundred and eighty-two days or more ;

(b) he is in Malaysia in that base year for a period of less than one hundred and eighty-two days and such period interspersed with or with any other period of one hundred and eighty-two or more consecutive days (hereinafter:

referred to in this paragraph as such period)

during which he is in Malaysia in the base year for the assessment year immediately preceding that particular assessment year or in that base year for the assessment year immediately following that particular assessment year:

Provided that a temporary absence of

Malaysia--

(i) in connection with your service in Malaysia and

due to service or attendance issues

conferences or seminars or study abroad;

(ii) for health reasons or a

member of your immediate family; and

(iii) in relation to social visits not exceeding

fourteen days not in total,

will be considered part of that period or period when in Malaysia

immediately before and after such temporary absence; (c) he is in Malaysia for a total period or periods totaling ninety days or more in that base year;

in relation to each of the three base years for the four years of assessment

immediately prior to that particular year of

Evaluation or--

(i) resident in Malaysia for the purposes of this Act for the relevant base year; or

053e .FM Page 29 Thursday 6 April 2006 12:07 PM30 Malaysian Law ACT 53

(ii) in Malaysia for a period or periods totaling ninety days or more in the base year

questionable; or

(d) he is a resident of Malaysia for the purposes of this Act for the base year for the assessment year subsequent to that particular assessment year, having been resident in each of the base years for the three assessment years immediately preceding that particular assessment year.

(1A) For the purposes of subsection (1), a person shall be deemed to be one day in Malaysia if he is in Malaysia for any part of that day and in determining the period of time he is in Malaysia during any year: each day (within paragraphs 1(a) and (c)) on which he is in Malaysia shall be taken into account, regardless of whether that day forms part of a contiguous period of days on which he is in Malaysia.

(2) (Excluded by Act A226).

Residence: Businesses and corporations of persons

8. (1) For the purposes of this Act - (a) a base year Hindu joint family is a resident of Malaysia for a assessment year if its manager or Karta is a resident for that base year;

(b) a company or group of persons (other than a joint Hindu family) carrying on a business is resident in Malaysia for an assessment year during the base year if at any time during that base year the management and control of its business or all of its Businesses may be conducted in Malaysia; and (c) any other company or group of persons (other than a common Hindu family) is resident in Malaysia for a rating year in the base year if at any time during that base year the management and control of its affairs is exercised in Malaysia by its directors or other relevant persons controllers.

(2) If it is established between the general manager and a company or corporation of persons for any tax 053e.FM Page 30 Thursday April 6, 2006 12:07 pm Income Tax 31

for the purpose that the company or entity was resident in Malaysia in the base year for a assessment year, unless proven otherwise, the company or entity shall be presumed to be resident in Malaysia in the base year for the purposes of this Act for the subsequent assessment year.

910. (Excluded by Act A226).

11. (Excluded by Law 624). Deriving business revenue in certain cases

12. (1) If it is necessary for the purposes of this Act to determine the gross income of a Malaysian person from his business, then -

(a) subject to paragraph (2), the majority of the company's gross income that is not attributable to operations conducted outside of Malaysia shall be deemed to originate in Malaysia;

(b) notwithstanding paragraph (a), if the enterprise is engaged, in whole or in part, in the manufacture, cultivation,

Mining, producing or harvesting in Malaysia any article, product, production or otherwise--

(i) the gross proceeds from the sale of the item, product, product or other event

outside Malaysia during the financial year

the business; or

(ii) if the item, product, product or other is exported in the course of

the business and subparagraph (i) do not

apply, an amount equal to the market value of

the article, the product, the product or something else in

time of export,

that Malaysian person's gross income from the business is taken into account.

(2) If, in the case of an entity to which paragraph (1)(a) applies,

(a) the business or part thereof is conducted in Malaysia;053e .FM page 31 Thursday 6th

(b) all gross receipts from the business (from wherever) consist of dividends or interest to which subsection 24(4) or (5) applies; and

(i) to any stock, debenture, mortgage or other source constituting or forming part of the stock

Trade of the company or if only part of the

Business is conducted from this part in Malaysia

of business; or

(ii) a foreclosure loan of the type referred to in subsection 24(5).

Business or part of business such as

case can be

as much of this gross income as consists of such dividends or interest shall be deemed to have originated in Malaysia. General provisions on earned income

13. (1) An employee's gross income in relation to earnings or gains from an employment relationship includes:

(a) wages, salaries, wages, vacation, fees, commissions, bonuses, payments, privileges or allowances (cash or otherwise) in connection with the holding or performance of any employment;

(b) an amount equal to the value of the employee's use or enjoyment of any benefit or convenience (not a cash benefit or convenience) provided to the employee by or on behalf of his or her employer, except:

(i) a benefit or amenity consisting of medical, dental or childcare treatment;

(ii) a benefit or convenience consisting of:

(A) Leave tickets for travel within

Malaysia no more than three times in

each calendar year; or

(B) leave passage to travel between them

Malaysia and everywhere outside

Malaysia in each calendar year, limited

053 .FM Page 32 Thursday, April 6, 2006 12:07 p.m. Income Tax 33

maximum three thousand

Ringgit:

Provided that the benefit or convenience is enjoyed

referred to in this paragraph is limited only to that

Employees and members of his immediate team

Family;

(iii) a benefit or convenience enjoyed by the employee

solely in connection with the performance of

their functions; and

(iv) a benefit or amenity covered by paragraph (c);

(including accommodation in premises

occupied by their employer) made available to the employee by or on behalf of the employer without payment of rent or otherwise; (d) so much of any amount (other than an annuity, annuity or periodic payment under paragraph 4(e)) that the employee receives from any retirement or benefit fund, scheme or partnership, either before or after termination of employment approved for the purposes of this Act, as they would not have been received if their

the employer has not made contributions in respect of the employee to the fund, scheme or partnership or its administrators; and

(e) any amounts received by the employee before or after termination of employment, as a

Compensation for loss of employment, including all amounts related to:

(i) an agreement entered into by the employee

Limitation of your right after leaving the

Employment to pursue employment a

similar type; or

(ii) any agreement or understanding having the same effect.

(2) Gross earnings in relation to earnings or gains from employment -

(a) for any period of employment in Malaysia;

053e.FM Page 33 Thursday 6 Apr 2006 12:07:34 Malaysian Law ACT 53

(b) for vacation time attributable to the pursuit of employment in Malaysia;

(c) for any period the employee is performing duties outside of Malaysia in connection with the performance of employment in Malaysia;

(d) for any period when a person is a director of a company and that company is resident in Malaysia for the base year of a rating year and that period or any part of that period falls in that base year; or (e) for any period of employment aboard a ship or aircraft operated by an enterprise operated by a Malaysia resident in the base year for an assessment year and such base year falls within that period or some of them are considered to be of Malaysian origin.

(3) Gross earnings, which refers to income or profits from employment in the public service or in the service of a statutory authority -

(a) for any period of employment outside of Malaysia; or

(b) for any leave attributable to the pursuit of employment outside of Malaysia,

considered to be from Malaysia if the employee is a citizen.

(4) For the purposes of subsection (1), a benefit, amenity or lodging provided to an employee as aforesaid is deemed to be used or enjoyed by the employee if it is provided by his spouse, family, employees or his used or enjoyed by relatives or guests.

(5) Any doubt as to whether gross income is gross income for a period referred to in subsection (2) shall be decided by applying the relevant provisions of Chapter 3 of Part III as if that period were the base period for an assessment year. 13A. (Excluded by Law 293).

053 .FM Page 34 Thursday, April 6, 2006 12:07 p.m. Income Tax 35

General Provisions on Dividend Income

14. (1) Subject to this Section, if a resident corporation in the base year of a Valuation Year pays, credits or distributes dividends in the Base Period of that Valuation Year, the dividend shall be deemed to have originated in Malaysia. (2) If a corporation resident in the base year of a valuation year was not resident in the base year of the valuation year immediately preceding that valuation year, only dividends paid, credited or distributed by the corporation on or after the date on which Management and Control all business of the company (or, in the case of a company not carrying on a business, the direction and control of its business by its directors or other controlling authority) first exercised in Malaysia referred to as the base year shall be deemed to be derived from Malaysia.

(3) Wo--

(a) the administration and control of the affairs of a company (or, if it has more than one business, all of its businesses); or

(b) in the case of a company not carrying on a business, the management and control of its affairs by its directors or other controlling authorities,

is no longer exercised in Malaysia in the base year of a valuation year and the Company is not resident in the base year of the valuation year following the first named valuation year, any dividends paid, credited or distributed in that first base year after termination will not be deemed to be from Malaysia originating.

(4) If a dividend consists of property other than cash, that dividend will be treated as an amount equal to the market value of the property at the time the dividend was paid.

Derivation of interest and royalty income in certain cases

15. Gross income in respect of interest or royalties shall be deemed to originate in Malaysia –

053e.FM Page 35 Thursday 6 Apr 2006 12:07.36 Malaysian Law ACT 53

(a) where the responsibility for payment of interest or royalties rests with the government or any state government; or (b) (i) if the obligation to pay interest or royalties in the base year is one year

Evaluation (responsibility of any guarantor

neglect in interest) is established

with a person resident in that base

Year; and

(ii) in the case of interest due in respect of money borrowed and employed by that person

in or invested in assets used or held for

Earning a gross income for that person

Malaysian derivatives or related debt

what interest is paid is secured by someone

property or asset in Malaysia; or

Derivation of special income classes in certain cases15A. Gross income in relation to--

(a) Amounts paid in consideration for services rendered by a person or his employee in connection with the use of property or rights attached to property, or the installation or operation of any plant, machinery or other apparatus which purchased from that person;

(b) Amounts paid in consideration for technical advice, assistance or services rendered in connection with technical administration or administration of any kind

scientific, industrial or commercial enterprise, company, project or undertaking;

(c) Rent or other payments made under any agreement or arrangement for the use of Furniture shall be deemed to have originated in Malaysia.

(i) where the responsibility for the payment of the above or other payments lies with the Government, or a

government state;

053 .FM Page 36 Thursday, April 6, 2006 12:07 AM Income Tax 37

(ii) where responsibility for the payment of the above or other payments lies with a person who is

place of residence in the base year; or

(iii) when payment of the above or other payments is charged as an outflow or expense

Accounts of a company operating in Malaysia:

Provided that in respect of paragraphs (a) and (b) this section applies to the amount attributable to the services provided in Malaysia.

Voluntary pensions, etc.

16. When a pension or other periodic payment is voluntarily paid to a person who has permanently ceased employment (or to his widow, child, relative or dependent), by his former employer or successor of his former employer, this shall be deemed to be a source of that person or his or her widow, child, parent or dependent with respect to that pension or payment and that pension or payment will be treated as gross income from that taxable source. Derivation of pensions, etc.

17. (1) Gross income related to a state or government pension shall be deemed to be of Malaysian origin.

(2) Wo--

(a) a person is entitled to a pension or similar payment -

(i) from a pension fund or a fund of a similar nature

Nett;

(ii) under a pension scheme or under a

similar type; or

(iii) as a result of your enrollment in a pension

company or a company of a similar nature; and

(b) the place of administration of the fund, plan or partnership is Malaysia at any time in the base year for the assessment year;

053e.FM Page 37 Thursday April 6, 2006 12:07 PM38 Malaysian Law ACT 53

Gross earnings for the base period for that assessment year in respect of pensions or other similar payments shall be deemed to have originated in Malaysia.

(3) Gross income for the base period for an assessment year from a source of the kind referred to in paragraph 16 or in respect of an annuity or other periodic payment to which paragraph 4(e) applies shall be deemed to have originated in Malaysia if the person receiving this Income pays resident in the base year for that assessment year:

Unless this paragraph applies to a pension or other benefit to which paragraph 1 or 2 applies. PART III

Calculation of eligible income

Chapter 1 - Preliminary

Interpretation of Part III

18. Unless the context otherwise requires, in this part “agriculture” means any form of crop production, livestock farming, aquaculture, inland fishing and any other agricultural or pastoral activity;

“Freight” includes mail, cash, goods, livestock and all types of goods;

"Harvest" includes any form of plant product;

"defined value" in relation to residential accommodation provided to an employee by or on behalf of his employer means - (a) when the accommodation is not subject to any written statute providing for the limitation or control of rents, and the Person who provides the accommodation holds the accommodation in the lease, the rent that is paid or would have been paid if the accommodation was furnished or unfurnished and the landlord and tenant were

independent individuals acting remotely;

(b) in all other cases, the taxable amount or, in the absence of a taxable amount, economic rent;

053 .FM Page 38 Thursday, April 6, 2006 12:07 AM Income Tax 39

"Person with a Disability" means any person who has been certified in writing by the Department of Social Welfare as having a disability; "Economic Lease" in relation to any facility or part of a facility means the lease for which that facility or part of a facility may reasonably be expected to be leased.

(a) the lessor has agreed to cover the costs of fire insurance, public charges and repair and maintenance work

(Work that would normally be included in a repair and maintenance agreement if such an agreement were completed remotely through lesser ordeal); and

(b) violated any written law providing for the restriction or control of rentals;

"Entertainment" includes--

(a) the provision of food, drink, recreation or hospitality of any kind; or

(b) the provision of accommodation or entry

in connection with, or for the purpose of facilitating entertainment of the kind referred to in paragraph (a) by a person or an employee of that person in connection with a trade or business carried on by that person;

"Farm" means any agricultural land; "Furniture" includes air conditioners and any fixtures and fittings which, if not fixtures, would be considered furniture; “Insurance” includes a takaful scheme under the Takaful Act 1984 [Act 312];

“Malaysian Licensed Offshore Bank” has the meaning set out in the Labuan Offshore Business Activity Tax Act 1990 [Act 445];

“Mine” means a mineral resource that is, has been or may be lawfully mined; "Minerals" means minerals and mineral substances (other than mineral oils) and includes precious metals, precious stones and base minerals, but does not include common clay (other than kaolin or bentonite), sand, sandstone or sodium compounds, or other mineral-like commonalities that are without underground mining operations were won and not

Contain precious metals or precious stones in commercially reasonable amounts;

"Mining operations" include any method or process by which minerals are extracted or extracted;

"Payroll Tax" means any tax of that name imposed by written law;

“Premiums” in relation to insurance include contributions or installments payable under a takaful scheme under the Takaful Act 1984;

“Taxable Amount” means, in relation to the Assumptions, the annual amount determined for rating purposes by the local rating authority, if any;

"Replanting" means replacing the crop of a product on any area of land with actions aimed at producing a crop of the same product on the same area and includes reforestation of timber;

"Sales Tax" means any tax of that name imposed by written law.

Additional Provisions for the Interpretation of Part III

19. (1) A term overlaps with another term for the purposes of this Part if

(a) begins and ends on or concurrently with or after that other period; or

(b) begins at the same time or during that other period and ends after that other period.

(2) For the purposes of this Part, an individual and his or her spouse are deemed to be cohabiting unless:

(a) You are separated by a court order or by an act of separation or written agreement

Separation; or

(b) they are actually separated in circumstances such that the separation is likely to be permanent.

(3) Wo--

053 .FM Page 40 Thursday, April 6, 2006 12:07 p.m. Income Tax 41

(a) it is necessary for the purposes of Chapter 4 to determine the amount of interest, rent or other payment of any kind due in the base period (or part of the base period) for any assessment year; and

(b) the period for which the interest, rent or payment is paid (referred to in this subsection as the relevant period) overlaps with this base period,

the interest, rent or payment shall be deemed to have accrued uniformly over the relevant period and the portion of the interest, rent or payment uncovered during the period of overlap shall be deemed to be the amount of interest, rent or payment accrued for that base period or part of this base period, as the case may be.

(4) In this part a reference to:

(a) gross income or other claims; or (b) rent or other amounts payable,

refers to gross income, other items, rent or other amounts payable to the recipient, whether due or due and payable.

(5) Any reference to this Part in Clause 18 or to this Clause includes a reference to Appendices 2, 3, 4 and 4B. (6) For the avoidance of doubt, if a person who is a partner in a partnership is not in fact personally involved in the management of the affairs of that partnership, sections 55, 56 or 57 shall not cause the partner to be so treated as having a personal interest in your property or conducting business related to this partnership. Chapter 2 – Base Years and Base Periods

base years

20. For the purposes of this Act, the calendar year that coincides with the year of assessment constitutes the base year for that year of assessment.

053e.FM Page 41 Thursday 6 Apr 2006 12:07pm42 Malaysian Law ACT 53

Base period of any person other than a corporation, trust, or cooperative

21. The base year of a calculation year, in relation to the source of a person who is not a corporation, trust or cooperative, constitutes the base period of that calculation year.

Establishment period of a company, trust company or cooperative21A. (1) Except as otherwise provided in this section, the base year for a rating year in respect of a corporation, trust or co-operative source shall constitute the base period for that rating year.

(2) Subject to subsections (5) and (6), if a corporation, trust or cooperative has kept accounts of its operations for a twelve month period ending on a date other than December 31 of the base year, applies to this period form the base period for this assessment year for one of your sources of income.

(3) If, during any twelve month period ending on a day other than 31 on the relevant day in the following accounting year, the company, trust or cooperative society, the Chief Executive Officer may determine that the accounting period for the accounting year, in which the failure occurs, or the reporting periods for this year and the following reporting period consist of a period or periods (which can be of any length) as specified in the direction.

(4) Subject to paragraphs (5) and (6), where a corporation, trust or cooperative commences business on a day in a base year and prepares its accounts for a period of twelve months which is on a day other than 31 December , there is no base term in relation to your revenue streams in the first year.

(5) When a corporation, trust or co-operative society commences operations and--

(a) is required by a law of the place of incorporation to close its accounts on a specified date; or053d .FM Page42 Thursday, April 06, 2006 00:07 Income Tax 43

(b) as a company, trust or cooperative within a group of companies, accounts for the same date as all other companies in that group;

the period commencing on the date on which the association, trust or cooperative commences operations and ending at the end of the accounting period of the association, trust or cooperative constitutes the trust or association for the operation of the association, trust or cooperative Cooperative, the base period for a rating year.

(6) If a corporation, trust company or cooperative is already running one or more businesses on the day of starting a new business, the basic period of the business or existing business new business applies to the assessment year in which this day falls, the base period for this assessment year, and there is no base period for new operations for the assessment year prior to this year.

(7) In paragraphs (4) and (6) references to a partnership, trust or association initiating a business shall be construed only as references to cases where that partnership, trust or association commences to conduct -

(a) its own operations; or

(b) the business of any other company, trust or cooperative is a business not previously conducted by that other company, trust or cooperative or its agents.

(8) For the purposes of this section, "transactions" in relation to a company, trust or cooperative means - (a) an activity consisting in the conduct of business;

(b) an activity consisting solely of making investments;

(d) an activity consisting in the making of

Investing before starting a business or after closing a business.

053e.FM Page 43 Thursday 6 Apr 2006 12:07pm44 Malaysian Law ACT 53

Chapter 3 - Gross Income

gross income in general

Article 22. (1) Subject to this Law, the gross income of a person from his or her own source for the assessment period of an assessment year shall be the gross income from that source for that period calculated in accordance with the following provisions of this chapter (i.e. person and that period shall be defined in these provisions referred to as the relevant person or period). (2) Subject to this Act, a person's gross earnings from his source for the base period of any assessment year shall include all amounts claimed or received for that base period in respect of that source by - (a) insurance, indemnity, restoration, restoration, reimbursement or otherwise -

(i) if those amounts relate to the nature of the expenses and expenses that are deductible in determining that person's adjusted income

Source; or

(ii) through an indemnity agreement;

(b) compensation for loss of income from that source; and (c) a rebate under Section 6B.

Interpretation of §§ 24 to 28

23. For the purposes of Sections 24 to 28 – (a) a reference to a liability is a reference to a liability the amount of which is settled (due or past due or past due and

turn off);

(b) A dividend deemed to have originated in Malaysia in accordance with Section 14 will be treated as paid on the date cash or its equivalent (whether in the form of a voucher, check or the like) is booked or delivered in respect of the dividend or on behalf of the payer and as paid in cash on the date of publication or delivery by or on behalf of the payer

distributor;

053 .FM Page 44 Thursday, April 6, 2006 12:07 p.m. Income Tax 45

(c) if any tax or foreign tax has been deducted in the payment, credit or distribution of gross income, any reference in these Sections to gross income paid, credited or received shall be deemed to be the amount of such gross income before deduction with respect to such gross income;

(d) when a dividend is deemed to be derived

Malaysia is paid or credited with no tax deducted or distributed in kind in accordance with Section 14, the amount of gross proceeds in respect of such dividend shall be deemed to be such amount after deduction of tax at the deductible rate on the date of payment, credit or distribution, would be equal to:

(i) the amount actually paid;

(ii) the amount actually credited; or

(iii) the market value of the dividend on the payment date,

is after

Reference period to which the gross turnover of a company refers

24. (1) If during the relevant period a debt arises to the person concerned in respect of:

(a) any interest in the trade which has been sold (or apportioned by requisition or forced purchase or similar means) in the course of business before or during the relevant period;

(b) any services rendered at any time in the course of business; or

The debt amount is treated as the gross income of the relevant entrepreneur for the relevant period. (2) During the relevant period each share in trading in a company of the relevant person -

(a) removed for personal use; or

(b) withdrawn (except upon request or

Zwangserwerb o.ä.)

053e.FM Page 45 Thursday 6 Apr 2006 12:07pm46 Malaysian Law ACT 53

without any consideration being received therefor or for consideration consisting of –

(i) any property other than a debt or sum of money owed to the person concerned or the

cash value;

(ii) any property together with any debt to that person or any amount; or

(iii) any property together with any debt to that person and any amount,

then, subject to paragraph (3), an amount equal to the market value of that share at the time of withdrawal shall be treated as gross income of that business person for the relevant period.

(3) If, in a case to which subsection (2) applies, the consideration for the withdrawal of trading positions is consideration of the kind described in subsection (b)(ii) or (iii) of this subsection, then for purposes of this subsection Subsection - (a) the market value of such traded share shall be reduced by the amount of Debt or the sum or the amount of Debt and the sum, as the case may be, referred to in any such subsection

applies to the case;

(b) Subsection (1) applies to the liability as if it were a liability arising from the sale of such trading inventory; and (c) Section 28 applies to that amount.

(4) Subject to Section 3, if in the relevant period any dividend is paid, credited or distributed to the relevant person, then if the stock, stock or other source to which the dividend relates was made before or during the relevant part of the period formed or formed from traded shares of the relevant person's business - (a) the amount of the dividend will be treated as the gross income of the relevant person's business for the relevant period if the transaction takes place at any time during the relevant period; and

(b) Subsection (1) shall not apply to any liability owed to that person in respect of any such dividend:

053 .FM Page 46 Thursday, April 6, 2006 12:07 AM Income Tax 47

To the extent that this subsection applies to a dividend credited, it will not apply to that dividend when paid.

(5) Subject to Section 3, if gross interest is first due from the relevant person in the relevant period, then if the debenture, mortgage or other source to which the interest relates is formed on or before the relevant period of the or trading portfolio of a business operated by or on behalf of the person concerned, or where the interest relates to a loan made under the transaction before or during the relevant period and the transaction involves borrowing on a regular basis. -

(a) interest should be treated as the relevant person's gross income from the transaction for the relevant period if the transaction is carried on at any time during the relevant period; and

(b) Subsection (1) shall not apply to any debt owed to that person in respect of such interest.

(6) If during the relevant period articles, products, producers or other things are exported from Malaysia in the course of a transaction in such circumstances that subsection 12(1) in respect of the transaction applies thereto -

(a) Subsection (2) does not apply to this item, product, product or other thing or the gross receipts related thereto; and

(b) a value equal to the market value of the item, product, produce or other item under consideration

Subsection 12 (1) as gross income from the business shall be treated as gross income from the

relevant entrepreneur for the relevant period.

(7) Where this section relates to a specific gross income item, nothing in sections 25 through 29 and nothing in section 30 shall apply to that item.

(8) This section does not apply to income under section 4A.053e.FM

Base period to which the gross income of an activity relates

25. (1) Subject to subsection (1A), if gross income from employment -

(a) is unavailable for a period of time; and

(b) are received for the first time in the relevant period, upon receipt they will be treated as gross income by the relevant person for the relevant period.

(1A) Gross income from employment relating to a right to acquire an interest in an enterprise of the type to which paragraph 13(1)(a) applies shall be treated when the right is exercised, transferred, released or acquired as a period of time the gross income of the relevant person for that relevant period. (2) Subject to Section 3 and subsection (5), if gross income from employment is earned in respect of all of the Relevant Period (or, unless subsection (4) applies, in respect of any part of the Relevant Period), when they received shall be treated as the gross income of that person for the relevant period.

(3) Subject to Section 3 and paragraph (5), if gross receipts are treated in paragraph (1) or (2) as gross receipts for the relevant period, then when its receipt is first notified to the Manager within one day after five years after the end of the relevant period, if any, will be treated as the gross income of the relevant person for the base period of the assessment year beginning five years prior to the beginning of the assessment year comprising that date. (4) Subject to Section 3 and subsection (5), if gross earnings are derived from employment in respect of a period (referred to in this subsection as an Overlap Period) that overlaps with the Relevant Period, such gross earnings, if derived, shall apportioned between that part of the Overlap Period which overlaps with the relevant period and the remainder of the Overlap Period (allocation will be in proportion to unless the Director-General, having regard to the circumstances of the case, otherwise directs). the number of overlapping period days that fall within the period in question 053e .FM

equal to the total number of days of the Overlap Period) and the portion of such gross income distributed for the overlapping portion of the Overlap Period shall be treated as that person's gross income from employment for the relevant period: Provided that --

(a) if employment ends within the assessment period of an assessment year and gross earnings from employment are payable as a lump sum per

form of benefit, deferred payment or otherwise, but

except for amounts included in your gross earned income in accordance with paragraph 13(1)(d) or (e), then for that purpose

subsection--

(i) notwithstanding subclause (1), this sum shall be treated as accumulating uniformly over and

Receivables for an accrual period

consisting of working hours

(including where the employment was

employment in a company,

Period in which the data subject was

employed at another company within the same company

group, a group from which the first

the company mentioned was a member at the time

termination of employment) or if the

Duration of employment (incl

specific period) began more than five

years before the start of this base

Period, an accumulation period consisting of

Base period and the base periods for the five

immediately preceding assessment years

this year;

(ii) both in the amount of that amount and due to

Subparagraph (i) will be treated as accumulating equally

on and receivable in connection with these

specific period in which the

Person was employed by someone else

Society is considered as income from

the source consisting of his employment by

that other company and not from the source

consisting of employment from this Prime

mentioned company; and

053e.FM Page 49 Thursday 6 Apr 2006 12:07pm50 Malaysian Law ACT 53

(iii) such Accrual Period will be treated as an Overlapping Period;

(b) if the overlapping period for which such gross receipts are partially received has elapsed more than five years before the date on which receipt of such gross receipts became known to the Director

Generally, for the purposes of this Subsection, such gross income shall be deemed due, if necessary, for that portion of the Overlapping Period that has not elapsed, and if that portion falls entirely within the relevant portion, and accrued evenly during that portion of that period, shall always be considered to take into account the gross income of the person concerned from employment for the relevant period;

(c) if the overlap period for which such gross proceeds are to be received in full has elapsed more than five years before the date on which receipt of such gross proceeds became known to the Directors

In general, such gross income shall be treated, to the extent required, as gross income for the base period for the assessment year beginning five years prior to the commencement of the assessment year containing that date.

(5) If gross income from employment is received for the first time in the relevant period and relates to: (a) a period beginning after the end of the relevant period; or

(b) a period of time that overlaps with the relevant period and partially elapses after the end of the relevant period, subsections (2) to (4) shall not apply and such gross income, if derived, shall be deemed to be income of the person treats relevant gross income for the relevant period:

Where the relevant period has elapsed more than five years prior to the date on which the receipt of such gross receipts became known to the Director General, such gross receipts shall be treated, where necessary, as the gross receipts of the person concerned for the assessment period of the year of assessment five years prior to the commencement of that date including assessment year has begun.

053 .FM Page 50 Thursday, April 6, 2006 12:07 AM Income Tax 51

(6) Notwithstanding the preceding subsections, if the Director-General is satisfied that--

(a) an official has left or will leave Malaysia in the base year for the assessment year to which the relevant period relates (the assessment year being referred to in this subsection as the relevant year) and will not be a resident in the base year for the evaluation of the subsequent year;

(b) the employee does not receive a Malaysian-originated pension in the base period of the following year; and

(c) the worker's gross earned income ceases to be derived from Malaysia at the end of a holiday period following the worker's departure from Malaysia;

All gross earnings from employment that, other than this subsection, would be earned in accordance with any of the subsections above in the assessment period for the assessment year following the relevant year will be treated as a receivable for the relevant period, unless the employee pays your income tax return for the relevant period year (or within the period permitted by the Director General after filing such a tax return) submits a written request to the Director General that this subsection not apply with respect to your gross income from employment. Base period to which gross dividend income relates

26. (1) Subject to sub-section (2), if gross income from a source consists of a dividend deemed to be Malaysian in accordance with Section 14, all gross income from that source paid, credited or distributed in the relevant period shall be deemed to be income-relevant gross income of the person for the relevant period: if this section applies to a dividend credited, it will not apply to that dividend when paid.

(2) In respect of the gross receipts to which paragraph 1 applies, if the relevant period overlaps the base period of the immediately preceding assessment year, the gross receipts ATO 53

in respect of that part of the Relevant Period which overlaps with such Base Period, shall not be considered as the Relevant Person's gross income for the Relevant Period.

Base period to which the gross receipts relate in terms of interest, etc.

27. (1) Subject to this Section, if the gross income from a source in Malaysia of the relevant person -

(a) consists of interest, rebates, rent or royalties, or a pension, annuity or other periodic payment to which paragraph 4(e) applies; and

(b) are received for the first time in the relevant period, upon receipt they will be treated as the gross income of that person for the relevant period.

(2) If the gross income from a source of the relevant person is the gross income to which subsection (1) applies and related to a period (referred to in this subsection as an overlap period) that overlaps with the relevant period, such gross income shall be apportioned upon receipt between that portion of the Overlap Period which overlaps with the Relevant Period and the remainder of the Overlap Period (the apportionment, unless otherwise determined by the Director-General taking into account the facts of a particular case, in proportion in which the number of days of the Overlap Period falling within the relevant period equals the total number of days in the Overlap Period) and as much of such gross income as is apportioned over the overlapping portion of the Overlap Periods shall be treated as the relevant person's gross income from that Que ll for the relevant period:

Provided that--

(a) where such Gross Income relates to an amount of Interest calculated for two or more Interest Periods which together constitute the Overlapping Period, the Gross Income in respect of Interest shall be determined for each Interest Period and - (i) whether there is an Accumulation Period gives falls in

Paragraph 1 applies

the gross income determined in this way in relation to

this accumulation time;

053 .FM Page 52 Thursday, April 6, 2006 12:07 p.m. Income Tax 53

(ii) when an accumulation period overlaps with the

relevant period, this subsection (excluding this

Paragraph of this provision) applies to the

Gross income is calculated in relation to this

Accumulation period as if this accumulation period

were the time of the overlap and as if the latter

the gross profits mentioned were the gross profits

due in connection with the overlap

Period;

(b) if the overlapping period for which such gross receipts are partially collected has elapsed more than five years before the date on which the Director-General became aware of the receipt of such gross receipts, then for the purposes of this subsection such gross receipts must always be considered for that part of the overlapping period that has not yet elapsed and considered equally distributed, and if that part falls entirely within the relevant period, they shall be taken into account, where necessary, as the person's relevant gross income from that source for the relevant period;

In general, such gross income shall be treated, to the extent necessary, as the gross income of that person for the base period of the assessment year beginning five years prior to the beginning of the assessment year that includes that date.

(3) If the gross income referred to in paragraph (1) falls due in the relevant period and relates to: (a) a period beginning after the end of the relevant period; or

(b) a period which overlaps with the relevant period and which has partially elapsed after the end of the relevant period, subsection (2) shall not apply and such gross income, if derived, shall be treated as the gross income of the relevant person for the relevant period:

053e.FM Page 53 Thursday 6 Apr 2006 12:07pm54 Malaysian Law ACT 53

Provided that if the relevant period has elapsed more than five years prior to the date on which the receipt of such gross receipts becomes known to the Director-General, such gross receipts shall be treated, if necessary, as gross receipts of the person concerned for the reference period of the year of assessment which is five years prior to commencement of the assessment year that includes this day has begun.

(4) In paragraph (2) "accrual period" means a period during which the rate of interest or the amount of principal on which interest is paid does not change. Base period to which the gross receipts not forecast in Sections 24 to 27 relate

28. Subject to this Act, if during the relevant period the person concerned derives gross income to which sections 24 to 27 do not apply from a source, the amount of that income (or, if the income consists of something having a market value , the value of their market value at the time of receipt) is treated as that person's gross income from that source for the relevant period.

Reference period to which the cash earned income relates

29. (1) Notwithstanding the provisions of Sections 23 to 28, if the circumstances are such that the person concerned is entitled to gross income (other than gross income to which Section 24 or 26 applies) arising in Malaysia or received and are able to obtain the receipt upon request, such gross income shall be deemed to have been received by him when such circumstances occur.

(2) Reference in subsection (1) to gross receipts which the relevant person may obtain upon request includes reference to gross receipts which could be received upon request but may lawfully be received by any recipient.

Special provisions for the gross income of a company

30.(1) If a deduction was made under subsection 34(2) in determining that individual's Adjusted Income053e .FMPage 54 Thursday April 6, 2006 12:07 p.m. Income Tax 55

of an entity for the base period of any assessment year, such base period being earlier than the relevant period, then - (a) if the deduction was made in respect of debts assessed as wholly uncollectible, any amount due to which that person's debts in relevant period are treated as the relevant person's gross income from the entity in the relevant period; and

(b) if the deduction was made in respect of a claim deemed partially uncollectible and an amount (or a sum of amounts) exceeding the amount of the unestimated portion of the claim has been received in respect of the uncollectible claim, so much of that excess as reclaimed from it in the relevant period

treated as the gross income of the relevant entrepreneur for the relevant period.

(2) If during the relevant period any amount is reimbursed to the relevant person -

(a) due to the payroll tax paid by him for remuneration which he paid to a person employed by him in order to achieve his gross income from a

Trades for the Relevant Period or a Base Period prior to the Relevant Period; or

(b) because of the sales tax paid by him for the business turnover,

the amount reimbursed will be treated as the gross income of your Malaysian derivatives business for the relevant period. (3) Where during the relevant period--

(a) reimbursed expenses (within the meaning of

Appendix 2) is accessed by or on behalf of

relevant person in connection with a business of yours that involves mining operations; and

(b) the total expenses so reimbursed exceed the sum of:

(i) Residual Spend (as defined

of this Annex) on the date on which the

deadline begins; and

053e.FM Page 55 Thursday 6 Apr 2006 12:07pm56 Malaysian Law ACT 53

(ii) qualifying mining costs (as defined in this Schedule) incurred by it

During the phase

the excess amount will be treated as the gross income of the entrepreneur concerned for the period concerned. (4) Where--

(a) a deduction has been made in accordance with subsection 33(1) in calculating the relevant person's adjusted income from an enterprise for the base period for an assessment year (which base period is prior to ).

relevant period) in respect of any outflow or expense (including any amount payable, rent payable or expense incurred of a kind described in paragraph 33(1)(a),(b) or (c)); and

(b) all or part of any liability in respect of outflows, expenses, sums, rents or expenses in the relevant period is discharged,

The amount released will be treated as that person's gross income from that entity for the period in question.

31. (Excluded by Law 624). Special provisions for gross wages

32. (1) If the relevant person claims or enjoys during the relevant period a benefit or amenity of the kind to which paragraph 13(1)(b) applies, the relevant amount shall be included in his or her gross employment for the relevant period an amount equal to the value of such use or enjoyment as determined by any method that is fair and reasonable in the circumstances.

(1A)(a) If a relevant person acquired during the relevant period a right to acquire shares in an enterprise of the type to which paragraph 13(1)(a) applies on its behalf or on behalf of its nominee or agent, the related amount to be included in your gross earned income: (i) the market value of the interests in which the right is to be exercised, assigned, released or acquired in a

053 .FM Page 56 Thursday, April 6, 2006 12:07 AM Income Tax 57

specified date or if the right is exercised, transferred, released or acquired within a specified period, the first day of that period; or

(ii) the market value of the shares on the date the right is exercised, assigned, released or acquired,

whichever is less, less the amount paid for the Shares. (b) In this subsection, “Market Value” means:

(i) in the case of a company listed on Bursa

Malaysia, the average share price

which is determined by the average of the highest

and the lowest share price of the day;

(ii) in all other cases, the Net Asset Value of the Daily Shares.

(2) If during the relevant period residential accommodation of the type to which paragraph 13(1)(c) applies is used or enjoyed by the relevant person, then, subject to subsection (3), the relevant amount in your gross earned income must contain for the relevant period:

(a) an amount equal to the Specified Accommodation Amount for the period in question, or an amount equal to thirty percent of the Gross Income required to be included pursuant to paragraph 13(1)(a) and Section 25 or 28 Your Gross Income of

Employment for the period in question, whichever is shorter; or

(b) if the accommodation is in--(i) a hotel, hostel or similar establishment;

(ii) facilities on a plantation or in a forest; or (iii) any facility which, although in a

area, are not subject to public tolls,

an amount equal to three per cent of gross income required to be included in your gross earned income for the relevant period in accordance with paragraph 13(1)(a) and section 25 or 28.

053e.FM Page 57 Thursday 6 Apr 2006 12:07pm58 Malaysian Law ACT 53

(3) Notwithstanding subsection (2), if during the relevant period residential accommodation of the type to which paragraph 13(1)(c) applies is used and enjoyed by the relevant person, then -

(a) where the employer of the relevant person is a corporation and the relevant person is a director of the corporation at any time during the Relevant Period (no a

service provider), as long as the company is controlled, then the amount is independent of whether or not he is a director at the time of use and enjoyment

Included in your gross income for the relevant period is the specified amount of accommodation for the relevant period or, if all or part of the accommodation is shared with other workers, such as

Percentage of value defined as appropriate and

appropriate;

(b) if Accommodation is only provided for part of the relevant period, the amount to be included in your gross income for the relevant period in subsection (2) or this subsection will be reduced pro rata, where appropriate, where fair and reasonable. taking into account all circumstances;

(c) where residential accommodation (except where paragraph (a) or paragraph (2)(b) applies) is provided in such circumstances that

(i) shared in whole or in part with other employees;

(ii) the person concerned is required by the employer to live on the premises; or

(iii) the relevant person is required or expected by the employer to use them for the carriage

the interests of the employer through the provision of

Hospitality or otherwise, and to do that

can be used, is larger or more valuable

accommodation as the person concerned

otherwise need

The amount to be included in your gross income for the relevant period pursuant to paragraph (2)(a) shall be either the determined value of the Accommodation for the relevant period which is fair and reasonable, or thirty percent of your gross income of

053 .FM Page 58 Thursday, April 6, 2006 12:07 p.m. Income Tax 59

Paragraph 13(1)(a) and Section 25 or 28 must be included in your gross income from employment for the relevant period, whichever is lower (in each case such amount shall be reduced to the amount referred to in paragraph (b )

as applicable as is fair and reasonable, having regard to all the circumstances). Chapter 4 - Adjusted Income and Adjusted Loss

Adjusted income in general

Section 33. (1) Subject to this Act, a person's adjusted income from a source for the base period of an assessment year is an amount determined by subtracting from that person's gross income from that source for that period all expenses and total expenses exclusively during during that period incurred by that person in earning gross income from that source, including (a) subject to subsection (2), any sums payable as interest for that period (or any part of that period) borrowed from that person

e--

(i) at that time employed in the production of

gross income from this source; or

(ii) invested in assets used or held during that period to generate gross income for that period

Those;

(b) rent payable for that period (or any part of that period) by that person in respect of any property, or

Buildings or parts thereof occupied during that period for the purpose of earning gross income from that source;

(c) Expenditure incurred during that period in the repair of any plant, appliance, machinery or accessory used in generating gross income from that source or in the refurbishment, repair or alteration of any appliance, utensil used with exception of equipment, accrued,

Utensils, items (which expenses are considered operating costs within the meaning of

Appendix 3) or any means of transport, excluding the cost of rebuilding or rebuilding -

(i) any permanent installation, building, structure or work;

053e.FM Page 59 Thursday 6 Apr 2006 12:07pm60 Malaysian Law ACT 53

(ii) plant or machinery; or

(iii) any accessories; and

(d) other deductions that may be required.

(2) If a person who is a person to whom paragraph (1)(a) applies in respect of gross earnings from own enterprise for the base period for an assessment year and in respect of money borrowed, ( except for the purpose of earning such gross income) any loan of money or any investment in tangible or immovable property and the loan or any part thereof is outstanding or the investment or part thereof is held by him at any time in that period that period and it appears to the Director-General that the loan, or any part thereof, or the investment, or any part thereof, was financed in whole or in part, or directly or indirectly, with the money borrowed - (a) the The entire sum incurred for that period or any Part thereof is payable as interest on the loan shall be deemed to have been accrued evenly during that period or part thereof melt, and that much of that amount accrued during each calendar month shall be deemed an accumulated monthly amount for that purpose

subsection;

(b) if at the end of a calendar month the sum of (i) the then outstanding Loan Amount, if any; and

(ii) the cost of a major part of the investment it holds at that time, if any,

is less than the amount of money borrowed, the monthly amount for that month shall be reduced by an amount equal to, or equal to, that monthly amount in proportion as that total amount is equal to the amount of such money borrowed

the opinion of the Director General is fair and reasonable in all circumstances;

(c) If at the end of any calendar month the total amount referred to in the preceding paragraph is greater than the amount of money borrowed, the monthly amount for that month shall be reduced to zero or such amount as the Director-General considers to be fair and reasonable in all circumstances; and

053 .FM Page 60 Thursday, April 6, 2006 12:07 AM Income Tax 61

(d) the amount to be deducted from the money borrowed for that period is an amount composed of -

(i) the monthly amounts for each calendar month to which paragraph (b) or (c) applies, in abbreviated form

by any of these paragraphs; and

(ii) the monthly values for the other calendar

Sweet.

(3) In subsection (2), "calendar month" in relation to a base period or part thereof means a period included in that base period or part thereof and is:

(a) any of the twelve months of the Gregorian calendar; or (b) if that base period, or any portion thereof, includes part but not all of that month, that portion of that month.

Special provisions for the adjusted income of a company

Article 34. (1) In determining an individual's adjusted income from an entity for the base period of an assessment year, deductions shall be made from the entity's gross income for that period in accordance with the following subsections (person, entity, period and the relevant gross income recorded in referred to in these subsections as the relevant person, entity, period and gross income respectively).

(a) if at the end of the Relevant Period the debt is reasonably determined to be wholly uncollectible in all the circumstances of the case, an amount equal to the amount of the debt;

(b) if at the end of the relevant period the debt is reasonably determined to be partially uncollectible in all the circumstances of the case, an amount equal to that portion of the debt judged uncollectible, in either case the deduction being reduced by the amount of any deductions which made under this Subsection in relation to debts to 053e .FM Malaysian Laws ACT 53

the base period for an assessment year prior to the assessment year to which the relevant period relates.

(3) In paragraph (2), "debts" means -

(a) a liability arising in connection with any matter referred to in subsection 24(1) or in respect of interest of the kind referred to in subsection 24(5), if the amount of a liability has been included in the relevant gross income or gross income of the person concerned Entrepreneur for the base period for an assessment year prior to the assessment year to which the relevant period relates; or

(b) a liability arising from a loan of the type referred to in subsection 24(5) made in the course of business in the relevant period or the base period for a previous assessment year. (3A) References to partially uncollectible debt under paragraph (2)(b) shall, in the case of a bank, mean all interest on any loan or line of credit accrued from the date such loan or facility is drawn down in accordance with relevant policies classified as a bad loan by the central bank.

(3B) For the purposes of sub-section (3A), “bank” means a bank or finance company, or a banking and finance company incorporated under the Banking and Financial Institutions Act 1989 [Act 372] or the Islamic Banking Act 1989 1983 [Act 276] or an institution prescribed by the Development Financial Institutions Act 2002 [Act 618].

(4) If the relevant person has contributed to an approved plan in relation to any of their employees during the relevant period, then -

(a) whether compensation of employees is deductible as a whole in accordance with the rules, regulations, statutes or articles of association of that scheme for the period for which the contribution is made (that period being a period that coincides with or overlaps with the relevant period). or in parts aggregated as a whole, in calculating adjusted business income for one or more base periods for an assessment year or years in respect of the business, may be deducted from 053e .FM income tax 63

an amount equal to the relevant gross income

Contribution or nineteen percent of the employee's remuneration as determined for the period

which contribution is made, whichever is less; (b) if only a portion or portions of that remuneration are deductible, an amount equal to that amount

Contribution or such percentage of the fee (whichever of such amounts is lower) shall be levied on the total contribution or such percentage of the fee, in the same proportion as that part or the sum of those parts, as the whole of such fee, if any, supports .

(5) If, in the initial establishment of a system of the kind referred to in paragraph 4, in the relevant period, a special contribution is made by the person concerned with one of his employees engaged in activities related to the production of the relevant gross income or the gross income of the relevant person of the entity who is entitled to benefits under this scheme for the base period of an assessment year (such base period prior to the relevant period), the Director-General, in approving such scheme, may provide deductions in respect of that special contribution from such amounts (i.e. amounts the sum of which equal to or less than the special contribution) from the gross income of the entrepreneur concerned for the assessment periods for such assessment years that he deems appropriate. (6) May be deducted from Relevant Gross Income – (a) Amount equal to the payroll tax paid by the relevant person in the Relevant Period in respect of any

compensation it pays to persons it employs in order to generate its gross income from the business;

(b) an amount equal to any sales tax in respect of the Company's turnover paid by that person during the relevant period;

(c) if a portion of the relevant gross revenues derive from the operation of a mine, amounts relating to capital expenditures that may be incurred for the

relevant period according to Annex 2;

(d) when a portion of the relevant gross income is derived from farm work related to the cultivation of 053e .FM

crops, an amount equal to all expenses (other than expenses that qualify as qualifying expenses or qualifying agricultural expenses for the purposes of Schedule 3, or for the acquisition of land or anything growing thereon) incurred by the relevant person in the relevant Period of time incurred in the replanting of the farm for the purpose of growing crops or for making improvements to the farm or part of the farm in connection with such replanting;

(e) an amount equal to the expenses incurred by that person during the relevant period in providing equipment necessary to assist a disabled person employed by him in earning his gross income from the business;

(f) an amount equal to the expenses incurred by the relevant person during the relevant period in connection with the translation or publication into the local language of any cultural, literary, professional, scientific or technical book approved by Dewan Bahasadan

referrals;

(g) an amount equal to the expenses incurred by the person concerned in the provision of public library facilities and contributions to public and school and college libraries during the relevant period

Education:

As long as the amount that can be deducted

must not exceed one hundred thousand ringgit;

(h) an amount equal to the expenditure incurred by the person concerned in the provision of services, public utilities and contributions to an institution or community project related to education, health, housing, infrastructure and information and communication technology during the relevant period from the Minister: Since when was a deduction made

no other deduction of the same amount shall be permitted under this paragraph under subsection 44(6);

(i) an amount equal to expenses incurred other than capital expenditures on land, plant, buildings, structures or structures of a permanent nature or in

053 .FM Page 64 Thursday, April 6, 2006 12:07 AM Income Tax 65

Modifications, additions or extensions thereof, or if the person concerned acquires any rights in or over any property during the relevant period, relating to the provision and maintenance of a crèche for the benefit of persons employed by him

the business;

(j) an amount equal to the expenses incurred by the competent person during the relevant period in establishing and directing a musical or cultural group approved by the Minister;

(k) an amount equal to the expenses incurred by the person concerned in the relevant period for the sponsorship of a local or foreign artistic or cultural activity approved by the Ministry of Culture, Arts and Tourism:

Provided that the amount deducted

Expenditure on sponsorship of these activities shall not exceed three hundred thousand ringgit in total, from which the amount deducted in respect of expenditure on sponsorship of foreign artistic and cultural activities shall not exceed two hundred

Ringgit Miles;

(l) an amount equal to the expenses incurred by the Company in awarding a scholarship to a student for any course during the relevant period

to obtain a diploma or degree (including a master’s or doctoral degree) or the

Equivalent to a degree or diploma obtained from a higher education institution established or registered under the laws applicable to that institution, or

registered in Malaysia or authorized by an order under Section 5A of Universities and

University Faculty Act 1971 [Act 30]:

Since the scholarship--

(a) should only be given to a student -

(i) the full-time tuition is given in

such higher education institution;

(ii) that it does not have its own funds; and

(iii) the total monthly income of those who

Parents or legal guardians, if applicable

053e.FM Page 65 Thursday 6 Apr 2006 12:07pm66 Malaysian Law ACT 53

does not exceed five thousand ringgit;

(b) do not contain payments that are not

Payments required for such higher education

course-related institution and

Educational aid and reasonable living expenses

expenses during the study period

at such a university;

(m) an amount equal to the expenses, not capital expenses, incurred by a company during the relevant period in obtaining accreditation from a laboratory or certification body, as evidenced by a certificate issued by the Malaysian Ministry of Standards:

Provided that the costs incurred in the

the relevant period shall be deemed to have accrued by that entity in the base period of the calculation year in which the Certificate is issued;

(ma) an amount twice the amount of expenditure, other than capital expenditure, incurred by an entity for the purpose of procurement during the relevant period

Certification of recognized quality systems and

Standards and Halal certification, evidenced by a certificate issued by a certification body designated by the Minister:

Provided that the costs incurred in the

the relevant period shall be deemed to have accrued by that entity in the base period of the calculation year in which the Certificate is issued;

(n) an amount equal to the expenses incurred by a person during the Relevant Period in providing practical training in Malaysia related to their business to a person who

(i) be a resident for one year in the base year

Valuation; and

(ii) is not an employee of that person; and

(o) an amount equal to the expenses incurred by a company in a relevant period to participate in international standardization activities approved by the Malaysian Ministry of Standardization.

053 .FM Page 66 Thursday, April 6, 2006 12:07 AM Income Tax 67

(7) Any expenditure, other than capital expenditure, incurred on plant, machinery, plant, land, plant, building, structure or construction of a permanent nature, or on any alteration, addition or extension thereof, may be deducted from the relevant gross receipts Acquisition of rights in or over any property acquired by the relevant person during the Relevant Period in scientific research related to the Business and conducted directly by or on their behalf.

(8) Where a deduction may be made in respect of a matter under this Section, no deduction or allowance may be made in respect of that matter under Section 33 or Schedule 3, as the case may be.

Special deduction for research costs

34A. (1) Subject to this section, in determining an individual's adjusted income from an enterprise for the base period for an assessment year, a deduction in accordance with paragraph (4) shall be made from gross income of the enterprise for that period in respect of expenses other than capital expenditures, for any installation, machine, appliance, land, installation, building, structure or work of a permanent nature, or for any modification, addition or extension, or for the acquisition of any right or property sought by that person during that period -

a) approved by the Minister; or

(b) performed by that person if that person participates in industrial accommodation under Section 31A of the Investment Promotion Act 1986 [Act 327].

(2) The Minister, in approving research under paragraph (1)(a), may impose such conditions as he thinks fit or may determine the period or periods for deduction purposes in accordance with this Section.

(3) Research costs are deducted in accordance with paragraph 1 letter b for expenses incurred within ten years of the approval of the commercial adjustment in accordance with Section 31A of the 1986 Investment Promotion Act.

053e.FM Page 67 Thursday 6 Apr 2006 12:07pm68 Malaysian Law ACT 53

(4) The amount of the deduction to be made under paragraph 1 is twice the expenses referred to in this paragraph that are not capital expenses:

If subsection (4A) applies, the amount to be deducted is the amount of expenses incurred.

(4A) A pioneer company may elect, in an income statement for the assessment year in which the expenses referred to in subsection (1) were incurred, to report the amount of those expenses in the first base period in respect of its post-start business.pioneer for a year of evaluation.

(5) Where a deduction is made for research expenses under this section, no deduction is made for such expenses under sections 33 or 34. (6) For the purposes of this section, the words “pioneer company” and “pioneer company” are used. have the meaning given to them by the Investment Promotion Act 1986.

Special deduction for donations to an accredited research institute or payment for the use of services from an accredited company or research institute

34B. (1) Subject to this Section, in determining an individual's adjusted income from an entity for the base period of a measurement year, a deduction shall be made in accordance with subsection (2) from the entity's gross income for that period in respect of expenses, other than capital expenditure, incurred by that individual during during this period in connection with - (a) cash contributions made to an accredited research institute; (b) payment for the use of the services of an accredited research institute or research company; or (c) payment for use of the services of a research and development company or research and development contract

development company.

(2) The amount of the deduction to be made under paragraph 1 is twice the expenses referred to in this paragraph that are not capital expenses:

053 .FM Page 68 Thursday, April 6, 2006 12:07 AM Income Tax 69

Provided that no deduction is made in respect of such expenses under this Section for a person who is a company associated with a research and development business authorized under Subsection 27D(1) of the Investment Promotion Act 1986 and its Period as defined in Section 29E(2)(b) of this Act has not yet ended.

(3) Where a deduction is made under this Section for the expenditure referred to in paragraph (1), no deduction shall be made for such expenditure under Sections 33, 34 or 34A.

(4) In this section--

(a) “approved research institute” means an institute, including a company, authorized under Section 24 of the Companies Act 1965 and approved by the Secretary of State

primarily to conduct research in an industry specified in the permit and to commercially exploit the benefits of that research;

(b) "approved research company" means a company which is not a licensed company under Section 24 of the Companies Act, 1965, passed by the Secretary of State

primarily to conduct research in an industry specified in the permit and to commercially exploit the benefits of that research;

(c) a "contracted research and development company", an "affiliated company" and a "research and development company" have the meaning given to them in

Section 2 of the Investment Promotion Act 1986. Trading Stock

35. (1) Notwithstanding any other provision of this Part, in determining an individual's adjusted income from an entity for the base period of a valuation year, account shall be taken of the market value of the entity's shares at the beginning and end of that period in accordance with the following subsections (these Person, company, period and stock are referred to in these subsections as the relevant person, company, period and stock, respectively). (2) If the value of the holding at the end of the relevant period exceeds the share value at the beginning of Malaysian Act 53

period, the sum of all amounts deductible under Sections 33, 34, 34A and 34B will be reduced by the amount of the deductible when determining the adjusted income of the relevant entrepreneur for the period in question; and if the inventory value at the beginning of the relevant period exceeds the inventory value at the end of the relevant period, the sum of all otherwise deductible amounts will be increased by the amount of the excess.

(3) Subject to subsections (4) and (5) -

(a) The value of a specific inventory item at the end of the relevant period is assumed to be:

(i) an amount equal to its market value at that time

Time; or

(ii) if the relevant person so decides and that item is physically available, an amount equal to

Total cost for him to acquire this item (or any other).

Materials used in their manufacture, preparation

or construction) and to place it in its condition and location at that time:

Provided that in the case of an item of stock consisting of immovable property, shares, shares or negotiable securities, the value thereof at the end of the relevant period shall be deemed to be an amount equal to its cost price to that relevant person or its market value at that time, whichever is lower; (b) the value of a particular Lot of Shares at the commencement of the relevant period (unless the transaction was commenced by the relevant person in the relevant period) shall be deemed to be an amount equal to its value as determined in paragraph (). a) at the end of the base period for the assessment year immediately preceding the assessment year for

to which the relevant period relates.

(4) Wo--

(a) in accordance with Section 41 of this Chapter, the transaction shall be treated as if an accounting period were the relevant period; and

(b) any previous period for which the annual accounts of the Company were prepared ended immediately before

this billing period,

053 .FM Page 70 Thursday, April 6, 2006 12:07 p.m. Income Tax 71

the reference in paragraph (3)(b) to the base period for the assessment year immediately preceding the assessment year to which the relevant period relates shall be construed as a reference to that earlier period.

(5) If the relevant person ceases permanently to be engaged in business during the relevant period, then - (a) if -

(i) At the time or at the time of termination, a portion of the Company's trading stock will be sold or transferred for reasonable consideration

person to another person and that other person

intend to use this transferred stock in the

business or other business of yours; and

(ii) the cost of that inventory transferred to that other person is a deductible expense

Calculate this other person's adjusted income

for the base period of a valuation year

of the company or that other company

Clear,

The value of such shares transferred at the time of termination shall be deemed to be an amount equal to the price paid or consideration paid at the time of sale and shall be deemed to be the value of such shares at the end of the relevant period;

(b) the value of any part of what is in stock at the time it ceases to be in the trade of the enterprise to which paragraph (a) does not apply shall be deemed to have a value equal to its market value at that time if it corresponds, it expires and is deemed to have its value at the end of the relevant period;

(i) when shares are sold in trading or

against payment in cash or transferred by you

equated with other business assets,

the full consideration given by him

stocks transferred in commerce and those assets must be fairly distributed

appropriate;

(ii) when trading shares (whether other assets or not) are transferred to a053e.FM

consideration other than cash or its equivalent,

the amount of the consideration is taken into account

be an amount equal to the market value of the

Consideration on the transfer date and when that trading position is transferred with another

assets, this amount will be credited pro rata

manner that is fair and reasonable; and

(iii) if shares of trade (whether or not to the other assets) are transferred by consideration made in part and in part

does not consist of cash or its equivalent, the

The amount of the consideration is taken into account

an amount equal to that money or its equivalent

along with the market value of the remaining

the consideration and if that stock is trading

be transferred with other assets, this amount must

be fairly distributed and

appropriate; and

(d) if shares of trade are sold or transferred to another person, in a case for which paragraph (a)

applicable, the cost to that other person of that stock trading shall be taken into account in calculating that person's adjusted income from the business (or any other business of his in which he trades or intends to use those stocks) as equivalent to his value specified in that paragraph.

Power to order special treatment in the calculation of trading income in certain cases

36. (1) Notwithstanding any other provision of this Part, if the Director-General is satisfied that accounting is required -

(a) the gross proceeds of any transaction relating to (i) a Forward Purchase Transaction;

(ii) a transaction in which a debt is settled in instalments;

(iii) a leasing transaction relating to movable property

Property;

(iv) any other transaction involving a debt or stock dealing; or

053 .FM Page 72 Thursday, April 6, 2006 12:07 AM Income Tax 73

(v) any other transaction that may be required;

(b) the adjusted income and the legal income of the company,

it may issue instructions and issue rules to be published in the Journal regarding special treatment in relation to any transaction, either in relation to a specific business or in relation to any company having such a transaction:

Unless any of these policies and regulations apply in respect of a company for a valuation year in respect of which a valuation relating to the earnings of that company has become final or is the subject of an appeal in whole or in part has been sent to the Special Commissioners.

(2) Any guidance given in subsection (1) with respect to gross income, adjusted income and legal income of a business or businesses may -

(a) determine that the gross income to which it relates (or any portion thereof) shall be deemed to be gross income for the base period or periods for the assessment year or years in respect of that entity or entities as specified in the Instruction ;

(b) provide for special treatment in relation to the determination of adjusted income and statutory income from that entity or entities for the base period or periods for a year or years

Valuation.

37. (Excluded by Law 624). Special provisions for the adjusted earned income

38. (1) Subject to this Section - (a) if the gross income of an employee of a

Gainful employment includes the value determined thereafter for the assessment period of one year

with Subsection 32(1) relating to benefits or amenities consisting of furniture provided by or in 053e .FM Page 73 Thursday April 6, 2006 12:07 PM74 Malaysian Laws ACT 53

for your employer in connection with accommodation, can be deducted from this amount

Gross Income means the amount of any rent to be paid by that Worker for that housing and facility during that period, less the amount of any deduction made in respect of that rent pursuant to paragraph (b); and

(b) if the gross income of an employee of a

Gainful employment includes the value determined thereafter for the assessment period of one year

with subsection 32 (2) or (3) in relation to Accommodation provided by or on behalf of you

Employers, can be deducted from this gross amount

Income expenses of the following type:

(i) the amount of any public levy or insurance

Premiums to be paid by the employee in relation to

this accommodation for this period;

(ii) costs incurred for the repair or

Plant maintenance (excl

Expenditures of a capitalistic nature and expenses

incurred in connection with property maintenance

attached to the premises for use by

amenity such as garden or property) that the

employees, under the conditions in which that

Accommodation is provided, it is legal

obliged to comply with in relation to this accommodation

During the phase;

(iii) where accommodation is provided

unfurnished, any rent to be paid by the employee

for this accommodation for this period;

(iv) where accommodation is provided

provided and maintained by or on behalf of

Employer leased for what would be a

Economic rent if the major part of the rent is related to it

Furniture was then disregarded

much of any rent paid by the employee

this period applies to all income

payable in the same proportion as that

the rental income corresponds to the income

payable by or on behalf of the employer for

This period; and

(v) where accommodation is provided

provided and subparagraph (iv) not

053 .FM Page 74 Thursday, April 6, 2006 12:07 AM Income Tax 75

apply, either from the rent paid

busy for this period as it is related to the whole

Rent is therefore due in the same ratio as the

defined value of the accommodation has to do

the economic income aggregate for it

period and the rent for that period

at the market value of the delivered furniture

in connection with this property.

(2) Where accommodation is provided for only part of a basic period, the expenses referred to in paragraph (1)(b) shall be limited to those expenses payable for that part under this subsection or payable during that period this part under this subsection, as the case may be.

(3) The total amount deducted under this Section from an employee's gross income from an employment relationship for the base period of an assessment year shall not exceed the sum of the amounts included in that gross income:

(a) pursuant to subsection 32(1) in connection with benefits or amenities consisting of furniture provided by or on behalf of an employer in connection with housing

Accommodation; and

(b) pursuant to subsection 32(2) or (3).

(4) If a worker's gross income from employment for the assessment period of an assessment year includes an amount determined in accordance with subsection 32(2) or (3) in respect of lodging provided by or on behalf of your employer, all expenses for which subparagraph (1)(b)(ii) in respect of such Base Period (or any part of such Base Period), if payable for any period which overlaps with such Base Period or payable to such party, shall be apportioned in accordance with paragraph 6; and for the purposes of this section only that portion of such costs so allocated over that base period or portion shall be considered.

(5) When an amount is included in gross income - (a) under subsection 32(1) in connection with a benefit or amenity consisting of furniture provided by or on behalf of an employer in connection with housing

Accommodation; or

(b) pursuant to subsection 32(2) or (3),

053e.FM Page 75 Thursday 6 Apr 2006 12:07pm76 Malaysian Law ACT 53

no deduction shall be made under section 33 in respect of expenses and expenses incurred or included as incurred in preparing that portion of gross receipts which consists of that amount.

(6) In applying subsection (4) in respect of a person's gross income from his employment, when the expenses to which subsection (1)(b)(ii) applies are paid for a period (referred to in this subsection as "Overlap means period") that overlaps with the Base Period or part of the Base Period, the amount of expenses to be deducted from such Gross Income shall be determined using the following formula: A × C

___

where A is the number of days that residential accommodation is provided during the Base Period or any part of the Base Period that falls within the Overlap Period;

B is the total number of days in the overlay

Period; and

C is the amount of expenses to which subparagraph (1)(b)(ii) applies.

Limitation on the deduction of entertainment expenses38A. If the gross income of an employee from an employment pursuant to Section 13 (1) for the base period of an assessment year includes entertainment deductions, the amount of expenses for entertainment of the employee which is deductible pursuant to Section 33 (1) may not exceed the amount of such an entertainment allowance included in the gross income is.

Deductions not allowed

39. (1) Except as expressly provided in this Act, in determining an individual's adjusted income from any source for the base period of an assessment year, no deduction from the gross income of that source for that period shall be permitted in respect of:

(a) domestic or private spending;

053 .FM Page 76 Thursday, April 6, 2006 12:07 AM Income Tax 77

(b) any disbursements or expenditures other than cash that are earmarked or expended wholly and solely for the purpose of generating Gross Income;

are to be used as capital;

(d) any amount relating to payments to pensions, annuities, savings, widows and orphans or others

Fund or similar entity that is not an authorized entity

the plan;

(e) all costs incurred in connection with a transaction, such costs being:

(i) qualification of mining costs for the purposes of Schedule 2;

(ii) Eligible Expenditure, Eligible Agricultural Expenditure or Eligible Forestry Expenditure

for the purposes of Schedule 3; or

(iii) Prospecting costs qualifying for the

Purposes of Annex 4,

and which, except for this paragraph, would be deductible in determining adjusted business income; (f) Malaysian interest or royalties from which tax is deductible under Section 109 if tax has not been deducted and paid to the Director-General in accordance with subsection (1) of this Section: where this Section does not apply if the payer has paid the amount referred to in subsection (2) of this section;

(g) any amount, however specified, payable (other than to a state government or with the consent of the Minister, a statutory authority or any other body the capital or funds of which are wholly or substantially owned by a state government or statutory authority ) for the use of a license or permit to harvest timber from a forest in Malaysia;

(h) (Excluded by Act 619);

(i) any Contract Payment from which tax is deductible under Section 107A where no tax has been deducted

053e.FM Page 77 Thursday April 6, 2006 12:07 PM78 Malaysian Law ACT 53

paid therefrom and to the General Manager

according to subsection (1) of this section:

Except where this paragraph applies, when the payer has paid the amount specified in subsection (2) of this section;

(j) any payment from which tax is deductible under Section 109B if tax has not been deducted and paid to the Director General in accordance with subsection (1) of this Section:

Except where this paragraph applies, when the payer has paid the amount specified in subsection (2) of this section;

(k) Amounts paid for the rental of a motor vehicle other than a motor vehicle registered by the competent authority for the commercial carriage of goods or passengers in excess of fifty thousand

Ringgit:

Provided that the motor vehicle has not been used by any person for any purpose prior to the rental and the total cost of the motor vehicle does not exceed one hundred and fifty thousand ringgit, any amount paid for the rental in excess of one hundred thousand will be paid

Ringgit:

Provided the maximum amount of

Deduction for the rental of such motor vehicles in the assessment year and subsequent years

Valuation years may not exceed a total of fifty thousand ringgit or one hundred thousand

if applicable, ringgit in relation to this motor vehicle;

(l) a sum equal to fifty percent of all expenses incurred in providing hospitality, including any amounts paid to an employee of that person to meet expenses incurred by that employee in providing hospitality:

Except where this paragraph applies to the following expenses:

(i) providing entertainment for its

employees, unless there is such a provision

053 .FM Page 78 Thursday, April 6, 2006 12:07 AM Income Tax 79

in connection with the provision of entertainment

Others;

(ii) the provision of entertainment by any person engaged in a business consisting of or

contains the provision for the payment of

entertainment for customers or patrons thereof

Business and entertainment is taken care of

Payment by customers or customers in the

normal course of business;

(iii) the provision of promotional gifts at trade fairs or trade or industrial exhibitions which are held outdoors

Malaysia to promote the export of

Malaysia;

(iv) the provision of promotional samples from

products of that person's business;

(v) the provision of entertainment for cultural or sporting events open to the public,

fully promote that person's business;

(vi) the provision of freebies within

Malaysia consisting of articles with a

visible advertising or logo

the business; or

(vii) the provision of entertainment wholly connected with sales arising from the business of

this person; or

(m) notwithstanding sub-paragraph (l)(i) any costs incurred in providing any benefit or amenity to an employee which consists of a holiday within or

Malaysian wear.

(2) It is noted that Section 33 is not an express provision of this Act for the purpose of this Section, except with respect to expenses of the kind referred to in subsections (1) (a) through (d).

adjusted loss

40. Subject to this Act, if, apart from an entrepreneur's insufficient gross income for the base period of an assessment year, there would be an adjusted earnings figure for that entrepreneur for that period, the 053e .FMPágina 79 Thursday April 6, 2006 12:07 p.m.80 Malaysian Law ACT 53

Amount by which the sum of all deductions that would be allowed under the foregoing provisions of this Chapter in determining that adjusted income exceeded gross earnings from the enterprise for that period is considered to be the amount of her adjusted loss from the enterprise for that period a company's adjusted or adjusted loss for an accounting period

41. (1) Subject to this section, when it is necessary for the purposes of this Act to determine an individual's adjusted income or loss from an enterprise for the base period of a valuation year (that base period is referred to in this section) as relevant period) and company accounts were not prepared for the relevant period--

(a) Adjusted income or loss from that person's business for each accounting period for which accounts have been established for the business (whether or not a period falls within or overlaps with the relevant period) is included, where possible Application of Chapters 3 and 4 determined and necessary as if this accounting period were the base period for this calculation year;

(b) such distribution of adjusted income or adjusted loss for any accounting period and the like

The aggregation of Adjusted Income or Adjusted Loss for one accounting period (or a pro-rata portion thereof) with Adjusted Income or Adjusted Loss (or a pro-rata portion thereof) for another accounting period is done as necessary to arrive at an Adjusted Income or Adjusted Loss for the relevant period; and

(c) The Adjusted Income or Loss so calculated represents the Adjusted Income or Loss of the enterprise for the period in question.

(2) The allocation referred to in paragraph (1)(b) shall be made for each accounting period which overlaps with the relevant period, provided that, failing that the Director-General does so, the allocation shall be made having regard to the circumstances of the individual case, determine otherwise, in Relationship to 053e .FM Page 80 Thursday, April 6, 2006 12:07 Income Tax 81

the number of days of the Overlap Period falling within the relevant period shall be the total number of days in the Overlap Period.

(3) This section does not apply if the transaction has not been settled for part of the relevant period.

Chapter 5 - Legal Income

legal income

42. (1) Subject to this Act, a person's legal income (if any) from one source for an assessment year (the assessment year is referred to in this section as the relevant year) consists of:

(a) the amount of your adjusted income (if any) from that source for the base period of the relevant year; and (b) the amount of -

(i) an equalization fee or the added value

compensation fees;

(ii) agricultural taxes or the total amount of agricultural taxes; and

(iii) each Forestry Fee or the aggregate value of Forestry Fees,

in respect of that source falls within the relevant year set out in Annex 3,

reduced by the amount of any correction or the total amount of corrections to be made for that year in accordance with this Annex in respect of that source.

(2) If the base period of the relevant year overlaps with the base period of the immediately preceding assessment year, the amount of Adjusted Earnings for the base period of the relevant year shall be reduced by an amount determined by the following formula:

A × B

053e.FM Page 81 Thursday 6 Apr 2006 12:07pm82 Malaysian Law ACT 53

where A is the amount of Adjusted Revenue for the base period of the relevant year;

B is the duration of the overlap period; eC is the length of the base period for the relevant year.Chapter 6 - Revenue and Total Revenue

total income

43. (1) Subject to this Act, the aggregate income of a person in the year of assessment (the person and year of assessment are referred to in this section as the relevant person and year, respectively) consists of:

(a) the sum of his statutory income, if any, for that year from each of his sources consisting of a corporation, less any deduction required for that year in accordance with subsection (2); (b) the total of your statutory income, if any, for the relevant year from each of your other sources; and (c) any amendments to be made for the relevant year in accordance with Schedule 4.

(2) Subject to paragraphs (3) and (5), in accordance with paragraph (1)(a), in accordance with this paragraph, a deduction shall be made from the total legal income of that person from each of his sources consisting of an enterprise for the year in question the Amount determined pursuant to subsection 44(4) or (5) for a particular assessment year prior to the relevant year, or if such amount exceeds such total, such amount of such amount as is equal to such total:

Provided where a deduction has been made or may be made under this subsection from the sum of the relevant person's legal income from each of its sources consisting of a corporation for a valuation year after the particular year in question or for more than one valuation year after that particular year and in any event ending before that year in question, then for the purposes of applying this subsection to that year, the value determined in subsection 053e.FM Thursday, April 6, 2006 12:07 p.m. Income Tax 83

44 (4) or (5) for that particular year, so much, if any, of the amount not deducted for the assessment year after that particular year or, as the case may be, assessment years after that particular year specific and ending earlier for the year in question.

(3) For the purposes of subsection (2), reference to the amount determined in subsection 44(4) or (5) for a particular year shall, where necessary, be understood as a reference to the sum of:

(a) that amount for the specific year; and

(b) such amount of each amount for a year of assessment prior to the specific year that has not been deducted in accordance with subsection (2) from the total of the relevant person's legal income from each of his sources consisting of a corporation for the year, or for an assessment year prior to the year in question.

(4) For the purposes of paragraph (1), a person who during a year of assessment has no statutory income from any source of his or her total statutory income of the kind referred to in paragraphs (1)(a) and (b)) shall be deemed to be for that year no legal income from that source or, as the case may be, total legal income of the kind referred to in paragraph (1)(a) or of the kind referred to in paragraph (1) )(b) ) , as the case may be, of zero.

(5) (a) Subject to paragraph (b) of this subsection, any deduction to be made under subsection (2) relates only to the adjusted loss from any source in Malaysia of the relevant person.

(b) Where the adjusted loss to be deducted under subsection (2) of this section includes an adjusted loss amount from any source in Malaysia and an adjusted loss amount from any source outside Malaysia, the adjusted loss in paragraph (a) is determined assuming , that a deduction made pursuant to subsection 44(2) for the assessment year in the base period for which such adjusted loss first arose, or subsection (2) of this section for the assessment year or years subsequent to the assessment year in the base period for which such When the adjusted loss was first incurred it was recognized in the same proportion as the value of the adjusted loss from any source in Malaysia the sum of the 053e .FM page 83Thursday 6 , 2006 12:07 PM84 Malaysian Laws 53

adjusted loss amount from each source in Malaysia and adjusted loss amount from each source outside Malaysia.

(6) A reference in this section to the sum of the relevant person's legal income from each of his sources which is a corporation, or from each of his other sources if he has only one source, which is one corporation or only another source refers to his legal income from that single source, which is a business, or from that other source, as the case may be.

total earnings

*44. (1) The total income of a person for a reference year (that person and the reference year are referred to in this section as the relevant person and year respectively) consists of the amount of their total income for the relevant year less -

(a) first, for any deduction to be made for the relevant year in accordance with subsection (2);

(b) then for any deductions that may be made under Schedule 4 or 4B;

(d) hereinafter for any deduction that may be made under subsections (8), (9), (10), (11) or (11A); and

(e) thereafter for any deduction made under Section 44A.

(2) Subject to subsections (3) and (5), in accordance with this subsection, the total income of that person for that year shall be deducted the amount of any adjusted loss from any source thereof for the base period for that year or, if there is an adjusted Loss from each of two or more of its sources for the corresponding base period for each source for the relevant year gives the sum of the adjusted losses from each of those sources for their corresponding base period for the relevant year.

*NOTE – See Section 10 of Act 644.053e .FM Thursday April 6, 2006 12:07 p.m. Income Tax 85 for explanation

(3) For the purposes of subsection (2), if for a source the base period for the relevant year overlaps with the base period for the immediately preceding assessment year, the amount of adjusted loss for that source for the base period for which that year applies shall be deemed to have been reduced by an amount which is an equal proportion of that amount to the length of the overlapping period equal to the length of the base period for that year and the amount of that loss so reduced shall be deemed to be the adjusted loss from that source for the base period of the concerned year.

(4) If the relevant person does not have aggregate income for the relevant year, for the purposes of Section 43, the amount of any adjusted loss from any source thereof for the base period for the relevant year or the sum of all adjusted losses from each of its sources shall be determined for the relevant base period for the relevant year that would have been deducted, as the case may be, under subsection (2) if total income had not existed.

(5) If the amount referred to in paragraph (4) exceeds the total income of the person concerned for the relevant year, such amount shall be deducted from that amount as corresponds to that total income, in accordance with paragraph (2). the value of this deductible can be determined for the purposes of Section 43. (5A) The amount determined in sub-section (4) or (5) for a relevant year in respect of a company shall not be taken into account for the purposes of Section 43 unless the general manager is satisfied that the shareholders of that company on the last day of the base period for the relevant year in which that amount is determined were substantially the same as the shareholders of that company on the first day of the base period for the assessment year in which that amount would otherwise be deductible under this section and that amount will not be taken into account , may no longer be deducted in subsequent assessment years.

(5B) For the purposes of subsection (5A)--

(a) the shareholders of the entity at any time are substantially the same as the shareholders at any other time if on both dates -

(i) more than fifty percent of the paid-up capital in respect of the Company's common shares

053e.FM Page 85 Thursday 6 Apr 2006 12:07pm86 Malaysian Law ACT 53

is maintained by or on behalf of the same persons;

(ii) more than fifty percent of the par value of the shares awarded based on the common shares

Interests in the Company are held by or on behalf of

the same people; and

(b) Shares in the Company held by or on behalf of another company shall be deemed to be held by the

shareholder of the latter company.

(5C) In subsection (5B), "common stock" means any stock that is not a stock that confers only a right to a dividend payable -

(a) a fixed amount or fee expressed as a percentage of the face value of the Shares; or

(b) a flat percentage of corporate profits. (5D) If there is a material change in the shareholders of a company referred to in subsection (5A), the Secretary may, in special circumstances, exempt that company from the provisions of that subsection.

(6) Subject to paragraph (12), an amount equal to a cash donation by him in the base year of that year to the Government shall be deducted under this paragraph from a person's total income for the relevant year, less any deduction to be made for that year under paragraph (1), a state government, local authority, or agency or organization approved for the purposes of this Section by the Director-General at the request of the agency or organization concerned:

Provided that the amount to be deducted from a corporation's total income for the relevant year in respect of monetary donations by that corporation to an institution or organization approved by the Director General for the purposes of this section does not exceed five percent of the corporation's total revenue for the relevant year.

(6A) Subject to subsection (12), an amount equal to 053e .FM page 86 shall be deducted under this subsection from a person's total income for that year, less any deduction for that year under subsection (1) Thursday 6 April 2006 12:07 Income tax 87

the value, as determined by the Department of Museums and Antiquities or the National Archives, of a donation to the government or state government of artifacts, handwritten paintings, made by him in the base year of that year.

(7) In subsection (6)--

“Establishment” means an establishment in Malaysia which is not operated or operated principally for profit and which – (a) is a hospital;

(b) public or non-profit entity;

(c) a university or other educational institution; (d) an agency or society devoted solely to research or other work related to the causes, prevention or cure of disease in humans;

(e) a government-sponsored institution dedicated to socio-economic research; or

(f) a technical or professional training institution; “Organization” means an organization in Malaysia which is not operated or operated principally for profit and which (a) is an organization incorporated and maintained

solely for the purpose of administering and augmenting any public or private fund established or maintained solely for the purpose of establishing, expanding or improving an institution, or solely for the purpose of providing a bursary, exposure or award to any person for educational work, research work or other similar work work

institution or what an institution would be if it were in Malaysia;

(b) an organization that is formed and maintained

solely for the purpose of administering and augmenting a public fund established or maintained solely to alleviate problems among members of the public;

solely to manage and grow a fund

constructed and maintained solely for the construction, improvement or maintenance of a building

Malaysia, das--

053e.FM Page 87 Thursday 6 Apr 2006 12:07pm88 Malaysian Law ACT 53

(i) intended to be used (and, if constructed, will be used) solely for the Purposes.

religious worship or the promotion of

Religion; and

(ii) intended to be open (and, if built, is open) to any member of the public

purposes;

(d) an organization which maintains or supports a zoo, museum, art gallery or similar enterprise or which is involved in or associated with the promotion of culture or the arts;

(e) an organization concerned with or associated with the conservation or protection of animals;

(f) a government-sponsored organization dedicated solely to solving industry-related problems, and

business development and promotion and

to strengthen relations between the public and private sectors;

(g) a government-sponsored organization established and maintained solely for the administration and augmentation of a fund established or maintained solely for the purpose of promoting national unity;

(h) an organization established solely for the preservation or protection of the environment;

(i) an international organization as defined in the International Organization (Privileges and

Immunities) Act of 1992 [Act 485] conducting such

charitable activities as determined by the Minister; (j) an organization formed and maintained

solely to manage or grow a fund

established or held for the purpose of carrying out community acculturation projects in information and communication technologies approved by the Minister; or

(k) any charitable fund or trust account established or maintained for the sole purpose of providing assistance or assistance to any person who is lacking in or insufficient funds or, in the case of a dependent person, their parents or

the guardian does not have or does not have enough funds to pay the 053e .FM

Costs for the medical treatment required as a result

Person for treatment of a serious illness as defined in subsection 46(2).

(7A) An institution or organization as defined in subsection (7)--

(a) shall not employ more than twenty-five percent of its funds accrued at the beginning of the base period of the assessment year in the exercise of or interest in any entity:

Provided the profits or income come from

it may only be used for charitable purposes or for the main purpose for which the institution or organization was established; or

(b) may conduct charitable activities outside of Malaysia with the prior consent of the Minister.

(7B) The reference to the carrying on or participation in a business in paragraph (7A)(a) does not include the carrying on of a business by any institution or organization in which (a) the business is carried on in the course of the fulfillment of the actual Purpose of the institution or organization; or

(b) business-related work is mainly carried out by persons for whose benefit the institution or organization was established.

(8) Subject to subsection (12), a person to whom paragraph 34(6)(g) does not apply shall have an amount deducted under this subsection from the total income for that year, less any deductions for that year under paragraph 1, equal to a monetary donation made in the base year of this year for the provision of public library facilities to public libraries and libraries of schools and colleges, up to a maximum of twenty thousand ringgit.

(9) Will be deducted from the aggregate income of a relevant person who is an individual for the relevant year in accordance with this subsection, less any deductions for that year under 053e .FM Page 89 Thursday 6 April 2006 12:07 PM90 Malaysian LawACT 53

under paragraph 1, an amount equal to a donation in cash or in kind (the amount to be determined by the competent municipal authority) made in the base year of that year for the provision of facilities in public places for the benefit of persons with disabilities.

(10) Pursuant to this sub-section, there shall be deducted from the total income of a relevant person who is an individual for the relevant year, less a deduction for that year under sub-section (1), an amount equal to a monetary gift or expense or value (as of Ministry of Health) of a gift of medical equipment made by him in the base year of this year to a health facility approved by that Ministry, and this value shall not exceed twenty thousand ringgit. (11) Subject to paragraph (12), there shall be deducted, pursuant to this paragraph, from a relevant person's aggregate income for the relevant year, less a deduction for that year in accordance with paragraph (1), an amount equal to Amount of a Gift of a Painting (to be determined by the National Art Gallery or a State Art Gallery) that he made to the National Art Gallery or a State Art Gallery in the base year of this year. (11A) Pursuant to this sub-section, an amount equal to the payment of Zakat Perniagaan paid in the period on which the basis for the relevant year is concerned shall be deducted from the total income of an enterprise for the relevant year, less any deductions for that year pursuant to sub-section (1). a relevant religious authority established under a statutory document, or to a person authorized by that religious authority:

Provided that--

(a) the amount to be deducted under this subsection shall not exceed one-fortieth of the entity's total income for the relevant year; and

(b) the company is not an offshore company.

(12) In paragraphs (6), (6A), (8) and (11) references to the base year in relation to a company, trust or cooperative shall be construed as references to the base period for the assessment year of that company, Trust company or cooperative.053d .FM Page 90 Thursday, April 6, 2006 12:07 Income tax 91

Group relief for companies

44A. (1) Subject to this section, a corporation (referred to in this section as the “Relay Company”) may not cede more than fifty per cent of its Adjusted Loss in the Base Period of any Valuation Year to one or more related companies (referred to in this section as the “Complaining Company”). :

Provided both the transferring company and the applicant company are resident and incorporated in Malaysia in the base year of that assessment year.

(2) Paragraph (1) shall apply if for each assessment year - (a) the Transferor and the Applicant

Company--

(i) are affiliated companies throughout the base

Period for this assessment year and the

12 month period immediately preceding

this base period;

(ii) has paid-up capital in respect of common shares

Share of more than two and a half million

Thousand ringgit at base launch

period for this assessment year;

(iii) have a basic term of twelve months ending on the same day;

(iv) make an irrevocable decision to surrender or claim an adjusted loss amount upon surrender

provided for the assessment year below

Section 77A; and

(v) be subject to taxation at the appropriate rate in accordance with paragraph 2 of Part I of the Schedule

1; e

(b) the complaining company has a defined total turnover for this assessment year.

(3) For the purposes of this section, a redemption company and the complaining company are affiliates if at least - (a) seven cents of the paid-up capital exists in respect of the common stock of the supplier company

directly or indirectly (via others)

companies incorporated and incorporated in Malaysia)

property of the complaining company;

(b) seventy per cent of the paid-up capital in respect of common shares of the complaining company is owned directly or indirectly (through other companies incorporated and incorporated in Malaysia) by the transferring company; or

plaintiff companies are directly or indirectly owned by another company resident and incorporated there

Malaysia.

(4) Subject to subsection (5), any Adjusted Loss Amount submitted pursuant to this section for a valuation year - (a) the value or total of the Adjusted Loss or excess of the transferor of that amount for the valuation of that valuation year provided for in subsection 44(4) or (5);

(b) granted to an applicant company as a deduction in determining the applicant's total income

Subsection 44(1) entities; and

(5) Where the adjusted loss value is:

(a) delivered to more than one applicant company, the adjusted loss under subsection (4) must be fully deducted to the first applicant company before any excess of the adjusted loss is delivered and deducted under this subsection to the second applicant company and so continue; or

(b) claimed by an applicant company by more than one seller company, the adjusted loss repaid by the first seller company shall be deducted in accordance with subsection (4) for that applicant company before the adjusted loss repaid by the second seller company is deducted in

in accordance with this subsection for this applicant

company and so on.

053 .FM Page 92 Thursday, April 6, 2006 12:07 p.m. Income Tax 93

(6) For the purposes of subsection (5), the assignor and claimant company shall compare the ranking with the adjusted loss returned or claimed but where that loss cannot be realized in accordance with the established ranking by either assignor company or Claimant, the amount of Adjusted Loss returned or claimed shall be treated as the General Manager deems fair and reasonable.

(7) Notwithstanding that a company to which paragraph 3 applies owns at least seventy per cent of the paid-up capital of the other company, this paragraph shall not be deemed to be satisfied unless, in addition, in the first year of assessment the said company has a beneficial interest to at least seventy percent of--

(a) any residual profits of the other company available for distribution to the equity of that other company

Holder; and

(b) all remaining assets of the other company available for distribution to the shareholders of that other company in the event of a winding up.

(8) Notwithstanding anything else in this Section, where--

(a) an applicant entity has made an election under subsection (2), that entity may not elect to allocate its adjusted loss to another applicant entity in that year; or

(b) a transferring entity has made an election under subsection (2), that entity may not claim an adjusted loss from another in that year

selling company.

(9) Wo--

(a) the chief executive officer determines in the base year of a valuation year that the adjusted loss under subsection (4) should not have been deducted to determine the complaining entity's total income, the chief executive officer may in that year or within six years make an evaluation after expiry or

additional assessment in relation to this company to compensate for any tax losses; or

053e.FM Page 93 Thursday April 6, 2006 12:07 PM94 Malaysian Law ACT 53

b) The transferring company makes an incorrect statement

Information in the declaration provided under Section 77A relating to the amount of Adjusted Loss that will be recovered, the General Manager may require the selling company to pay a penalty equal to the amount of tax determined by the

complaining company as a result of wrong

Education.

(10) The provisions of this Section shall not apply to a Company in respect of any Base Period for any Valuation Year if the period in which such Company -

(a) is a pioneer company or has received an investment tax deduction permit under the investment promotion scheme

Investment Act 1986;

(b) is exempt from income tax under Section 54A, paragraph 127(3)(b) or subsection 127(3A);

(d) applied for a deduction in relation to an approved food production project under the Income Tax (Deduction for Investment in Approved Food Production Project) Rules 2001;

(e) Claiming a deduction under the Income Tax (Deduction for Cost of Acquisition of Property) Regulations 2002;

(f) an income tax deduction (deduction for acquisition costs of a foreign

Own company) Standards 2003; or

(g) has claimed a right to a deduction under the rules under section 154 and those rules state that this section does not apply to that entity.

(11) For the avoidance of doubt –

(a) The Adjusted Loss Amount disclosed pursuant to this Section shall not be taken into account for purposes of

determine the assignor's total income in accordance with Section 43; and

053 .FM Page 94 Thursday, April 6, 2006 12:07 AM Income Tax 95

(b) The provisions of this Act shall apply to any adjusted loss of the assignor which is not

rendered under this section.

(12) In this section--

"Commercial Loan" means any loan that entitles the Lender to a rate of return that is only -

(a) a fixed amount or a fixed percentage of the loan amount; or

(b) a flat percent of the Company's profits; “Defined Total Sales” in relation to a Review Year means a Complaining Entity's total sales for that year less any deduction made pursuant to paragraph 44(1)(a), (b), (c) and (d). ;

“Shareholder” means any holder of common stock of the applicant or donor company, or any creditor of such company in connection with a non-commercial loan;

"Non-Commercial Credit" means any credit that is not a Commercial Credit;

"Common Share" means any share that does not carry the right to receive a dividend equal to (a) a fixed amount or percentage of the par value of the shares at a fixed rate; or

(b) a flat percent of the Company's profits; "Residual Assets" means the net assets of the Applicant or Discontinued Business after distributions to - (a) creditors of such business in connection with commercial loans; and

(b) holders of shares other than ordinary shares,

and if that company has no residual assets, a nominal amount of one hundred ringgit is considered as the residual assets of the company;

"Residual Profits" means the profits of the transferring or transferring company after deducting any dividends which - (a) equal a fixed amount or a fixed percentage of the par value of the shares of such company; or

053e.FM Page 95 Thursday April 6, 2006 12:07 p.m.96 Malaysian Laws ACT 53

(b) a flat percentage of that company's profits, but before deducting any returns due to a non-commercial lender, except for -

(i) a lump sum or a flat percentage of the loan amount; or

(ii) a flat percentage of that company's profit, and if that company has no residual profit, a notional amount of one hundred ringgit will be considered as residual profit of that company.

Chapter 7 - Compensatory Income

Eligible income and aggregation of husband and wife earnings

45. (1) Subject to this Section, a person's taxable income for a year of assessment is his total income for that year less any deductions permitted under this Chapter for that year. (2) Subject to this Section, if an individual and her or her spouse cohabited for any assessment year in the base year and did not cease to cohabit or be husband and wife in that base year -

(a) The wife may elect in writing (wife elects) to have her total income aggregated with her husband's total income and assessed on his behalf for that tax year; or

(b) The husband may elect in writing (husband elects) to have his total income aggregated with his wife's total income and assessed on her behalf for that year of assessment:

Provided that if the voting wife or husband is not a resident in the base year for a rating year, such wife or husband, as the case may be, may only vote under this subsection if he or she is a citizen.

(3) For the purposes of paragraph (2)(b)--

(a) For each census year, this paragraph applies only if no election is made by the wife or wives. Thursday April 6, 2006 12:07 p.m

pursuant to paragraph (2)(a) for that assessment year; and

(b) the election may only take place with a wife. (4) If the total income of the voting wife is added to that of her husband or the total income of the voting husband is added to that of his wife pursuant to paragraph 2, the wife entitled to vote or the husband entitled to vote is treated as such for a calculation year in this year as if they had no eligible income.

(5) The election referred to in paragraph (2) shall take place before April 1 of the following assessment year or at a later date (as permitted by the Director General).

deduction for husband

45A. Where from--

(a) the husband has no source of income;

(b) the husband has no total income that can be

added to that of his wife; or

the wife is granted for a year of assessment, in addition to the allowances or deductions (if any) for that wife in Sections 46, 48 and 49, a deduction of three thousand ringgit for the husband and another three thousand five hundred ringgit he is a disabled person:

As long as this section applies to only one wife. Deduction for individuals and Hindu joint families

46.(1) In the case of an individual or a Hindu resident of a joint family in the base year for a year of assessment, personal deductions of - (a) eight thousand ringgit shall be made for that person in respect of that year of assessment for that year of assessment from himself and his dependent relatives (if any) or be admitted by that joint Hindu family;

053e.FM Page 97 Thursday April 6, 2006 12:07 p.m.98 Malaysian Laws ACT 53

(b) (Excluded by Act 600);

(c) an amount, limited to a maximum of five thousand ringgit, in respect of medical expenses incurred by that person for his or her parents in that base year: provided the claim is supported by a medical receipt certifying that the parents were treated;

(d) an amount limited to a maximum of five thousand Ringgit that has been spent or deemed to have been spent

Paragraph (3) in this base year by this person for the purchase of a necessary basic supply

Equipment for her own use if she is disabled, or for the use of her wife, child or parent who is disabled, or in the case of a woman, for her own use if she is disabled, or for the use of hers husband, child or parent who is a disabled person; (e) plus six thousand ringgit for that person if it is a person with a disability;

(f) an amount limited to a maximum of five thousand ringgit of fees paid by that person in that base year for study up to tertiary level at a government-recognized or Ministerial, as the case may be, recognized for the purpose of acquiring law, accounting, technology,

professional, industrial, scientific or technological skills or qualifications;

(g) an amount, limited to a maximum of five thousand ringgit, in respect of medical expenses incurred or deemed to have been incurred in accordance with subsection (3) in that base year by that person when suffering from a serious illness or on his or her spouse or a seriously ill child, or in the case of a wife, about herself if she is seriously ill, or about her seriously ill husband or child:

Provided the claim is supported by a receipt and certification from a doctor that the person, spouse or child has received treatment for the condition;

053 .FM Page 98 Thursday, April 6, 2006 12:07 AM Income Tax 99

(h) an amount, limited to a maximum of five hundred ringgit, in connection with the cost of full medical examinations that have been expended or deemed to have been expended

Subsection (3) in that base year, by that person, about himself or his wife or child, or in the case of a wife, about himself or his husband or child, as evidenced by receipts issued by a hospital or doctor:

Provided the deduction provided for in this paragraph

form part of the amount limited to a maximum of five thousand ringgit in subparagraph (g); and

(i) an amount limited to a maximum of seven hundred ringgit in respect of expenditures expended or deemed to have been expended pursuant to subsection (3) in that base year by that person in the purchase of books, periodicals, periodicals and other similar publications

for the purpose of knowledge enhancement for himself or his wife or child, or in the case of a woman, for herself or her husband or child, as evidenced by receipts issued in connection with the purchase.

(2) In this section--

“Child” shall be construed as referring to a child within the meaning of subsection 48(9);

"serious illness" includes acquired immunodeficiency syndrome, Parkinson's disease, cancer, renal failure, leukemia and other similar diseases.

(3) For the purposes of paragraphs (1)(d), (g), (h) and (i), any amount expended by the wife or husband in the year of assessment

(a) where subsection 45(2) applies, shall be deemed to have been issued by the husband of his chosen wife or by the wife of his chosen husband, as the case may be; or

(b) If the wife or husband does not have a full income, they are considered by the as expenses

Husband of this wife who does not have a full income, or the wife of this husband who does not have a full income, as the case may be:

053e.FM Page 99 Thursday 6 April 2006 12:07 PM100 Malaysian Law ACT 53

If section 45(2)(b) applies or if the husband does not have full income, any amount spent by the husband is deemed to have been spent by the wife, who received a section 45A deduction.

Deduction for individuals on interest expense

46A. (1) Subject to this section, in the case of an individual who is a resident in the base year of the relevant year, a personal deduction is allowable for the relevant year in respect of the interest expended in that base year by the individual to finance the purchase a residential property owned by:

Provided that--

(a) the residential property is the first residential property acquired by the person to be used as a place of residence;

(b) the residential property was acquired from a real estate developer or a public corporation or cooperative;

$180,000.00; e

(d) the contract of sale for the Purchase was entered into on or after June 1, 2003 but not later than May 31, 2004.

(2) The amount of the deduction to be made pursuant to paragraph 1 may not be exceeded

(a) RM5,000 for the 2003 assessment year;

(b) RM3,000 for the 2004 assessment year;

(3) Wo--

(a) two or more persons are entitled to claim a deduction for interest accrued in respect of the same residential property for the relevant year under this Section; and

053 .FM Page 100 Thursday, April 6, 2006 12:07 p.m. Income Tax 101

(b) the aggregate amount of interest expended by such persons in the base year for that year exceeds the deductible amount permitted for that year in subsection (2);

each of these persons is granted an amount to be determined according to the following formula for the year in question:

A x B

where A is the total amount of deduction allowed in subsection (2) for that year;

B is the total interest expended by that person in the base year of that year; and

C is the sum of interest expended in the base year for that year by all of these individuals.

(4) For the purposes of subsection (1), any amount expended by the wife or husband in the relevant year if — (a) subsection 45(2) applies shall be deemed to have been expended by the husband of the wife who chooses, or by the wife of the husband she chooses, as the case may be; or

(b) the wife or husband has no total income, it shall be deemed to be from that wife's husband or if no full income, any amount expended by the husband shall be deemed to have been expended by the wife who received a section 45A deduction.

(5) For the purposes of this Section –

“Cooperative” means a cooperative incorporated or deemed to be incorporated under the Cooperative Societies Act 1993 [Act 502];

"First Home" includes a Second Home acquired by the Individual after the Individual has disposed of an Inexpensive Property;

053e.FM Page 101 Thursday 6 April 2006 12:07 p.m.102 Malaysian Law ACT 53

“Developer” means a developer licensed under the Housing Development (Control and Licensing) Act 1966 [Act 118];

“Low Cost Property” means the only residential property owned by the individual and such property has been held by the individual for at least five years and purchased by him or her for no more than RM42,000.00;

“Relevant Year” means the year of assessment 2003, 2004 or 2005;

“Condominium” means a completed house, condominium, apartment or apartment constructed as a dwelling; "Government Corporation" means a corporation created by state or federal law.

Deduction for wife or ex-wife

§ 47. (1) In the case of an individual residing in the base year of the assessment year and having a cohabiting spouse in that base year, subject to the provisions of paragraphs 3 and 4 of this assessment shall allow such assessment a deduction of - (a) three thousand ringgit for each year the wife; and

(b) plus three thousand five hundred ringgit for the wife if she is a disabled person.

(2) In the case of an individual resident in the base year for a valuation year, the resident in that base year

(a) made payments to a spouse of yours as child support payments;

(b) paid alimony or alimony (in accordance with a court order or otherwise) to any ex-wife whose marriage to him has been dissolved or annulled (by a court or otherwise) in accordance with the law or custom applicable thereto; or

(c) made payments pursuant to a court order, deed or written agreement to a spouse from whom he has been separated by a court order, deed

Separation or a written separation agreement, 053d .FM page 102 Thursday, April 6, 2006 12:07 p.m. Income Tax 103

then, subject to paragraph 3, a deduction from the total of such payments for that year of assessment shall be permitted.

(3) The sum of the allowable deductions for one assessment year for an individual under paragraph (1)(a) and paragraph (2) shall not exceed three thousand ringgit. (4) If the wife of an individual is assessed separately on her behalf for a year of assessment of her income, she shall not be entitled to any allowance or deduction in respect of that wife in paragraph (1).

(5) Notwithstanding subsection 45(2), but subject to subsection (4), if the wife of an individual has no aggregate income aggregateable with that of her husband for a year of assessment, an allowance or deduction shall be granted to her in Reference to that wife under paragraph (1).

deduction for children

48. (1) Subject to this Section, if an individual who is a resident for a assessment year in the base year (a) pays in that base year (in whole or in part) for maintenance at any time in that base year one

unmarried child under the age of eighteen at any time during this base year;

(b) pays (in whole or in part) in that base year - (i) maintenance at any time in that base year for an unmarried child who is at any time in

This base year receives full-time

teaching at universities, colleges, schools or other similar educational institutions; or

(ii) for this instruction;

unmarried child (referred to as the child in subparagraphs (i) through (ii)) serving under articles or contracts to qualify in a trade or occupation at any time in that base year, or -

(i) pays (in whole or in part) in that base year for any part-time education received from

053e.FM Page 103 Thursday 6 April 2006 12:07 p.m.104 Malaysian Law ACT 53

the child at any time during that base year and

relates to that trade or profession;

(ii) pays (in whole or in part) all premiums payable on behalf of the child in that base year

or in connection with these articles or

writings; or

(iii) makes any other payments payable under or in that base year on behalf of the child

association with such articles or writings; or

(d) in that base year (in whole or in part) any maintenance payments at any time in that base year from a

unmarried child if it is proved to the satisfaction of the Director-General that the child is corporeal or

mentally retarded,

If applicable, the appropriate deduction referred to in paragraph 2 shall be granted for that year of assessment in respect of that child: If a wife living with her husband is assessed separately according to her income for a year of assessment, she may elect in writing that she be entitled to the appropriate deduction is awarded in full for that assessment year.

(2) The reasonable deduction referred to in paragraph (1) is

(a) in relation to children covered by paragraphs (1)(a) to (c), one thousand ringgit for each child;

(b) in relation to children falling under paragraph (1)(d), five thousand ringgit for each child.

(3) (a) If an individual is entitled to any deduction referred to in paragraph (2)(a) or (b) during a valuation year under paragraph (1)(b), (c) or (d), per as the case may be, in relation to a child over the age of eighteen receiving full-time instruction at a university, college or other educational institution (similar to a university or college) or subject to articles or contracts for qualification in a trade or profession, then it is permissible - (i) if that person is entitled under paragraph (1)(b) or (c) ) to take a deduction instead of the deduction under paragraph (2)(a) four times the amount of the deduction under paragraph (2)(a); or

053 .FM Page 104 Thursday, April 6, 2006 12:07 AM Income Tax 105

(ii) in the event that such person is entitled to a deduction under paragraph (1)(d), in addition to a deduction under paragraph (2)(b), an additional deduction of four thousand ringgit:

Provided, in the case of a child receiving full-time education outside of Malaysia, it is either a degree (including a master's or doctoral degree) or its equivalent.

(b) For the purposes of paragraph (a), the teaching and educational institution referred to in paragraph (a) must be licensed by the appropriate governmental authority.

(4) If two or more persons are entitled to a deduction for a year of assessment under this section in respect of a payment made in respect of the same child, each such person shall be allowed under this section in lieu of the entire deduction that would otherwise be made be allowed, a reduced deduction of fifty percent of the total deduction. (5) No deduction shall be allowed to a person under this section for any assessment year in respect of a child whose total income, whether derived or accrued, for that year exceeds the amount of the deduction that would otherwise be permitted under this section. Section for that person relating to that child.(6) (Exempt by Law 644).

(7) (Excluded by Law 531).

(8) (Excluded by Act A226).

(9) In this section, “child” in relation to a person or his spouse means a legitimate child or step-child of his wife or a child proven to the satisfaction of the Director-General to have been adopted by the person or his spouse under any law.

Deduction for insurance premiums

49. (1) Subject to this section, in the case of an individual resident in the base year for a measurement year and in that base year:

053e.FM Page 105 Thursday 6 April 2006 12:07 p.m.106 Malaysian Law ACT 53

(a) has paid a premium for any insurance or deferred annuity other than an insurance policy

Subsection (1C) applies;

(b) as an employee or self-employed within the meaning of the Employee Provident Fund Act

1991 [Act 452] created or created a

Contribution to an approved scheme or to the employee pension fund, as the case may be; or

Pensions or under one in the approved system

meaning of such a law,

a deduction from the total value of payments or contributions, or both, or a deduction of six thousand ringgit, whichever is the lesser, is allowable for that year of assessment. (1A) For purposes of subsection (1), if subsection 50(2) or 50(3) applies, the total deduction under that subsection shall not exceed six thousand ringgit.

(1B)(a) Subject to this section, in the case of an individual who is a resident in the base year of an assessment year and has paid educational insurance premiums or medical insurance premiums for that assessment year, in addition to the allowable deduction in subsection (1), a deduction from the total amount will be made the payments or a deduction of three thousand Git, whichever is less;

(b) for the purposes of paragraph (a), if subsection 50(2) applies, the aggregate deduction under paragraph shall not exceed three thousand ringgit.

(1C) In the case of a resident in the base year of the assessment year who used any amount of their entitlement to the Employee Provident Fund to purchase an insurance policy determined by the Board of Directors of the Employee Provident Fund in that base year, a deduction of one thousand ringgit is permitted in that assessment year, and if subsection 50(2) applies, the total deduction under that subsection shall not exceed one thousand ringgit.

(2) For the purposes of subsection (1), contributions to an approved scheme will not be considered unless contribution is mandatory for the following reasons:

053 .FM Page 106 Thursday, April 6, 2006 12:07 AM Income Tax 107

(a) any contract of employment of the person claiming a deduction in connection with the Entry; or

(b) any provision in the rules, regulations, articles of incorporation or bylaws of the scheme,

and if the contribution is partly obligatory and partly not so obligatory by virtue of such a contract or provision, only that part which was obligatory need be taken into account. (3) In relation to a person claiming a deduction under subsection (1), “insurance” and “deferred annuity” means insurance or deferred annuity taken out by the person — (a) for the life of the person;

(b) in the life of a person's wife or, if the person is a woman, in the life of the person's husband; or

(c) in the common life of the person and his wife or wives, or in the common life of two or more of his spouses, or, if the individual is a woman, in the common life of

(i) the person and her husband;

(ii) the person, her husband and any other wife or wives of him;

(iii) the person and any other wife or wives of his husband; or

(iv) your husband and any other wife or wives of his who are an insurance or deferred annuity contracted with an insurance company to guarantee a lump sum or a deferred annuity or both (together with other benefits or not) in the event of death or an insurance or deferred annuity contracted with a government, public agency, or the regulatory body of a nationalized insurance company.

(4) For the purposes of subsection (1B), the term "insurance" means insurance taken out by a person for himself, his wife or child, or in the case of a wife, for himself, her husband or child.

053e.FM Page 107 Thursday 6 April 2006 12:07 p.m.108 Malaysian Law ACT 53

Application of Section 49 when husband and wife live together

50. (1) If an individual who is a resident in the base year of the assessment year has a spouse who is living with him or her at any time in that base year and they were not cohabiting that year - (a) were no longer cohabiting; or

(b) ceasing to be husband and wife to each other,

the application of Section 49 to that person is governed by that Section.

(2) Any premium for an insurance or deferred annuity within the meaning of subsection 49(3) or for an insurance for education or medical benefits within the meaning of subsection 49(4) or for an insurance policy determined by the Board of Directors that requires subsection 49(1C) said employee pension paid by the wife or husband in the assessment year -

(a) where subsection 45(2) applies, shall be deemed to be paid by the husband of his chosen wife or by the wife of his chosen husband, as the case may be; or

(b) if the wife or husband does not have a full income, shall be deemed to be paid by that wife's husband who does not have a full income or by that husband's wife who does not have a full income, as the case may be: Provided where paragraph 45 (2)(b) If this is the case, or if the husband does not have full income, any amount paid by the husband shall be deemed to have been paid by the wife, who was allowed the deduction under section 45A.

(3) If Section 45 (2) applies to the assessment year and in this year the spouse of choice made or received a contribution as an employee in an approved plan or as a self-employed person within the meaning of the 1991 employee pension fund -

a) the contribution is deemed to have been made by the spouse or wife on whose behalf the settlement was made in that year; and

053 .FM Page 108 Thursday, April 6, 2006 12:07 p.m. Income Tax 109

(b) Reference to an employment contract in

Paragraph 49(2)(a) includes a

Reference to the employment contract of the woman or husband who chose. The deduction must be claimed

51. Notwithstanding Sections 47 to 50, no deduction shall be permitted under these Sections in determining the taxable income of an individual for a year of assessment, unless a right of deduction, or a deduction of a greater or lesser amount, has been established for that year in related to the same topic.

Chapter 8 - Special cases

Modification of Part III in certain special cases

52. In the event that any provision of this Chapter applies, the previous Chapters shall also apply but their application shall be modified to the extent necessary to conform with that provision; and if in such event there is a conflict between this provision and any provision of the preceding chapters, that provision of those chapters shall be null and void to the extent of the conflict.

trade associations

53. (1) If a professional association is resident in the base year for a year of assessment,

(a) the totals (other than amounts forming part of any gross income of the association from a source other than that provided for by this subsection) to be held in the association's income account for that base year (including membership dues and

subscriptions) are gross receipts for that base year of any club business deemed to be operated by the club; and

(b) that base year shall be deemed to be the base period for that valuation year for that transaction.

053e.FM Page 109 Thursday 6 April 2006 12:07 PM110 Malaysian Law ACT 53

(2) For the purposes of paragraph (1) -

(a) A professional association's gross income, adjusted income or adjusted loss and statutory income in respect of its dealings with its members shall be determined on the same principles as its gross income.

Income, Adjusted Income or Adjusted Loss and Legal Income related to your transactions with non-members, if any, would be determined; and

(b) all expenses or expenses related to claims in the income account referred to

Paragraph 1 shall be deemed to have accrued in generating its gross income from its dealings with its members if it would have accrued if the amounts deemed to be gross income under this paragraph had actually been gross income of the association.

(3) Business association in this Section is any association of persons, corporations, or of persons and corporations incorporated for the principal purpose of safeguarding or promoting the affairs of its members; and notwithstanding any other provision of this Act, a trade association shall be deemed to be a group of persons and not a partnership for the purposes of this section. sea and air transport companies

54. (1) If a person's business consists partly in the carriage of passengers or cargo by sea or air and partly in other activities -

(a) transportation activities of this nature shall be deemed to be business and source of that person and the other activities shall be deemed business and source separate and separate from that person; and

(b) the gross income and the adjusted income or loss for the base period for an assessment year of the enterprise consisting of those other activities and the legal income for that assessment year of the enterprise so formed are determined in

in accordance with the provisions of the previous one

Chapters not modified by this section.

053 .FM Page 110 Thursday, April 6, 2006 12:07 AM Income Tax 111

(2) (a) Subject to Section 54A, if that person is a resident in the base year of a year of assessment, his gross income and adjusted income or adjusted loss for the base period of that year of assessment of passenger transport business or cargo, by sea or air, his lawful income for that Valuation year of that business determined by reference to its income, regardless of where it accrues or originates; (b) If that person is not a resident in the base year for the assessment year, then his or her gross Malaysian income is from the carriage of passengers or cargo by sea or air for the base period for that assessment year and his or her legal Malaysian income is from that entity for that assessment year is determined according to the following subsections (the company, person, base period and assessment year are referred to as company, operator, relevant period and relevant year in these subsections, respectively). (3) Subject to the subsections under (4), the legal earnings of the entrepreneur for the relevant year shall be deemed to be five per cent of the gross earnings generated in Malaysia for the relevant period.

(4) If the operator produces a certificate which is an acceptable certificate within three years (or such other period as may be approved by the Director General) from the beginning of the relevant year, then -

(a) In the case of worldwide earnings, the legal earnings of the trader for the relevant year shall be deemed to be an amount which has an equal share of the worldwide earnings as the gross earnings derived therefrom

Malaysia for the relevant period comprises the gross receipts recorded in the certificate less the amount of any business loss calculated in accordance with paragraph (b) for a valuation year prior to the relevant year (to the extent that the loss has not been allowed as a deduction in the calculation of the

legal income of the company for each year of assessment after the previous year from

assessment and end before the year in question); (b) in the case of worldwide damage, the trader's net legal loss for the relevant year applies

considered as an amount having an equal share of the worldwide loss as the gross income derived from Malaysia053e .FM Malaysian Laws ACT 53

it is levied on the gross income stated in the certificate for the relevant period;

(c) if no assessment has been made of the operator for the relevant year by reference to sub-section (3) at the time the certificate becomes an acceptable certificate, this sub-section shall lapse in respect of the business for the relevant year ; and (d) if by that time a tax assessment for the relevant year has been made in respect of the operator in accordance with subsection (3), the Director-General shall make a further tax assessment or refund, as appropriate

are required as a result of the application of this Subsection for that year.

(5) In this section, in relation to the company, operator, relevant period and year –

"Acceptable Certificate" means a certificate submitted to the Director General in respect of which he is satisfied that the values stated in the certificate have been calculated by methods not materially different from those used in this Act for the calculation of analogous values intended for a similar business carried out by a resident;

“Certificate” means a certificate that

(a) is issued by the authority responsible for administering the tax laws of any country (other than Malaysia) in which the operator is resident for the purposes of those laws; and

(b) indicate in relation to the transaction for the relevant period the amount of:

(i) gross income, where it comes from;

(ii) the income or losses calculated for

foreign tax purpose by this authority

excluding depreciation; and

(iii) the total depreciation allowance granted by that authority (excluding depreciation or any portion thereof).

brought by an earlier one

Period);

"Malaysia Gross Derived Income for the Relevant Period" means the sum of all totals first received by the Operator on 053e .FM Page 112 Thursday 06 April 2006 12:07 Income Tax 113

relevant period in relation to the carriage by sea or air (whether before, during or after the relevant period) of passengers or cargo embarked or loaded in Malaysia on ships or aircraft owned or chartered by the operator, except of claims relating to passengers or cargo -

(a) brought into Malaysia, whether or not by the operator, for transfer only--

(i) from one ship or aircraft to another;

(ii) from a ship to an aircraft; or

(iii) from an aircraft to a ship; or

(b) so loaded or loaded onto such ship or aircraft if the stopover of such ship or aircraft at a port, aerodrome or airport in Malaysia for such loading or loading is an occasional stopover within the meaning of subsection (6); less any amounts received in or before the Relevant Period that will be repaid in the Relevant Period and all amounts first received in or before the Relevant Period, other than upon receipt;

“Gross Receipts, however derived” means the sum of all initial amounts accrued by the Operator in respect of the carriage of passengers or cargo by sea or air (whether before, during or after the Relevant Period) on its own ships during the Relevant Period or aircraft received or chartered by the operator;

“World Income” in relation to a Certificate that is an Acceptable Certificate means the value of any income specified in that Certificate in accordance with sub-paragraph (b)(ii) of the definition of “Certificate” in this Subsection, less the amount of Amortization , set out in this certificate, less any amounts received on or before the relevant period that will be repaid in the relevant period and any amounts first received on or before the relevant period that will no longer be received in the relevant period, except at the reception of it;

"Loss of the World" in relation to a Certificate being an Acceptable Certificate means -

(a) the amount of loss stated in this certificate together with the amount of impairment

allowances specified in this certificate; or

053e.FM Page 113 Thursday 6 April 2006 12:07 PM114 Malaysian Law ACT 53

(b) if the amount of such allowances exceeds the amount of income stated on that certificate, in accordance with sub-paragraph (b)(ii) of the definition of “Certificate” in that sub-section, the amount of the excess.

(6) A stopover at a port, aerodrome or airport in Malaysia (referred to in this subsection as a Malaysian stopover) by a ship or aircraft owned or chartered by the operator (referred to in this subsection as the relevant ship) is an occasional stopover stopover as defined in subsection (5) ) only if

(a) in addition to that specific Malaysia call, there have been no other Malaysia calls by that or any other relevant ship for the twenty-four consecutive months immediately preceding that specific Malaysia call; and

(b) the Director-General is satisfied that this is the operator's intention for the period of twenty-four consecutive months immediately thereafter

certain malay call--

(i) the vessel in question will not make any further Malaysian call (other than a call in

Itinerary or escape from the site

Where did that particular call from Malaysia go?

he has); and

(ii) no other relevant vessel will a

Malaysian call:

Provided that that or any other relevant ship makes a further Malaysian call within the period referred to in paragraph (b) (except, in the case of that relevant ship, a call made en route or in flight from the place where that specific Malay call was made), that particular call from Malaysia should be treated as if it was never a random call.

Promotional Prize Exemption

54A. (1) Subject to the following subsections, if a resident in the base year of an assessment year carries out the activity:

(a) carry passengers or cargo by sea in a

Malaysian ship; or

053 .FM Page 114 Thursday, April 6, 2006 12:07 p.m. Income Tax 115

(b) charter a Malaysian ship of his own for a voyage or time charter,

the legal income for this assessment year of this company is tax-free.

(2) In determining a person's income under this section - (a) any capital deductions claimed in respect of a Malaysian vessel may only be made against income excluded under the provisions of this section and the balance thereof Deductions may not be available as a deduction from your other income;

(b) any adjusted loss incurred by such person in connection with the operation of a Malaysian vessel in any year will only be deducted from exempt income in accordance with

the provisions of this section and the balance of any such loss will not be available as a deduction from your other income.

(3) For a person who runs a trade for which their income is tax-free under paragraph 1, the following provisions apply:

(a) He must keep a separate account for the income accruing or deemed to accrue from each Malaysian of that business for the purposes of this section provided that where the expenses are incurred

from that person not directly attributable to a Malaysian ship, the Director General may allocate the reasonable amounts as expenses

duly arisen in the ordinary course of business in relation to such ship;

(b) Once an amount of Malaysian income is exempt from tax under this Section, such amount will be credited to an Exempt Account;

(c) if such an Exempt Account has an balance on the date dividends are paid by that person (out of Exempt Income), an amount equal to such dividends or such balance, whichever is less, debited from this account ;

053e.FM Page 115 Thursday April 6, 2006 12:07 PM116 Malaysian Law ACT 53

(d) any dividends paid, credited or distributed from such Exempt Account in a Base Period will be exempt from tax;

(e) where such dividend is received by a Shareholder and that Shareholder is a company, any dividend paid by that holding company to its Shareholders, provided that the Director General is satisfied that the dividend so paid will be paid with such exempt dividend, into the hands of shareholders are tax-free; and

(f) Section 108 does not apply to such dividends. (4) Such person shall furnish the Director-General with a copy of the accounts referred to in sub-section (3) drawn up by a date determined by him, whenever requested by written notice.

(5) Notwithstanding the foregoing provisions of this Section, if the Director-General considers that -

(a) all Exempt Income of that person; or (b) any dividend (including a dividend paid by a holding company to which paragraph (3)(e) applies) exempt from tax in the hands of a Shareholder,

should not have been so exempt, the Director-General may at any time -

(i) make such assessment or additional assessment for that person or a Shareholder as appears necessary to offset any loss of tax; or (ii) instruct that person to debit your account held pursuant to subsection (3) for such amount as circumstances may require:

Provided the notices given under this

paragraph shall be deemed to have been communicated by

Assessment for Section 99 purposes.

(6) For the purposes of this Section –

“Malaysian Ship” means a sea-going ship classified as such under the Merchant Shipping Ordinance 1952 [Ord. 70 of 1952],053e .FMPage 116 Thursday, April 6, 2006 00:07 Income Tax 117

which is not a ferry, barge, tugboat, supply vessel, crew ship, barge, dredger, fishing vessel or similar vessel; "Person" includes a partnership.

54B. (Repressed by Law 293).

partnerships in general

Section 55. (1) Subject to this Section and Sections 56 to 59, in the case of an entity of a partnership (referred to in this Section as the relevant partnership) and in relation to a person who is a partner in the relevant partnership during the period , in which he was such a partner, it shall be deemed for the purposes of this Act that -

(a) that person (referred to in this section as the sole owner) has transferred the business and assets of the relevant partnership together with all associated rights and liabilities of the members; (b) the subject of the transfer is a business (referred to in this Section and in Section 56 as a real estate business) of the sole proprietorship carried on by it in a manner similar to that of the relevant partnership and, in particular, that the relevant business accounts of the partnership which were created for any period, which are separate business accounts set up for that period. (2) It shall be determined in accordance with the previous provisions of this section and this part, what would be without provisions of any of the following subsections, and the adjusted income in this section shall be referred to as the adjusted income determination of the sole proprietor of his establishment for the assessment period of an assessment year. (3) Own enterprise divisible income for the base period for a year of assessment shall be deemed to be the value obtained by subtracting the preliminary adjusted income of that enterprise's sole trader for that period from the total of - -

(a) any remuneration payable under a partnership agreement of the relevant partnership to a partner during that period or for any part thereof;

053e.FM Page 117 Thursday 6 April 2006 12:07 p.m.118 Malaysian Law ACT 53

(b) all interest payable to any partner in the partnership concerned for that period or any part thereof in connection with all the capital paid or advanced by him (other than in a fiduciary capacity unless he is in that capacity partners in the respective

partnership) for the partnership in question; and

(c) all expenses incurred during such period in respect of any Partner in the relevant partnership and debited to the relevant partnership's accounts (whether or not for that period) which -

(i) would have been private or household expenses

if they arise to that partner; or

(ii) are reimbursements of private or national expenses

Costs incurred by this partner.

(4) The divisible proprietary trading income determined in paragraph 3 for the assessment period of a valuation year shall be treated as accruing equally during that period and apportioned among the members of the relevant partnership during that period in accordance with the sharing arrangements (which may be made during that period from time to time exist) that partner, in the same manner as that amount would have been divisible between those partners if that amount had been equally divisible profits from the business of that partner during that period; and any portion of that divisible income deemed attributable to the sole proprietor shall be deemed his share of that divisible income for that period.

(5) The adjusted income of the sole proprietorship of the real estate company for the base period for a year of assessment shall be taken as the sum of - (a) both total deductions

Subsection (3) in determining that entity's divisible income for that period in relation to any

remuneration, interest or costs to be paid or

in relation to the individual entrepreneur; and

(b) its share of the divisible income from that business for that period, as determined in subsection (4). (6) For the purposes of subsection (3) of this Section, the amount of remuneration or interest, if necessary, shall be determined applying subsection 19(3) as if References 053e .FM Page 118 Thursday April 6, 2006 12:07 pm Income Tax 119

in chapter 4 there were references to subsection (3) of this section.

(7) Items of the type referred to in paragraphs (3) (a), (b) and (c) shall not be deemed to be divisible income in paragraph (4).

consecutive partnerships

56. (1) Where, save for this section, the circumstances are such that--

(a) Section 55 applies to an entity of a partnership (referred to in this section as a former partnership), to a person (referred to in this section as a general partner) who is a partner therein and for the period in which he was such Partner;

(b) any time after the commencement thereof

§ 55 applies to a company of another partnership (referred to in this section as the new partnership) for the partner there who is a permanent partner and for the time during which he was a partner;

(d) such corporations are substantially similar and in all respects (as far as the permanent partner is concerned) will go on successively as if one were going on (other than the assets of each such partnership and the rights and liabilities of the respective partner in relation to each of these companies, partnerships and assets),

Section 55 as it applies to the business of the old partnership, the business of the new partnership and the permanent partner as the sole owner of each of the companies under this section in respect of the old and new partnerships are subject to such changes as are provided for in this section for that period (a period referred to in this Section as a Material Period, a part of which shall include all or part of the period during which the surviving Partner was a Partner in the Prior Partnership and a portion thereof shall include all or part of the period during which the permanent partner was a partner in the new partnership)

as may be required in all circumstances for the purposes of the application of this Section together with Section 55, as amended, to the Permanent Member in connection with the matters of the Old and New Partnerships and in other matters provided for in this Section.

(2) Without prejudice to paragraph (1) -

(a) This section does not apply if the business accounts of the old partnership were maintained for a period of twelve months ending on the day before the new partnership was incorporated and the business accounts of the new partnership were maintained for a period of twelve months from the date the new partnership became founded; and

(b) if prior to the application of this section to the permanent member section 55 has been applied to him in respect of the previous partnership and an assessment has been made in whole or in part as a result of that application of section 55, the subsequent application of this section will be the assessment not invalidate. (3) Notwithstanding, but for the purposes of this section, after the incorporation of the new partnership, the permanent member's business in relation to the old company would have ceased and the permanent member's business in relation to the new company would have commenced during the relevant period such two ownership relationships will be treated throughout the relevant period as a continuing ownership business (referred to in this section as a continuing ownership business) by the surviving shareholder and will be managed by him in a similar manner in which the business of the old partnerships and new ownership has continued and, subject to generality of the foregoing, accounts of such businesses established for any period shall be deemed to be accounts of entities in continuing ownership established for that period.

(4) It shall be determined in accordance with the foregoing provisions of this Section and this Part what the Adjusted Income (referred to in this Section as Preliminary Adjusted Income) would be, other than as provided in any of the following subsections, the permanent member's continuing ownership business for the base period for an assessment year.

053 .FM Page 120 Thursday, April 6, 2006 12:07 p.m. Income Tax 121

(5) The divisible income of the continuing enterprise for the base period of an assessment year is an amount obtained by dividing the preliminary adjusted income of the continuing owner of this enterprise for that period from the total amount of --( a) all remunerations due under of a memorandum of association of the old or new company

partner in the old or new partnership for this period or for part of it;

(b) all interest payable to any member of the old or new partnership for that period or any part thereof in connection with all the capital paid or advanced by him (other than in a fiduciary capacity unless he is in that property partner of the old or new partnership) for the old or new partnership; and

(c) all expenses incurred during such period in respect of a Member in the old or new partnership and charged to the accounts of the old or new partnership (whether for that period or not) which -

(i) would have been private or household expenses

if they arise to that partner; or

(ii) are reimbursements of private or national expenses

Costs incurred by this partner.

(6) The amount of divisible income from continuing real estate operations for the base period for a valuation year, as determined in subsection (5) -

(a) if the date of incorporation of the new partnership is after that period, they will be treated as having been accumulated equally during that period and will be divided according to the sharing arrangements among those who were partners in the old partnership during that period

(which existed from time to time during that period) of that partner in the same manner as that amount would have been divisible between those partners if that amount had been divisible profits from the former partnership's dealings made during that period would have been accumulated in equal parts; and the portion of that divisible income attributable to the continuing member shall be deemed his share of that divisible income for that period;

053e.FM Page 121 Thursday 6 Apr 2006 12:07pm122 Malaysian Law ACT 53

(b) If the date of incorporation of the new company coincides with this period, it shall be deemed to have been accumulated evenly over this period and distributed proportionately since the respective durations of the two parts mentioned below correspond to the duration of this period, namely the part (in this subsection referred to as the first part) of that period which is before such date and that part (referred to in this subsection as the second part) of that period which is on or after such date, and

(i) an amount equal to that amount determined to have been distributed to the first party

are treated as if they were evenly accumulated

the length of the first part and divided between

those who were members of the former society

in the first part after the division

Agreements (exist from time to time

during the first part) these partners in affinity

way, this sum would have been divisible

between these partners if that sum had been

Divisible profits from the old man's business

in the first part evenly increasing partnership;

and as much of that sum as it turns out

are attributable to the continued shareholder

taken as part of his share of this divisibility

Income;

(ii) an amount equal to that amount found to have been distributed to the second

Part is treated as evenly accumulated

during the second part and will be

divided between those who were partners of

the new partnership in the second part in

according to the sharing agreement

(existing from time to time during the

second part) this partner in the same way as

this sum would have been divisible between

these partners if this sum were divisible

profits from the business of the new

Partnership that accumulates evenly over the second

Paper; and as much of this sum as is thus found

attributable to the continuing partner

counts as part of your share of it

divisible income; and

053 .FM Page 122 Thursday, April 6, 2006 12:07 p.m. Income Tax 123

(iii) the value of the share of

Shareholder's portion calculated in accordance with the terms of the subparagraph

(i) and the value of your share

to be determined in sub-paragraph (ii).

aggregate; and the amount of aggregate

counts as its share of this divisibility

income for this period; and

(c) if the date of incorporation of the new partnership is before that period, they will be treated as if they had been accumulated equally during that period and will be apportioned according to apportionment among those who were partners in the new partnership during that period of arrangements (existing from time to time during that period) of those partners in the same manner that that amount would have been divisible between those partners had that amount been divisible profits from the new company's business accumulated equally during that period ; and the portion of that divisible income attributable to the permanent member shall be deemed his share of that divisible income for that period.

(7) For the purposes of subsection (5) of this section, the amount of remuneration or interest, if necessary, shall be determined by applying subsection 19(3) as if references to Chapter 4 were references to subsection (5) of this section.

(8) The continuing partner's adjusted income from continuing ownership business for the base period of an assessment year is taken as the sum of - (a) both of the total amount deducted under

Subsection (5) in determining that entity's divisible income for that period in respect of all

remuneration, interest or costs to be paid or

arose in relation to the continuing partner; and (b) its share of the divisible income from that transaction for that period, as determined in accordance with paragraph (6)(a), (b) or (c), as the case may be.

(9) In sub-section (6), “divisible profits” do not include any item of Article :07 PM124 Malaysian Law ACT 53 referred to in paragraphs (5)(a), (b) and (c).

Provisions that apply when the partnership is a partner in another partnership

57. If a partnership (referred to in this section as a subsidiary) is a partner in another partnership (referred to in this section as a parent company), then in relation to any business of the parent company -

(a) Throughout the period that a person is a shareholder in the Subsidiary and the Subsidiary is a shareholder in the Principal Company, that person will be

posits that the person concerned is a shareholder in the main company instead of the subsidiary

Partnership and that person's Adjusted Income under Subsection 55(5) or 56(8) (hereinafter referred to as Calculated Adjusted Income) of that person for the base period of any assessment year as the sole proprietor of his or her own business or as a continuing partner's continuing business , as the case may be, in relation to the parent company, to be checked in Section 55 or in Section 55 in conjunction with Section 56, as the case may be; and

(b) the adjusted income calculated for that base period is apportioned among the members of the subsidiary in the same manner as apportionable income is apportioned in subsection 55(4) or 56(6), as the case may be, and the amount of the portion so

dismissed by each shareholder as the sole owner or as a continuing shareholder as mentioned in

Subsection 55(4) or 56(6), as the case may be, will be considered your adjusted base period income for that property appraisal year

business or continuing real estate business it has in relation to the parent company in accordance with paragraph (a).

58. (1) Where a partnership carries on a business or shares in the profits and the income is received by the partnership (the income is not part of the gross income for the base period for a business or private property valuation year or 053d .FM page 124 Thursday , April 6, 2006 00:07 Income Tax 125

continuation of ownership business in relation to a partner in the partnership) from a source, then, whether or not income has been distributed to the partners, Sections 55, 56 and 57 (with necessary modifications) apply in determining gross income and Adjusted Income Income for the assessment period of an assessment year from that source of each partner who is a partner in the partnership when it requests to determine its gross income and adjusted income for the assessment period of that year of operation.

(2) For the purposes of subsection 1, if section 55 or section 55 in conjunction with section 56 is applied, provisional adjusted income shall be deemed to be divisible income.

partnership losses

59. (1) In the case of a sole proprietorship of a real estate company or a permanent partner of a continuing real estate company referred to in sections 55 and 56, respectively – (a) the adjusted loss (referred to in this section as adjusted loss). provisional) of that owner or associate of that property or continuing real estate business for the base period of a valuation year is determined using the same principles used to determine its provisional adjusted income from the

the relevant transaction, other than that loss, would have been determined in Section 55 or Section 55 in conjunction with Section 56, as the case may be;

(b) the divisible loss of such sole proprietorship or continuing ownership for the base valuation period of one year is offset by the addition of the provisional adjusted loss of such sole proprietorship or continuing ownership, as the case may be, of such sole proprietorship or continuing ownership of it for that period of the aggregate amount as mentioned and as noted in subclauses 55(3) and (5) or subclauses 56(5) and (7), as the case may be;

(c) the divisible loss so determined in respect of that business with assets or business with surviving assets will be shared in the same manner as the divisible income of that business would have been shared if Thursday April 6, 2006 12:07 p.m

there was divisible income for that period and that portion of that divisible loss attributable to that sole proprietorship or continuing partner shall be deemed your share of that divisible loss for that period; and

(d) the adjusted loss of that sole owner or surviving associate of that business owned or owned

the continued ownership transaction for that base period shall be deemed to be the difference between - (i) its proportion, determined in accordance with paragraph

for this period; and

(ii) both the total amount added pursuant to paragraph (b) and any compensation,

interest or costs payable or accrued

see him as a partner in the partnership

in terms of which it is considered unique

Owner or continuing partner, as the case may be

perhaps:

If, in respect of any person, the sum determined in sub-paragraph (d)(ii) exceeds the proportion referred to in sub-paragraph (d)(i), the difference between such sum and such proportion shall be treated as an adjusted net worth of that person's income for that period out of that ownership transaction or the continuing ownership transaction, as the case may be.

(2) For the purposes of Section 55 or Section 55 in conjunction with Section 56, if the total amount is specified and determined as in subsections 55 (3) and (5) or subsections 56 (5) and (7), as if it exceeds the preliminary adjusted income of the sole proprietor of its own business or the continuing associate of its continuing own business for the base period of a valuation year, the excess shall be treated as a divisible loss for that period of such ownership business or business with continuing ownership, and paragraphs (1 )(c) and (d) apply accordingly.

(3) In the event that Section 57 would apply but there is no adjusted income, the above paragraphs shall apply with the following additional provisions:

053 .FM Page 126 Thursday, April 6, 2006 12:07 p.m. Income Tax 127

(a) the adjusted loss (referred to in this subsection as calculated adjusted loss) of the sole proprietor of his proprietary business or the surviving partner of his continuing proprietary business, as the case may be, in respect of the primary partnership for the reference period should be a performance year

calculated according to paragraph 1; and

(b) the adjusted loss calculated for that base period is allocated to the partners of the subsidiary partnership in the same manner as it would have been the case

divided in accordance with paragraph 57(b) if the calculated amount

Adjusted loss was calculated as adjusted profit

as referred to in this Section; and the value of a member's interests as sole owner or permanent member so determined shall be deemed to be its adjusted loss for the base period for that measurement year of the ownership business or continuing ownership business treated in respect of the parent in accordance with paragraph 57(a).

insurance business

60. (1) This section should be applied to determine base period adjusted revenues for a rating year of an insurer's insurance business.

(2) For the purposes of this Section –

(a) subject to paragraph (b), where an insurer carries on life insurance business in connection with general business, the life insurance business and general business are treated as separate insurance business;

(b) (i) if an insurer engages in internal reinsurance business, the internal reinsurance business and

the shop in general (without interior decoration).

Offshore insurance and reinsurance business

business) should be treated as a separate more general

Company;

(ii) if an insurer engages in offshore insurance business, the offshore insurance business and

the business in general (except offshore

053e.FM Page 127 Thursday 6 April 2006 12:07 p.m.128 Malaysian Law ACT 53

Insurance activity and internal reinsurance

business) should be treated as a separate more general

Company;

(c) Where an insurer carries on life, income from the life insurance fund is treated as a separate source of income from income from the shareholders' funds in respect of life insurance:

Provided that--

(i) if the insurer also carries out life insurance

Insurance business, life reinsurance

Business must be a separate source of life

business and should be treated as a

the business; or

(ii) if the insurer also engages in internal life reinsurance activities, internal life insurance

Insurance business should be a separate source

of the affairs of life and should be treated as

business in general;

(d) where an insurer only carries on life reinsurance business, life reinsurance business is treated as general business.

(3) Adjusted life fund returns, other than life reinsurance returns, for the base period for a resident insurer's rating year for the base year of that rating year are determined by: (a) the sum of --

(i) the amount of gross receipts for that period

of investments made in any of the

insurer's life fund; and

(ii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (i) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(b) Deduct from this aggregate if subparagraph (a)(ii) is applicable for that period, Gross receipts053e .FM

Claims related to investments or

Rights, the costs of acquiring and realizing these investments or rights.

(3A) The adjusted shareholder fund income for the base period of a rating year of a resident insurer for the base year of that rating year is determined by - (a) the sum of -

(i) the amount of gross receipts for that period

of investments made in any of the

shareholder fund;

(ii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (i) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(iii) the value of the actuarial surplus of the life fund that is transferred to the share capital; and

(b) Deduction from this aggregate –

(i) where sub-paragraph (a)(ii) applies

this period on gross receipts in

in relation to investments or rights that

Acquisition and utilization costs of these

investments or rights; and

(ii) both the amount transferred from the

Share capital in the amount of the actuarial value

Deficit of this time due to life

funds other than the life insurance deficit

insurance business.

(4) The adjusted life fund income, excluding income from life reinsurance business, of a non-resident insurer for the base year of that assessment year when that business is wholly or partly carried on in Malaysia, as determined at-

(a) considering the sum of –

053e.FM Page 129 Thursday 6 April 2006 12:07 PM130 Malaysian Law ACT 53

(i) the amount of gross receipts for that period

of the investments made (in Malaysia or

elsewhere) outside the Malaysian life of the insurer

Background; and

(ii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (i) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(b) deduct from that total amount, if sub-paragraph (a)(ii) is applicable for that period, the gross income receivable in connection with investments; or

Rights, the costs of acquiring and realizing these investments or rights.

(4A) The adjusted shareholder fund income for the base period of a rating year of a non-resident insurer for the base year of that rating year, if all or part of the business is operated in Malaysia, is determined by -

(a) considering the sum of –

(i) the amount of gross receipts for that period

of investments made in any of the

shareholder fund;

(ii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (i) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(iii) the value of the actuarial surplus of the life fund that is transferred to the share capital; and

(b) Deduction from this aggregate –

(i) where sub-paragraph (a)(ii) applies

this period on gross receipts in

in relation to investments or rights that

053 .FM Page 130 Thursday, April 6, 2006 12:07 p.m. Income Tax 131

costs of acquiring and exploiting these interests or rights; and

(ii) both the amount transferred from the

Share capital in the amount of the actuarial value

Deficit of this time due to life

funds other than the life insurance deficit

insurance business.

(4B) Adjusted income under subsections (3A) and (4A) is considered legal income from that source.

(5) The base year adjusted income for a resident insurer's general business assessment year for that assessment year consists of an amount calculated by:

(a) considering the sum of –

(i) the amount of the premiums gross first

Claims during this period regarding

policies issued by him (less the value of any

Awards received at any time in connection with

one of these general guidelines and returned by him

during phase);

(ii) the amount of all other gross receipts for that period from the insurer's general operations

(including any commissions and any interest

or other income from participations

connection to this company);

(iii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (ii) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(iv) any amounts collected or receivable from it

in this period from reinsurance contracts

made in connection with this business; and

(v) the amount of your Reserve Fund for

Risks at the end of the immediately preceding period

base period; and

053e.FM Page 131 Thursday 6 April 2006 12:07 PM132 Malaysian Law ACT 53

(b) subject to subsection (7), deduction from that aggregate amount of -

(i) Claims that have arisen in connection with this period

with its general politics;

(ii) reinsurance premiums payable in that period in respect of that business;

(iii) Commissions payable and discounts granted

from him at the time in connection with it

the business;

(iv) administrative costs incurred by it

period related to this transaction;

(v) its reserve fund for risks that have not matured at the end of that period; and

(vi) if sub-paragraph (a)(iii) applies to the Gross Income Claims for that period

in relation to investments or rights that

Acquisition and utilization costs of these

investments or rights.

(5A) The base period adjusted income for a measurement year of a resident policyholder's domestic reinsurance business for the base year of that measurement year consists of an amount determined by applying subsection (5) as if including references to "general business". would be" and "General Policies" were references to "internal reinsurance business" and "internal reinsurance contracts", respectively.

(5B) The base period adjusted income for a resident policyholder's offshore insurance business assessment year for that base year for that assessment year consists of an amount obtained by applying subsection (5) as if referring thereto to "general business". would be taken and 'General Policies' were references to 'offshore insurance business' and 'offshore insurance policies' respectively.

(5C) Base period adjusted income for a resident life reinsurance business assessment year for that base year for that assessment year consists of an amount obtained by applying subsection (5) as if the references therein to

(a) "general business of an insurer" was a reference to "life reinsurance business of a life insurer";

053 .FM Page 132 Thursday, April 6, 2006 12:07 p.m. Income Tax 133

(b) "General Policies" were references to "Life Reinsurance Policies"; and

(6) The adjusted income for the base period for a assessment year of the general business of a non-resident insurer for the base year of that assessment year when all or part of the business is conducted in Malaysia consists of an amount earned of --

(a) considering the sum of –

(i) the amount of the premiums gross first

Claims during this period regarding

General Malaysia policies issued by him (minus

prices received at any time on account

this general Malaysian policy

returned by him during this period);

(ii) the amount of all other gross receipts for that period originating in Malaysia

Business (including gross receipts consisting of

Commissions and Gross Income from

Investments, wherever they are made, are preserved

connection to this company);

(iii) the value of all gross receipts (whether or not they constitute income) that are not gross

income to which subparagraph (ii) applies; and

who are the first to receive this deadline

related to their implementation

investments or rights arising therefrom;

(iv) any amounts collected or receivable from it

in this period from reinsurance contracts

made in connection with Malaysian general

policies of this company; and

(v) the amount of your Reserve Fund for

Risks associated with a Malaysian general

Rules at the end of immediately

previous base period; and

(b) subject to subsection (7), deduction from that aggregate amount of -

053e.FM Page 133 Thursday April 6, 2006 12:07 PM134 Malaysian Law ACT 53

(i) Claims that have arisen in connection with this period

with its general Malaysian politics;

(ii) reinsurance premiums payable by him in relation to a Malaysian during that period

general guidelines;

(iii) Commissions payable and discounts granted by

him at that time in connection with any

general Malaysian politics;

(iv) administrative costs incurred by him in

Malaysia at that time in connection with it

the business;

(v) its reserve fund for unexpired risks in connection with such general Malaysian policies at the end

from this time;

(vi) a reasonable and reasonable share of the insurer's administrative expenses during that period

reasonable considering the gross premiums to be paid in relation to that period

in relation to general Malaysian policies issued

of him at this time compared to the

Total gross premiums for it in

Compliance with all general guidelines issued by it

This period; and

(vii) if sub-paragraph (a)(iii) applies to the Gross Income Claims for that period

in relation to investments or rights that

Acquisition and utilization costs of these

investments or rights.

(6A) Adjusted income for the base period of a assessment year from a non-resident insurer's domestic reinsurance business for the base year of that assessment year when that business is wholly or partly carried on in Malaysia consists of an amount obtained by application of subsection (6) as if references to "general business" and "general Malaysian policies" were references to "internal reinsurance business" and "internal reinsurance contracts" respectively.

(6B) The adjusted income for the base period for a assessment year of a non-resident insurer's offshore insurance business for the base year of that assessment year, if all or part of the business is operated in Malaysia, consists of an amount calculated by applying subsection (6) as if References 053e .FM Income Tax135

Therein, "general business" and "general Malaysian policies" used references to "offshore insurance business" and "offshore insurance policies" respectively.

(6C) The income adjusted by the base period for a assessment year of a non-resident life policyholder's life reinsurance business in the base year for that assessment year when all or part of the business is conducted in Malaysia consists of: a value obtained by applying subsection (6). , as if references to--

(a) "general business of an insurer" was a reference to "life reinsurance business of a life insurer";

(b) "Malaysia General Policies" were references to "Malaysia Life Reinsurance Policies"; and

(7) Where a general commercial insurer has reinsured the risk or part of the risk with a reinsurer who does not carry on the business of insuring risks of this kind in Malaysia or does not reinsure the risk through a branch in Malaysia, this may be the case pursuant to subparagraph (5)(b)(ii) or (6)(b)(ii) in respect of such exposures that only ninety-five percent of the otherwise deductible amount is reinsured:

Provided that in any case subsection (6), (6A) or (6B) applies,

(a) the insurer may elect not to make any deductions under sub-paragraph (6)(b)(ii); and

(b) where he does it -

(i) the election is irrevocable and

apply in relation to the tax base for the

Assessment year for which it is created and for

the base periods for all subsequent years from

Valuation; and

(ii) reinsurance recoverables

Contracts are not considered for the purposes

do subparagrafo (6)(a)(iv).

053e.FM Page 135 Thursday 6 April 2006 12:07 PM136 Malaysian Law ACT 53

(8) If an insurer receives ancillary income (other than a premium on a policy issued in the course of conducting that life or general business) in connection with its life business or general business, for which subsections (3) to (7 ) do not provide, such income will be treated as income of the insurer falling under paragraph 4(f) and will be deemed to come from a separate source.

(9) For the purposes of this section, an insurer's reserve fund for unexpired risks at the end of a base period consists of: (a) twenty-five per cent of the difference between the first gross premiums it receives in that period in respect of marine , aviation or transit policies and the amount deducted pursuant to sub-paragraph (5)(b)(ii) or (6)(b)(ii); and

(b) a calculated value based on the method of

Calculation as determined by the competent authority that regulates the insurance industry and is

consistently applied to the first premiums due from him in this period from other general policies he has issued (less the deduction according to

subparagraph (5)(b)(ii) or 6(b)(ii)).

(10) If, in accordance with this Section, all deductions that would have been made in calculating the adjusted income for the base period for an assessment year of an insurer's insurance business had such adjusted income been determined exceed the total of the amounts from which such deductions otherwise the amount of the deductible will be taken as the amount of your adjusted loss on that deal in that period.

(10A) Notwithstanding subsections 43(2) and 60(10), unabsorbed life losses may be deducted from statutory income only for the base period of a assessment year and subsequent assessment years in respect of Insurance Fund.

(10B) Notwithstanding paragraph 75 of Schedule 3, unclaimed life insurance grants are only available for deduction from adjusted income for the base period for the assessment year and subsequent assessment years in respect of the insurer's life fund.

053 .FM Page 136 Thursday, April 6, 2006 12:07 AM Income Tax 137

(10C) Grants under Schedule 3 are only available as a deduction from adjusted life insurance fund income and the balance of such grants will not be available as a deduction from adjusted fund income to shareholders. (11) In this Section, Sections 60A and 60B--

“general business” means all insurance business other than life business;

"General Policy" means a policy other than life insurance; "Insurer" a person who carries on insurance business and includes a professional reinsurer;

"Investments" includes all approaches thereto;

"Internal Reinsurance" means any reinsurance of a risk under a policy where the risk is outside Malaysia and the original insurance policy--

(a) was issued by a non-Malaysia insurer but not a Malaysian branch of that insurer; or (b) issued by a non-Malaysia branch of a Malaysia resident policyholder,

and if a risk is traveling in Malaysia, it will be considered outside of Malaysia;

“Internal Reinsurance Contract” means a Malaysian policy relating to domestic reinsurance;

“Life Business” has the same meaning as in Section 2 of the Insurance Act 1996 [Act 553];

“Life Policy” has the same meaning as in Section 2 of the Insurance Act 1996;

“Malaysia Life Fund” means the fund established under Section 38 of the Insurance Act 1996;

"Malaysia Policy" has the same meaning as in Section 2 of the Insurance Act 1996;

“Offshore Insurance” means insurance of a risk under a general policy where the risk is outside of Malaysia and the insurance policy is issued by an insurer resident in Malaysia or a Malaysian branch of a non-Malaysia insurer and where a risk is located in Malaysia transported will be considered outside of Malaysia.

053e.FM Page 137 Thursday 6 April 2006 12:07 PM138 Malaysian Law ACT 53

“Offshore Insurance Policies” means policies issued in connection with offshore insurance.

"Police" has the same meaning as in Section 2 of the Insurance Act 1996.

"Premium" has the same meaning as in Section 2 of the Insurance Act 1996.

"Reinsurance" has the same meaning as in Section 2 of the Insurance Act 1996.

“Income Account” means the income account maintained in relation to life business in accordance with Section 87 of the Insurance Act 1996. Internal reinsurance: billable income, reduced rate and tax-exempt dividend

60A (1)(a) Where an insurer carries on internal reinsurance business in connection with other insurance activities, the portion of the taxable income for a assessment year attributable to that internal reinsurance business shall be an amount equal in proportion to the recoverable of the income of that insurer's rating year as part of the aggregated internal reinsurance revenue is the sum of that rating year's aggregated revenue from all sources of the insurer; and (b) the amount determined in paragraph (a) is treated as its taxable income per year of assessment from an insurer's internal reinsurance business for the purposes of paragraph 3 of Part I of Schedule 1.

(2) As soon as taxable income from the domestic reinsurance business of a base year resident insurer (which is a corporation) is subject to income tax for a year of assessment at a rate of 5 per cent - (one) of the amount of the net proceeds from such income (after deduction of such tax ) credited to an account (the account and entity referred to as an Exempt Account and Relevant Entity, respectively); and

(b) Paragraph 5 (except for subparagraph (1) thereof) and paragraph 6 of Schedule 7A shall apply without change

Reference in these paragraphs to any exempt income 053e .FM Page 138 Thursday, April 6, 2006 12:07 PM Income Tax 139

or exempted under paragraph 3 was an indication of the income credited to the exempt account. Application of Sections 60 and 60A to a Takaful60AA trade. (1) The provisions of §§ 60 and 60A apply accordingly to a takaful business operated under the Takaful Act of 1984.

(2) With respect to administrative expenses incurred by a person in connection with a takaful business, in applying Sections 60 and 60A to that business, such expenses shall be deemed to have arisen in connection with the general life or business referred to in these Sections.

Taxable taxable income from life funds

60AB. Income that is taxable in respect of the life fund under subsections 60(3) and 60(4) is subject to taxation in accordance with Part VIII of Schedule 1.

Offshore insurance: taxable income, reduced rate and tax-free dividends

60B. (1)(a) Where an insurer carries on offshore insurance business in conjunction with other insurance business, that part of the taxable income of a assessment year attributable to that offshore insurance business must consist of an amount representing an equal proportion of that year's taxable income has from the insurer's assessment as the proportion of total revenue related to the offshore insurance business is included in the total revenue for that year's assessment from all sources of the insurer; and

(b) The amount determined in paragraph (a) will be treated as taxable income for the purposes of paragraph 3 of Part I of Schedule 1 in respect of an insurer's rating year for offshore insurance business.

(2) As soon as any amount of collectable income from the offshore insurance business of an insurer (which is a corporation) 053e .FM Page 139 Thursday 6 April 2006 12:07 PM140 Malaysian Laws ACT 53

base year of a year of assessment is subject to income tax at the rate of five per cent - (a) the net amount of such income (after deduction of such tax) is credited to an account (such account and entity are referred to as an Exempt Account and Relevant Entity, respectively) ; and

(b) Paragraph 5 (except for subparagraph (1) thereof) and paragraph 6 of Schedule 7A shall apply without change

The reference in those paragraphs to income that is or has been exempted under paragraph 3 was a reference to income credited to the exempt account. banking

60C. If a resident in the base year of an assessment year carries on a banking activity in Malaysia and elsewhere, his gross income and adjusted income or adjusted loss for the base period of that assessment year in that business and his legal income for that assessment year of that business will be determined by reference to his income, regardless where it accrues or is derived, with the exception of gross income, adjusted income or adjusted loss and legal income attributable to an offshore operation of a licensed Malaysian offshore bank.

60D (Excluded by Law 600).

60E. (Repressed by Law 624).

holding company

60F. (1) If an investment holding company is resident in the base year for a valuation year, an amount for expenses shall be deducted from total income before any deductions made pursuant to paragraph 44(1)(c) of that company in the base period for that valuation year whose value is determined according to the formula -

A × B

053 .FM Page 140 Thursday, April 6, 2006 12:07 AM Income Tax 141

where A is the total eligible expenses incurred for that base period less any income of a similar nature;

B is gross income, consisting of dividends, interest and taxable income in that base period; and C is the sum of gross receipts consisting of dividends (exempted or not), interest and rents and profits earned on investments for that base period:

Provided that--

(a) The amount to be deducted shall not exceed five per cent of gross income

Dividend, interest and rent for this base period; and (b) if, due to the absence or inadequacy of aggregate income for that assessment year, any deduction payable to the investment holding company under this Section for that year cannot be made or cannot be made in full, which

a deduction that has not been made may not be made at the holding company

following year of assessment.

(1A) Without prejudice to other provisions of this Act, if in a year of assessment the income of an investment holding company consists of:

(a) Income from participations shall not be treated as income from any source arising from: a

the business; or

(b) income other than income from participations

investment, are treated as income or gains in accordance with paragraph 4(f).

(1B) If it is established between the Chief Executive Officer and the Company for tax purposes that the Company is an investment holding company for the base period of a valuation year, it shall be presumed, until proven otherwise, that the Company is for a holding company for the purposes of this Act for the base period of each subsequent valuation year.

053e.FM Page 141 Thursday 6 April 2006 12:07 p.m.142 Malaysian Law ACT 53

(1C) This Section does not apply to an investment holding company within the meaning of Section 60FA.

(2) In this section--

“Investment Holding Company” means a company whose principal activity is the holding of investments and not less than eighty percent of its gross income (whether tax-exempt or not) derives therefrom;

"eligible expenses" means expenses incurred by an investment holding company in relation to:

(a) Directors' fees;

(b) wages, salaries and allowances;

(d) secretarial, auditing and accounting fees, telephone charges, printing and stationery and postage costs; and (e) rent and other expenses related to maintaining an office,

which are not deductible under subsection 33(1).

Investment holding company listed on Bursa Malaysia*60FA. (1) The provisions of this section apply without prejudice to other provisions of this Act. (2) If an investment holding company is a company resident in the base year of a valuation year and listed in Bursa Malaysia in the base period of that valuation year, the income of that investment holding company from the investment holding company in that base period shall be gross income of that investment holding company from a source consisting of one company, for that assessment year.

(3) For the purposes of paragraph (2) -

(a) in determining an investment holding company's adjusted income for a measurement year of a

Source referred to in this subsection, any amount of deduction required to be made under this Act in order to *NOTE – See Section 18 of Act 644 for explanation.

Income counts only against gross income from that source, but--

(i) where in that assessment year that source

brings no income, no deduction in

Respect for this source must be disregarded

the purposes of this law; or

(ii) if the amount of the deduction the

Gross income from that source for that year

Evaluation, the deductible is not taken into account

the purposes of this law; and

(b) in determining the statutory income of an investment holding company for any assessment year of: a

source referred to in this subsection, any allowance for that assessment year made for that entity pursuant to Schedule 3 in respect of that source will only be available against that person's adjusted income from that source and if so due absence or insufficient adjusted income from that source, that source source for the base period for that assessment year, if a provision for that assessment year in respect of that source cannot be effectively or fully made, the unmade provision will not be made for that entity

subsequent years of the evaluation.

(4) If it can be demonstrated that a determination has been made between the Chief Executive and the Company for tax purposes that the Company is an investment holding company for the base period of a valuation year, it shall be presumed until proven otherwise that the Company is for the purposes of this Law for the base period of each subsequent valuation year a holding company.

(5) In this Section, “investment holding company” has the same meaning as in Section 60F.

Foreign fund management company

60G. (1) Where a foreign fund management company conducts business in Malaysia by providing fund management services to overseas local investors, income from the provision of fund management services to overseas investors will be treated as a separate and distinct source of business 053e .FM page 143 Thursday 6 April 2006 12:07 p.m. 144 Malaysian Law ACT 53

Revenue from providing fund management services to local investors.

(2) Taxable income in relation to the source consisting of the provision of fund management services for foreign investors for a valuation year is statutory income from this source, reduced by a deduction to be made for this source in accordance with Article 43 (2).

(3) Taxable income in respect of the source or sources other than the source consisting of the provision of fund management services to foreign investors during a valuation year is the legal income from that source or the sum of the legal income from each of those sources Sources, abridged where appropriate for any deductions made under subsections 43(2) and 44(1):

Provided that deductions under subsections 43(2) and 44(1) do not take into account adjusted loss, if any, from a source which is the provision of fund management services to foreign investors.

(4) The taxable income of a foreign fund management company resident in Malaysia for a year of assessment in the base year in respect of the source which is the provision of fund management services to foreign investors shall be credited, after deduction of tax thereon, to an account maintained by that entity (such account and entity are referred to as the "Exempt Account" and the "Relevant Entity," respectively). (5) Paragraphs 5 and 6 of Schedule 7A shall apply as if any reference in those paragraphs to exempt or tax-exempt income pursuant to paragraph 3 of this Schedule were a reference to income credited to the exempt account of the relevant company in accordance with the Subsection (4).

(6) For the purposes of this Section –

“Foreign Fund Management Company” means a company incorporated in Malaysia and licensed under the Securities Industry Act 1983 [Act 280];

"foreign investors"--

(a) in relation to an individual, means non-residents of Malaysia and non-Malaysia citizens;

053 .FM Page 144 Thursday, April 6, 2006 12:07 p.m. Income Tax 145

(b) in relation to a company, means a company in which all the issued share capital is beneficially owned, directly or indirectly, by non-Malaysia residents or nationals; and

(c) in relation to a trust, means trusts in which the entire interest in the Fund is beneficially held, directly or indirectly, by foreign investors, where:

(i) the Fund is established outside of Malaysia; and

(ii) the trustees of the trust are neither residents nor citizens of Malaysia;

"Local Investors" are individuals, corporations or trusts that are not foreign investors.

closed society

60H. (1) This section applies to a closed-ended corporation resident in Malaysia for a valuation year in the base year. (2) If a private equity firm receives an amount in respect of gains from investments in the base period for a valuation year, that amount is tax-free for that valuation year.

(3) Paragraphs 5 and 6 of Schedule 7A shall apply mutatismutandis to the amount exempted under subsection (2) and paragraph 35 of Schedule 6 (if any).

(4) When determining the total income of a closed-end fund company for the assessment period of a valuation year, an amount for expenses shall be deducted before any deduction pursuant to Section 44 (1) lit. c closed-end fund company during this period, the value of which is determined according to the formula A × B will

where A is the total Eligible Expenses incurred during that Base Period;

B is the gross profit from dividends and

taxable interest for that base period; and053e .FM Page 145 Thursday 6 Apr 2006 12:07 PM146 Malaysian Laws ACT53

C is the sum of gross receipts made up of dividends and interest (exempted or not) and profits derived from investments

(whether taxable or not) for that base period:

Provided that--

(a) the amount to be deducted shall not be less than ten per cent of the total reimbursable expenses incurred in that base period; and

(b) if, by reason of the absence or inadequacy of total income for that assessment year, any deduction to be made for the closed corporation under this Section for that year cannot be made or cannot be made in full, which

a deduction that has not been made may not be made to the closed corporation

following year of assessment.

(5) For the purposes of this Section –

“Closed Company” means a company incorporated in Malaysia that has been authorized by the Securities and Exchange Commission to participate fully in the investment of unsecured funds;

"permissible expenses" means expenses incurred by a private equity firm in connection with --

(a) management fees;

(b) maintaining the register of shareholders;

(d) secretarial, auditing and accounting fees, telephone charges, printing and stationery and postage costs; “Bonds” means debentures, stocks and shares of a company or public corporation, or securities of any government or corporation or otherwise, and includes any right or option thereon and any interest in any mutual fund plan. (6) Sections 33 and 34 do not apply to a closed company.

053 .FM Page 146 Thursday, April 6, 2006 12:07 AM Income Tax 147

trust in general

61. (1) So long as a trust exists – (a) the trustees shall for the time being be referred to as a trust and the trust shall be treated as one person for the purposes of all provisions of this Act except Part VIII (Miscellaneous as Section 122);

(b) for the purposes of this Act –

(i) any source which is part of the Fund's property;

(ii) any source of a trustee of the Fund, which is your source under Sections 55 to 58; and (iii) any income from such source

treated as the source and income of the trust

Trustee:

Assuming, in the case of an investment fund, the return

any income arising from the realization of investments shall not be deemed to be income of the trustee; (c) subject to subsections (4) and (5), a beneficiary's right at all times and from time to time to income from the trust as a source (referred to in this Section and Section 62 as their common source). in relation to the Trust and the value, as determined in this Section, of a portion thereof of the total income of the trustee of the Trust shall be deemed its year of assessment

legal income from his usual source for that year; and

(d) a beneficiary of the trust shall be assessed and taxed in respect of all income it has from its ordinary source or from its additional source within the meaning of subsection (5) in relation to the trust:

Provided that paragraphs (c) and (d) and subsection (5) do not apply to a person in respect of amounts to be included in that person's relevant gross income pursuant to paragraph 13(1)(d) of income or gains from a Employment Type. (1A) Notwithstanding paragraphs (1)(c) and (d), a Shareholder in an investment fund will be assessed and taxed in respect of: 07 PM148 Malaysian Act ACT 53

Income equal to an amount determined by reference to its share of the total income of the trust for a rating year and distributed to it by the trust in the base year for that rating year:

Provided that the Shareholder will not be assessed and taxed in respect of amounts distributed by the Share Fund from exempt income other than income exempted under Section 61A or the income referred to in paragraph 61(1) (b ) is referred to. ).(1B) All income distributed to a Shareholder by an investment fund referred to in sub-section (1A) will be deemed to have originated in Malaysia.

(2) The income of a trustee of a trust shall be assessed and taxed separately from the income of any beneficiary from any own source in connection with the trust, whether or not that beneficiary is also a trustee member of that entity, and at the rate and charge of that entity in relation to its taxable income for a year of assessment, its entire income for that year shall be considered, regardless of the amount of any part thereof, may be considered legal income under this Section or Section 62 of a recipient:

Since, where--

(a) the trustee of a trust is resident in the base year for a valuation year; and

(b) a beneficiary who has an interest in the total income of the trustee for that year of assessment is a resident in the base year for that year of assessment;

The Director General may, in determining the Trustee's recoverable income for that year of assessment, deduct from that total income that beneficiary's share.

(3) Notwithstanding any other provision of this Act, a trust shall be deemed to be resident in the base year for a rating year if, but only if, a trustee member of that institution is a resident in that base year:

Since where--

(a) the Fund is established outside of Malaysia by a person or persons who are not citizens;

053 .FM Page 148 Thursday, April 6, 2006 12:07 p.m. Income Tax 149

(b) that trustee's income for that base year is derived entirely outside of Malaysia;

(d) at least half of the members of the Trust are non-residents of Malaysia in that base year, such Trustee shall not be deemed to be residents of Malaysia in that base year.

(4) Subject to Sections 62 and 63 and whether or not the trustee of a trust is resident in the base year for a valuation year -

(a) if during the base year a beneficiary of the trust is entitled to all distributable income of the trust for that base year, the level of total income of the trust for that assessment year shall be deemed to be the level of the beneficiary of such total income;

(b) if a beneficiary of the Trust is entitled to a specified fraction of such distributable income during such base year, an amount determined by applying that fraction to such total income shall be deemed to be the value of his or her share of such total income;

(c) if the trust continues during such base year and during such base year a beneficiary of the trust is entitled to all or any fraction of the distributable income of the trust for any part or parts of such base year -

(i) such total receipts treated as if they had accrued evenly from day to day in the base year,

must be divided in relation to one of these parts

proportional to the length of this part

has the duration of this base year and such

much of that total income as is

thus found that this part is distributed

referred to in this paragraph as a prorated amount in relation to that part;

(ii) if the beneficiary was entitled to all distributable proceeds of the fund

a part, the proportionate sum, in proportion to it

053e.FM Page 149 Thursday 6 April 2006 12:07 p.m.150 Malaysian Law ACT 53

Party is considered the value of their

share (or the value of a portion of your share) of that total income;

(iii) whether the beneficiary is entitled to a specified fraction of the distributable income of the

Trust for this part, amount determined by

Applying this fraction to the divided total,

in relation to this part, it is taken into account

the value of your share (or the value of the share

on your part, as the case requires).

total income; and

(iv) if two or more portions of your share of that total income have been determined which

Sum of the quantities of these parts must

the value of your share in it will be taken into account

total income;

(d) if the trust does not exist during the base year, paragraphs (a), (b) and (c) (and subsection (7)) apply as if references to that base year were references to a period consisting of all of the time , during which the trust was

exist in this base year; and

(e) any amount deemed to be a beneficiary's share of such total income under this Subsection shall be deemed to have originated in Malaysia.

(5) Subject to Sections 62 and 63, if the aggregate of (a) all amounts received by a beneficiary in Malaysia from the trustee of a trust (which are amounts appropriate to the nature of the income in their hands) in base year by one assessment year; and

(b) any amounts received outside Malaysia from the Trustee of the Trust in any year (being amounts commensurate with the nature of the income in his hands) and remitted to Malaysia for an assessment year in the base year,

exceeds the amount of your statutory income from your ordinary source in respect of the trust in that year of assessment - 053d.FM page 150 Thursday April 6, 2006 12:07 p.m. Income Tax 151

(i) it shall be deemed to be a source (referred to in this subsection as its additional source) in relation to the Trust in respect of that excess; and

(ii) the amount of such excess will be taken as your statutory income from your additional source for that particular assessment year:

Provided that the Director General is satisfied that an amount equal to any part of such excess may, in the best judgment, be regarded as forming part of the beneficiary's legal income from his or her ordinary source in relation to the Trust for a prior assessment, the legal income of the beneficiary from your additional source for that particular year of assessment reduced by that amount.

(6) (Excluded by Act A226).

(7) Where a portion of a trust's income for the base year of a rating year is subject to a trust for accumulation, any reference in this section to the trustee's aggregate income for that rating year (in conjunction with any reference to the trust's distributable income for that base year) shall be construed as a reference to a sum in the same proportion to that aggregate income as that distributable income to the sum of --(a) that distributable income income; and

(b) that portion of the Fund's income which is subject to the Fund for accumulation.

(8) Paragraph (1)(a) and paragraph (3) shall apply to only one trustee as to two or more trustees and references to a trustee in this Act shall be construed accordingly.

(9) In this law –

(a) a reference to income from a source of a trust includes a reference to all income subject to the trust; and (b) a reference to any amount or proceeds received by a beneficiary of a trust includes a reference to any amount or proceeds paid by the trustee of the trust on its behalf or on its behalf.

053e.FM Page 151 Thursday 6 April 2006 12:07 p.m.152 Malaysian Law ACT 53

Exemption from Real Estate Investment Fund or Property Trust Fund

61A. (1) The total return of a common fund for a valuation year equal to the amount of income distributed to the unitholder in the base period for that valuation year, determined by reference to the unitholder's proportion of such income, is taxable free.

(2) In this section, "Unit Trust" means a unit trust authorized by the Securities Commission as a Real Estate Investment Trustor Property Trust Fund.

discretionary means

§ 62. (1) If a discretionary trust exists, § 61 applies to the trust, but its application is modified by the following paragraphs.

(2) Subject to the following subsections, regardless of whether the trustee of the discretionary trust is a resident in the base year of the assessment year:

(a) subject to paragraph (b), the aggregate of all amounts receivable by any particular beneficiary of the trust in Malaysia in that base year from the trust's trust company or that entity's total income for that year of assessment,

what is smaller is considered as

value of that specific beneficiary's share of that total income; and

(b) wo--

(i) that particular beneficiary belongs to a class of beneficiaries of the trust;

(ii) that particular beneficiary has received

Malaysia and any other beneficiary or

Beneficiaries of this class have or have received

in Malaysia any quantity or quantities of this kind in

in that base year of the trustee of the trust; and

(iii) the sum of all amounts so received exceeds that entity's total income for the year

Valuation,

053 .FM Page 152 Thursday, April 6, 2006 12:07 p.m. Income Tax 153

Paragraph (a) does not apply to this

beneficiaries in respect of that discretionary trust for that assessment year and an amount equal to that total income as the sum of all amounts received by that particular beneficiary for that sum shall be deemed to be the value of that particular beneficiary's share of that total income. (3) Where a trust is constituted such that discretion is exercised by the trustees in respect of that portion of the trust's distributable income for the base year for a valuation year (referred to in this subsection as the discretionary portion) and in respect of that portion of the distributable income of that trust for that base year (referred to in this subsection as the non-discretionary portion) to which either a beneficiary is entitled in full, or there are beneficiaries entitled to certain fractions thereof – (a) the total income of the trustee body of the trust for that assessment year are divided into a

a discretionary portion and a non-discretionary portion, the amount of the discretionary portion being an amount which is an equal proportion of that total income as the discretionary portion is to the distributable income of the trust in that base year and the amount of the non-discretionary portion being -discretionary portion an amount having the same proportion of that total income as non-

the discretionary part focuses on the fund's distributable earnings in this base year;

(b) subject to paragraph (c)--

(i) Subsection (2) applies in respect of the trustee and that part of the trust which relates to the discretionary part as if the value of the

the discretionary part was the total income of

the trustee for that assessment year;

(ii) in applying subsection 61(5) in

Relationship to trustee and part of

Trust in the discretionary party who

the value of the discretionary portion will be

treated as the trustee's total income for that assessment year; and

(iii) in applying subsection 61(4) and (5) in relation to the trust and that portion of the trust that relates to the non-discretionary portion,

053e.FM Page 153 Thursday 6 April 2006 12:07 p.m.154 Malaysian Law ACT 53

the value of the non-discretionary part must

be treated as the Trustee's aggregate income

for this assessment year;

(c) If, as a result of the application of paragraph (b), a beneficiary of the trust has a share of the discretionary share and a share of the non-discretionary share, the sum of the values of those shares shall be deemed to be the amount of his legal income from his ordinary source in respect of the fund for that assessment year is viewed and when the sum of

(i) all monies received in Malaysia from the Trust

Trust body of him (totals of a

type of income in your hands) in the base year

for a year of evaluation; and

(ii) any monies received outside of Malaysia

of the Trust's Board of Trustees each year

(totals of the type of income in your hands)

and shipped to Malaysia in the base year for a

assessment year,

exceeds that total, that excess will be considered your additional source for purposes of subsection 61(5).

(4) If subsection (2) or (3) applies in respect of a trust (referred to in this subsection as a principal trust) and a valuation year, then if a portion of the principal trust income for the base year of that valuation year is subject to an accrued fund, the Reference in paragraph (2) or paragraph (3)(a) to the total income shall be construed as a reference to an amount having an equal proportion of such total income as the proportion of the principal income of the trust property not so subject to such trust shall be to the principal income of the trust fund paid.

(5) (Excluded by Act A226).

trust pensions

63. (1) This section applies where a person is entitled to an annuity payable under the terms of a trust (such annuity, trust and trustee of that trust are referred to in this section as annuity, trust and agency ). ). Trustee .053 or .FM Page 154 Thursday, April 6, 2006 12:07 p.m. Income Tax 155

(2) The annuity amount payable for the base year (or part of the base year) for an assessment year shall be determined, where necessary, applying paragraph 3 of subsection 19 as if references to Chapter 4 were references to this section, and references to the base period (or part of) a year of assessment were references to (or part of) the base year of a year of assessment; and if two or more amounts in respect of the base year annuity (or part of the base year) are paid for any assessment year, then in applying this section to that annuity any reference to an amount payable in respect of that annuity should be construed as a reference to the sum of these amounts are interpreted.

(3) If the Trustee's entire gross income from each of its sources for the Base Period of a Rating Year is from Malaysia or the Trustee is a Resident in the Base Year of that Rating Year -

(a) The amount payable in respect of the pension for that base year shall be deemed derived

Malaysia, whether or not the trustee has total income for that assessment year; and

(b) in determining the total income (if any) of the Trustee for that assessment year, such amount shall be deducted after deduction in accordance with paragraph 44(1)(a) or (b) and before deduction in accordance with paragraph 44(1)(a) or (b) paragraph 44(1)(c).

(4) Wo--

(a) the Trustee is not a resident for a valuation year in the base year; and

(b) you--

(i) should be taken into account in determining the Trustee's total income for that year of assessment

only for a source and gross income for

the base period for that assessment year

from this source derives in part

Malaysia and partially from outside Malaysia; or

(ii) the Trustee's gross income for the Base

Period for this assessment year is derived as

in whole or in part to one of its sources

Malaysia and as for another of your sources

in whole or in part from outside Malaysia,

053e.FM Page 155 Thursday 6 April 2006 12:07 p.m.156 Malaysian Law ACT 53

Subsection (5) shall be applied to determine the Trustee's total income (if any) for that assessment year. the valuation shall be deducted after any deduction required under paragraph 44(1)(a) or (b) and before any deduction required under paragraph 44(1)(c) and--

(a) if the entire amount is so deducted, that amount shall be deemed to have originated in Malaysia;

(b) if such amount exceeds the trustee's total income (if any) for that assessment year, determined without deduction

in relation to that value, both that value is equal to what that total income would be, and

calculated counts as derived

Malaysia.

(6) If any amount in respect of a joint annuity is due under the terms of the Trust, for the purposes of this Section, for the purposes of this Section, each of the joint beneficiaries shall be deemed to be owed an amount in respect of that amount dividing that amount by the number of co-beneficiaries.

(7) If two or more annuities are paid under the terms of the Fund and the income is not sufficient to allow, in determining the aggregate income (if any) of the trustee of the Fund, an aggregate deduction from all amounts payable in respect of all such annuities, the Director-General the necessary instructions to determine how much of the amount payable for each such pension is considered Malaysian for the purposes of paragraph 5(b). (8) In this section, “annuity” includes any annuity or other periodic payment to which paragraph 4(e) applies. Special deduction for qualifying capital expenditures63A. (1) In determining the statutory income of a trust from a source consisting of the receipt of rent from the lease of immovable property for a year of appraisal, it shall be deducted fifthly from the adjusted income of that source for that appraisal year Thursday, April 6 2006 12:07 p.m. income tax 157

Provisions pursuant to paragraph (2) in connection with qualifying investments.

(2) If a unit trust has made qualifying capital expenditures in respect of an asset for the purpose of earning rental income from immovable property and at the end of the one-year assessment period the unit trust owns the asset and the asset has been used for that purpose, a Grant equal to one-tenth of such costs paid to the Trust Entity in respect of that source for that year: Provided that due to the absence or inadequacy of adjusted income from that source for the base period of that assessment year, one for that year in respect of that source The correction to be made cannot be taken into account in full or in full, the correction that has not been made will not be credited to the unit fund for any subsequent valuation year. (3) If, at the period end for any assessment year, the residual expenditure in respect of an asset in respect of which qualifying investments have been made is nil or the asset is no longer owned or used by the trustee, the trustee shall for no provision was made for this valuation year and subsequent valuation years.

(4) For the purposes of paragraph (2), qualifying investments shall be deemed to have been made on the date the machinery or plant is ready for use for purposes of payment of rent from the lease of immovable property. (5) For the purposes of this Section –

"Eligible capital expenditures" in relation to an asset are capital expenditures incurred in providing machinery or equipment used for the purpose of earning rents from the lease of immovable property, including:

(a) Costs incurred in converting an existing building for the purpose of installing such machinery or equipment and other costs incurred in connection with the installation thereof, provided that such costs do not exceed seventy-five per cent of the total cost and all other costs (a be a qualified capital issue); and

(b) Costs of preparing or leveling the ground to prepare a site for the installation of such equipment.

machinery or plant, provided that such expenditure does not exceed ten percent of the sum of itself and other expenditure (as qualifying capital expenditure);

"Residual Expense" at any time in respect of an asset on which a Trustee has made qualifying capital expenditures is the total qualifying capital expenditures incurred in reserving the asset prior to that date less the provision to be made in respect of that asset for each assessment year before this date.

(6) This section does not apply to investment funds as defined in subsection 61A(2).

Special deduction for expenses

63B. (1) In determining the total income of a trust unit for the base period of a valuation year, an amount for the expenses incurred by that fund unit during that period, the value of which is determined in accordance with the formula -

A × B

-- ,

where A is the total Eligible Expenses incurred during that Base Period;

B is gross income, consisting of dividends, interest and taxable income in that base period; and C is the total gross receipts, consisting of dividends (exempt or not), interest and rent and gains on investments (taxed or not) for that base period:

Provided that--

(a) the amount to be deducted shall not be less than ten per cent of the total reimbursable expenses incurred in that base period; and

053 .FM Page 158 Thursday, April 6, 2006 12:07 AM Income Tax 159

(b) if, owing to the absence or inadequacy of total income for that assessment year, any deduction payable to the Trust under this Section for that year cannot be made or cannot be made in full, the deduction which has not been made shall be made not credited to the fiduciary unit for any further assessment year.

(2) For the purposes of this Section –

"Reimbursable Expenses" means expenses incurred by the Trust in connection with:

(a) management fees;

(b) keeping the register of Shareholders;

(d) secretarial, auditing and accounting fees, telephone charges, printing and stationery and postage costs not deductible under subsection 33(1).

(3) This section does not apply to investment funds as defined in subsection 61A(2).

Special treatment when renting real estate from a real estate investment fund or real estate trust*63C. (1) This section applies without prejudice to other provisions of this Act.

(2) Where the income of an investment fund in the year of assessment consists of rent from the lease of property, the amount of rent shall be treated as gross income of an investment fund from a source consisting of a corporation for that assessment (3) In determining the adjusted income of a Trust from a source referred to in paragraph 2 for a tax year any deduction shall be made in respect of that income under this Act source for the base period for that tax year will only be allowed against gross income from that source, but--

*NOTE--See Section 18 of Act 639 for explanation

(a) if the amount of the deduction exceeds the gross income from that source for that year of assessment, the excess shall not be taken into account for the purposes of this Act; and

(b) if that source is not earning income, the gross income of that fiduciary entity shall not be deducted from that source of income.

(4) In determining the statutory income of a Trust for a year of assessment from a source referred to in subsection (2), any allowance for that year of assessment under Schedule 3 in respect of that source shall be available only against the adjusted income from that source and if due missing or insufficient adjusted income from that source for the base period for that assessment year, a reduction for that assessment year in respect of that source cannot be granted or cannot be effected in full, the non-approved benefit will no longer be credited to the trustee entity for subsequent assessment years .

(5) For the purposes of this section, "unit trust" has the same meaning as in subsection 61A(2).

Income of a trust company from the leasing of land is not income from commercial operations.

63D. Subject to Section 63C but notwithstanding any other provision of this Act, income from a trust consisting of rents from the lease of immovable property shall not be treated as income from a source consisting of a business.

Property under management

64. (1) For the purposes of this Act, all sources that are part of the estate of a deceased person and all income from that source accruing after the date of that person's death shall be treated as the source and income of that person's executor. (2) The income to be attributed to the administrator of the estate for an assessment year is determined on the basis of the gross income from these sources for the assessment period determined in accordance with the provisions of Sections 3 and 4.

053 .FM Page 160 Thursday, April 6, 2006 12:07 p.m. Income Tax 161

(3) If an annuity is paid in the base year for an assessment year by an executor of a deceased person, then - (a) in determining the executor's aggregate income for that assessment year, the amount of the annuity thus

payable liabilities are deducted after any deduction under paragraph 44(1)(a) or (b) and before any deduction under paragraph 44(1)(a) or (b).

44(1)(c);

(b) the annuity so due shall be deemed to be income within the meaning of paragraph 4(e) in the hands of the beneficiary; and

(4) In the case of the estate of a person who was a resident of Malaysia at the time of his death, the deduction permitted for each year of assessment under Section 46 (but no other deduction under Chapter 7) shall be made from the executor's total income for that year notwithstanding: whether or not the executor is an individual, and whether or not the executor is a resident in the base year for that year. (5) Subject to subsection (3), payments made by and received by a beneficiary of the estate of a deceased person by the executor of a deceased person shall not be deemed to be income for the purposes of this Act. (6) For the purposes of subsection (3), paragraph 2 of paragraph 63 applies to pensions affected by this section as it applies to pensions affected by this section 63.

liquidations

65. (1) Subject to this section where--(a) by virtue of or as a result of (directly or indirectly) liquidation and during the life of the trustor, any income from any source or assets

that constitute, will, or may constitute income from a source

become payable or enforceable in the Base Period for any Valuation Year to or for the benefit of a relative of the Trustor; and

053e.FM Page 161 Thursday 6 April 2006 12:07 p.m.162 Malaysian Law ACT 53

(b) such relative is unmarried and under the age of 21 at the beginning of the year of assessment;

Income or assets are considered income of the trustor and not income of another person.

(2) Subject to this section, if and so long as the terms of any agreement are such that--

(a) any person has or could have power, whether

immediately or in the future and with or without the consent of any other person, to revoke or otherwise determine the Agreement or any provision thereof; and

(b) in the event of the exercise of power, the settlor or the spouse or husband of the settlor becomes the beneficiary of all or part of the assets then included in the liquidation or of the income arising from all or part of the assets , or can become a beneficiary

Were understood

Any income arising out of the disposition of the property summarized in the disposition shall be deemed to be income of the liquidator and, subject to subsection 45(2), not income of any other person:

Provided that this subsection does not apply solely by virtue of the fact that the settlor, or a wife or husband of the settlor, becomes or may become a beneficiary of any income or property related to a beneficiary's interest under the arrangement, if that is the case The beneficiary, if any, dies before him.

(3) Subject to this Section, if in the base year for any assessment year the settlor in connection with an arrangement, or a relative of the settlor, or an entity over which the settlor or a relative of the setter has control, uses it for his or her own purposes, whether borrowed or otherwise, of income or accrued income accrued under the Agreement (which is income to which he or she is not entitled), the amount of such income or accrued income shall be deemed to be income the settlor for that base year and not as someone else's income; and if another person has or is entitled to such income, all taxes will be returned to the other person.

paid by him in respect of such income as is necessary for the operation of this subsection.

(4) If any tax is assessed or paid by the settlor in connection with any settlement to which this section applies pursuant to any provision of this section (and any other provision of this Act, if any), he shall be entitled to receive it from any trustee of the arrangement upon receipt of income arising directly or indirectly out of or as a result of the Arrangement (or from any person receiving such income which shall be deemed to be income of the Trustor under this Section) to recover the amount of tax paid by him and for that purpose to the Director General a request a certificate of the amount of tax paid; and any certificate so issued must be conclusive evidence of the facts contained therein. (5) If income or property constituting income qualifies as income of the settlor and not income of another person under the preceding subsections, then subject to subsection (6)--

(a) where the terms of the arrangement are such that a trust exists so that the income or property in question is the income or property of a person who has an economic interest in that trust, the amount of the income so treated as income of the trustor applies:

(i) the amount of what would have been but for

in this section, the legal income of that other

person of any property contained in the

liquidation or if that other person is not

Residents, what would have been your legal

Income from property if it had been him

residence in all relevant base years; or

(ii) to the extent subsection (3) is applicable, such as

Amount considered as Director General

can focus on all circumstances;

(b) in any other case the value of the income so deemed the income of the trustor shall be deemed to be - (i) the value of what would have been but for

in this section, the legal income of that other

person of any property contained in the

liquidation or if that other person is not

Residents, what would have been your legal

053e.FM Page 163 Thursday 6 Apr 2006 12:07pm164 Malaysian Law ACT 53

Income from property if it had been him

residence in all relevant base years; or

(ii) to the extent subsection (3) is applicable, such as

Amount considered as Director General

can focus on all circumstances

and in any event, such trustor's income as may be deemed to derive from such place and source as the Director-General, having regard to all circumstances, may determine as the trustor's legal income. (6) Notwithstanding paragraph (5). ) in each case to which subsection (2) applies in relation to an arrangement, legal income from any source of the trustee of the trust property subject to the arrangement shall be deemed to be legal income of the settlor and derive from that location and source of the Settloras which the Director General under may order taking all circumstances into account.

(7) If there is any doubt as to the amount of any income payment or any distribution of income or statutory income under this Section, the Director-General shall decide the matter and no appeal shall be made. (8) This section applies to all agreements, regardless of whether they were made or concluded before or after this Act came into force.

(9) In the event of a liquidation where there are two or more liquidators, this section shall apply in respect of each liquidator as if it were the sole liquidator, and in that case - (a) references in this section to property contained in of the Agreement includes, with respect to a Settlor, only property originating from that Settlor and references in this Section to income related to or arising from an Agreement includes, with respect to a Settlor, only income originating from that Settlor; (b) References in this subsection to the original property of a trustor are references to:

(i) Property provided by that Settlor

directly or indirectly for the purpose of

Settlement;

053 .FM Page 164 Thursday, April 6, 2006 12:07 AM Income Tax 165

(ii) property constituting property so provided;

(iii) a property representing either

Property and other properties so provided as in

a just distribution thus constitutes ownership

provided; and

(i) resulting income from assets

Founder; and

(ii) Income provided directly or indirectly by that Settlor.

(10) In this Section, any reference to property contained in an Agreement includes a reference to property constituting the property so composed, and any reference to property constituting another property includes a reference to property, representing the accrued income of that other property.

(11) In this section--

"Relative" means a child of the Settlor (including a stepchild of the Settlor and a child of which the Settlor has custody or who is maintained in whole or in part at the Settlor's own expense), a child adopted by the Settlor, or the Settlor's husband or wife under any law and any person who is the wife, grandchild, brother, sister, uncle, aunt, nephew, niece or cousin of the settlor; "Liquidation" includes any disposition, trust, arrangement, arrangement or arrangement, and any transfer of assets or income, but does not include:

(a) an arrangement which the Director-General considers to be values-based and reasonable

Thoughtfulness;

(b) an agreement resulting from a court order; or (c) any arrangement made by an employer to pay an employee or an employee's widow or relative or dependent upon his or her death, such remuneration, pension or lump sum being in the opinion of the Director General fair and reasonable;

053e.FM Page 165 Thursday 6 Apr 2006 12:07pm166 Malaysian Law ACT 53

"Creator" in relation to an Agreement includes any person by whom the Agreement was made or entered into, directly or indirectly, and any person provided or pledged to provide funds or credit directly or indirectly for the purpose of the Agreement made by any other person a mutual agreement that that other person should make or enter into the agreement.

cooperatives

65A. When determining the taxable income of a cooperative for a year of assessment, the following are deducted from the total income for that year:

(a) the amount transferred or paid during the base period for that year to a statutory reserve fund or to an educational institution or cooperative

Organization established for the promotion of cooperative principles, or both, or for a cooperative formation trust fund as required by the provisions of a written law relating to the

Registration of cooperatives in Malaysia: Provided that the maximum amount to be deducted

shall not exceed one quarter of that cooperative's audited net profit for that base period; and (b) an amount equal to eight per cent (or such percentage may be prescribed) of the funds of the members (such as

according to Annex 6 Part I subparagraph 12 paragraph 2) as the first day of the base period for the year of assessment.

(2) (Excluded by Law 451).

TEIL IV

RESPONSIBLE PERSON

Personal enforceability: general principle

66. Subject to the provisions of this Part, if any person's income is taxable and subject to tax under this Act, that person is the person who is taxable and subject to tax in respect of that income and is subject to income tax 167

Vicarious liability and enforceability

67. (1) Subject to this part, if by or pursuant to any of the following sections of this part a person (referred to in this section as an agent)-(a) is appointed agent of another person; (b) is liable and liable for tax on behalf of another person; or

any other person referred to in this section as Principal.

(2) The Nominee may be any person (including the Principal to the extent that it is able to comply with the requirement) receiving or controlling income from the Principal and any person from whom income is paid or payable to the Principal require the representative to provide full details of income and related expenses.

(3) If the Nominee is liable and liable to tax on behalf of the principal, the Nominee shall be taxed and liable to tax in the same manner and at the same rate as the principal would be assessed and liable to tax; and if the principal is chargeable and taxable on behalf of the nominee, the principal will be taxed and collected in the same manner and at the same rate as it would be taxed and collected if it were taxed and collected in its own name.

(4) The representative is responsible for all actions and things that are to be done by him as a representative or for the person represented within the meaning of this law according to or according to this Act, in particular for the payment of the taxes owed by him as representative or client and for Paying a debt to the government under Section 107A, 108, 109, 109A or 109B; and in the event of any default, any tax or debt (together with any penalties for which he is or will be liable or liable as agent or principal in connection with the default) shall be recoverable from the agent as such or as if he were principal, if any .:

053e.FM Page 167 Thursday 6 April 2006 12:07 p.m.168 Malaysian Law ACT 53

Provided that the agent is under no obligation to pay any taxes, debts or fines (or any other penalties incurred by the principal) except with available funds. (5) If by or by virtue of this Act anything is done or delivered for the purposes of this Act or handed over or handed over to the principal, the same may instead be executed or served on or handed over or executed to the agent:

Provided that nothing in this subsection shall result in the agent being convicted of any offense committed by the principal in which the agent was not a party. (6) The Representative--

(a) may withhold so much of the available money as is necessary to pay any taxes or penalties or any debts of the kind referred to in subsection (4) owed by him as agent or principal; and

(b) is and is hereby held harmless to all persons for all payments made by him

representative under this law.

(7) In this Section, “affordable money” in relation to Agents and Principals means any money (including any pension and any wages, salaries or other remuneration) that -

(a) from time to time owed by the Nominee to the Client or held in its care and control by the Nominee on behalf of the Client; or (b) monies then due or owing to the principal may be obtained at the request of the nominee.

Power to Appoint a Representative

68. (1) The Director General may, at his discretion, by notice in writing, appoint any person to act as agent for any other person for all or any of the purposes of this Act; and if one person is appointed for all such purposes, he is liable and taxable on behalf of that other person. (2) An appointment made pursuant to paragraph (l) may be revoked at any time by the Director General.

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(3) If a person appointed under paragraph (l) to represent another person is disadvantaged by the appointment, he may appeal within thirty days of the delivery of the notice of appointment pursuant to Section 99 as if the notice of appointment had been sent to him a notice of assessment, and the provisions of this Act relating to remedies shall apply subject to any necessary changes.

(4) Where any chargeable income (or the source of such income) is under the direction and control of a court in Malaysia and the court appoints an insolvency practitioner thereto - (a) the Depositary, so long as its appointment continues, shall be deemed to have been appointed under paragraph 1 ( through without appeal

Subsection (3)) as representative of the court in relation to such income or sources for all purposes of this Act; and

(b) if the source of that income belongs to the court, the clerk or other appropriate officer of the court shall be treated as the person entitled to that income for the purposes of this Act.

(5) The following sections of this part apply without prejudice to the generality of paragraph (1).

People with disabilities

69. (1) If a person lawfully having management, control or administration of property or business on behalf of a disabled person receives that disabled person's gross income from all sources for the relevant base periods for an assessment year, the first-designated person must account for and be subject to tax in respect of that income on behalf of that disabled person.

(2) If there is no person who is chargeable and taxable under subsection (1) in respect of the income of a disabled person, the Director-General may appoint a person under subsection 68(1) as agent for that disabled person for all purposes of this Act . (3) Notwithstanding subsections (1) or (2), if a taxable and non-taxable person is a minor, 053e .FM Page 169 Thursday 6 April 2006 12:07 PM170 Laws of Malaysia ACT 53

The parent or guardian of the minor (or any person with whom the minor has a relationship equivalent to that of the parent or guardian) is taxed on behalf of the minor and is subject to tax.

(4) Nothing in this section shall prevent a minor from being directly taxed and subject to tax.

(5) Paragraph 23(c) applies, where applicable, in relation to the reference to gross income in this Section. non-residents

70. (1) A person who is not a resident in the base year of a rating year is independent for that rating year, directly or on behalf of an attorney, factor, representative, custodian or manager of his (if applicable, the attorney, factor, agent, receiver or manager whether he receives income from that non-resident):

Unless anything in this subsection renders a person liable to tax or duty on behalf of a broker, principal agent or other agent where the broker or agent is not --

(a) exercise that person's regular representations with that person's authority; or

(b) a person who is chargeable and recoverable as if he were an agent under section 141 over income in respect of gains or gains on a sale or transaction effected, although himself a broker or agent.

(2) If a shareholder of a partnership is not resident in the assessment year of a valuation year, his income from the partnership assessed in accordance with the relevant provisions of Sections 55 to 59 is taxable and taxable for that valuation year.

(a) the partnership (considered to be a person to the extent necessary for the implementation of this subsection); (b) each member resident in that base year; or (c) a representative of the partnership in Malaysia,

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and the tax thereon is recoverable with the assets of the Company by any means provided for in this Act. ship captains and airplane captains

71. The master of a ship and the master of an aircraft owned or chartered by a person who is taxable and liable to tax as a result of the application of Section 54 shall be deemed (but not to the exclusion of all other agents) that person's agent and shall in the Name of that person taxed and liable for tax.

hindu joint families

72. The income of a common Hindu household (and any income of the householder or the Karta in his capacity as such that constitutes income under Sections 55 to 59) shall be assessed and collected by the householder or the Karta and taxed and taxable on behalf of the family . curators

Art. 73. (1) The income of the trustee body of a trust shall be taxable and taxable to the trust body (which may be suitably designated for the purpose by the Director-General) and so long as trustees remain members of the trust body they shall be liable ( whether or not each trustee was a member of the trust when a particular liability or obligation arose under this Act) jointly and severally all obligations to which they would be subject under section 67 if the trust was the principal for the purposes of this section and each administrator the agent for the purposes of this section would be.

(2) An administrator who vacates office loses his responsibility under paragraph (1):

Provided that nothing in this subsection relieves any person from liability for a criminal or negligent act whenever committed.

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executor

Article 74. (1) If an individual dies in the base year of a year of assessment, his executors shall be taxed for that year of assessment, the following year of assessment and, if applicable, for each preceding year of assessment and subject to tax on that individual's taxable income for each year of assessment; and if they are liable and subject to tax, they shall be liable and subject to tax in the same manner and at the same rate as the individual would be taxed and charged had he not died.

(2) For the purposes of paragraph (1) -

(a) Reference therein to an individual's taxable income for any year of assessment shall be read as the taxable income for that year that he would have had had he not died in respect of income accruing prior to his death and accrued in respect of any income received from his executors which, had he not died and if it had been received from him (at the time of receipt by his executors), would have been taken into account in determining the latter

eligible income; and

(b) all rights and obligations which would have been attributed to him in relation to the latter chargeable income as he would have passed it on to his executors. (3) An assessment or additional assessment to be made on the basis of the above paragraphs may not be made later than at the end of the third assessment year following the assessment year in the base year for which

(a) the person has died;

(b) an estate tax affidavit (if any) has been filed in Malaysia in respect of a portion of that person's estate; or

(c) if such an inheritance tax return has been filed, the last of any corrective statements relating to that inheritance tax return has been filed,

This is the base year in which the last of these events occurred.

(4) The amount of any taxes due by the executors of a deceased person under this section (together with any penalty imposed under subsection 103(3),(4),(5),(6),(7)). may become) or (8)) is a due and payable debt in the estate of that deceased person.

(5) The executors of a deceased person shall not distribute any property from his estate unless they have made arrangements (to the extent they can do so in respect of such property) for the full payment of all taxes which they know of or can reasonably expect pursuant to this section to be paid.

(6) Executors who fail to comply with paragraph (5) shall be jointly and severally liable to pay a fine equal to the amount of tax to which the breach relates.

(7) Subsection 125(2) applies to a penalty imposed under subsection (6) of this section as well as to a penalty imposed under subsection 112(3) or 113(2).

companies and partnerships

75. (1) Responsibility for taking all acts and things to be done by or on behalf of any corporation or group of persons for the purposes of this Act shall be joint and several - (a) in the case of a corporation , with - -

(i) the Manager or other officers in Malaysia; (ii) the directors;

(iii) the Secretary; and

(iv) any person (regardless of style) doing so

Functions of one of the persons named

the previous paragraphs; e

(b) in the case of a group of persons with:

(i) there Manager;

(ii) the Treasurer;

(iii) the Secretary; and

(iv) the members of its governing body.

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(2) The liquidator of a company in liquidation shall not distribute any property of the company to its shareholders unless he has caused (to the extent that he can do so with the property of the company) to pay all taxes of which he is aware or reasonably expectable to be paid in full by the Company under this Act or is deductible by the Company under Section 107.

(3) An insolvency administrator who fails to comply with subsection (2) shall be liable to a fine equal to the amount of tax to which the violation relates.

(4) Subsection 125(2) applies to a penalty imposed under subsection (3) of this section as well as to a penalty imposed under subsection 112(3) or 113(2).

director's responsibility

75A. (1) Notwithstanding anything contrary to this Act or any other written law -

(a) where tax is due and payable under this Act by a corporation, any person who is a director of that corporation

company during the period in which such tax is payable by that company; or

(b) where a debt is due and payable by an employer in accordance with regulations made under section 107 and the employer is a company, any person who is a director of that company during the period in which the debt is discharged by that company,

shall be jointly and severally liable for any such tax or debt which is due and payable and collectable under that person's Section 106.

(2) In this Section, "Director" means any person who - (a) holds the office of Director (however the name may be called), including any person involved in the management of the affairs of the Company; and

(b) whether on its own account or with one or more associated companies as defined in subsection 139(7), owning or able directly or through other companies or through other indirect means of control053e .FM Page 174 Fifth Fair, April 6, 2006 12:07 am Income tax 175

more than fifty percent of the share capital of the company ("share capital" has the same meaning as in the definition of "director" in Section 2).

rulers and ruling chiefs

Section 76. (1) The income of a Ruler or Ruler-Supreme shall be taxable and taxable to the person appointed by the Ruler or Ruler-Supreme for the purposes of this Act as the person performing the function of trustee of the Ruler or the private property of Head.

Unless such appointment is made by a governor or chief governor, Section 66 applies to that governor or chief governor.

(2) If a person is taxable on behalf of a ruler or supreme ruler -

(a) that person may pay tax on any private property in his hands or control and belonging to the ruler or ruling chief and, to the extent that he pays tax on his own property, may be indemnified from such private property;

(b) that person is not personally liable for the tax unless he

(i) has in his possession, custody or control private property of the Ruler; or

Governing Chief; or

(ii) owned private property

possession, custody or control at any time thereafter

receipt of the tax return due;

a proceeding must be brought against that person for any act or matter for which he is responsible under this section; and

(d) The provisions of Section 67 shall be modified accordingly where applicable to that Section.

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(3) In this passage, "ruler or ruling chief" means (a) the Yang di-Pertuan Agong;

(b) King Queen Agong;

Agong;

(d) a government agency or a person exercising the functions of a government agency; or

(e) o Sungei Ujong Law, o Jelebu Law, o Johol Law, o Rembau Law or o

Tunku Besar de Tampin.

PART V

RETURNS

Return of income by any person other than a corporation, trust or cooperative

Section 77. (1) Any person other than a corporation, trust company or cooperative society to which Section 77A applies shall submit a declaration in the prescribed form to the Director-General for each year of assessment –

(a) in the case of a person carrying on a business, by 30 June of the year following the year of assessment; or

(b) in all cases other than paragraph (a) by April 30 of the year following the year of assessment:

As long as that person...

(a) taxable income for that year of assessment; or (b) has no taxable income for that year of assessment but has qualifying income for the year of assessment immediately preceding that year of assessment or has made a declaration or was required to make a declaration under this Act.

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(1A) Where paragraph 2 of subsection 45 applies, a reference to a person under paragraph 1(a) includes a reference to a person whose wife or husband, as the case may be, runs a business.

(2) Where a person is required to make a declaration under paragraph (b) of subsection (1), the Director-General may, by notice, waive that requirement for any year of assessment.

(3) A person arriving in Malaysia during a specific assessment year and--

(a) is taxable for that particular year; or (b) is not taxable for that particular year but is taxable for the year of assessment following that particular year,

notifies the Director-General within two months of his arrival that he is responsible for it.

(4) For purposes of this section, there must be a return to an assessment year

(a) State the taxable income and the amount of tax (if any) on that taxable income for that year; and

(b) contain such data as may be requested by the Director General.

Income refund by any corporation, trust or cooperative

77A. (1) Each corporation, trust company or cooperative shall submit a declaration in the prescribed form to the managing director for each assessment year within seven months of the end of the accounting period constituting the assessment period.

(2) Notwithstanding paragraph (1), if the accounting period of a corporation, trust or cooperative changes such that the accounts are not closed on any day of the year, such corporation, trust or cooperative shall make a declaration to the general manager in the form prescribed for that year Before

and the assessment year in which the accounts are closed, within seven months of the date following the closing of the financial year.

(3) For purposes of this section, there must be a return to an assessment year

(a) State the taxable income and the amount of tax (if any) on that taxable income for that year; and

(b) contain such data as may be requested by the Director General.

Power to summon certain returns and book productions

78. For the purpose of obtaining complete information to determine whether or not any person is liable to tax, or to determine his or her liability to tax, the Director-General may, by declaration of authorship, require that that or any other person -

(a) complete any declaration specified in the notice and submit it to the Director General within the time period specified in the notice (not less than thirty days from the date of service of the notice);

(b) Appear in person before the Director-General and submit for examination all books, accounts, reports and other documents produced by the Director-General

deem necessary;

(c) make a declaration in accordance with paragraph (a) and also appear in accordance with paragraph (b); or (d) provide in writing such information or detail as the Director General deems necessary.

Authority to request bank statements, etc.

79. The Director-General, by notice of his authorship, may require any person to make, within a time limit specified in the notice (not less than thirty days after service of the notice), a declaration giving details of -

(a) all bank accounts -

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(i) on your own behalf or on behalf of a spouse, or

Child dependent or joint in one

names;

(ii) in which he has or had a common or individual interest; or

(iii) in which it has or has had the authority to operate jointly or exclusively,

accounts that exist or do not exist at any time during a period to be specified in the notice;

(b) all savings and loan accounts, deposits, estate accounts and association accounts which it has or has had an interest or authority to maintain, alone or jointly, during such period;

(c) all property owned by him and any dependent wife or child owned or owned during the period; (d) all of your sources and gross income from those sources; and

(e) any facts relating to your current or past tax liability.

Access authorization to buildings and documents etc.

Section 80. (1) For the purposes of this Act, the Director-General shall at all times have full and free access to all land, buildings and land, as well as all books and other documents, and may search and inspect such land, buildings and land, copies or extracts from books or documents without payment of any fee or reward.

(1A) When the Director General is exercising his powers under subsection (1), the occupants of such land, buildings and premises shall provide the Director General or an authorized officer with all reasonable facilities and assistance for the exercise of their powers under this section.

(2) The Director-General may take possession of any book or document to which he has access under paragraph (1) if he considers:

053e.FM Page 179 Thursday 6 April 2006 12:07 PM180 Malaysian Law ACT 53

(a) inspecting, copying or extracting them cannot reasonably be done without taking possession of them;

(b) they may be impaired or destroyed unless he takes possession of them; or

Proceedings under or related to this Act.

(3) If, in the opinion of the Director-General, it is necessary for the purpose of determining the income relating to the income or profits of any enterprise in any period to examine books, accounts or records kept in a language other than the national language, may it give notice on its condition that any person transacting business during that period furnish, within a period specified in the notice (not less than thirty days from the date of service of the notice), a translation into the local language of the books, accounts or records concerned: provided, that in East Malaysia this subsection has the effect of inserting the words "or English" after the words "local language" wherever they occur.

Power to Request Information

81. The Director-General may require any person to provide any information or detail which the Director-General, for the purposes of this Act, may have in his possession:

If such person is a civil servant or an employee of a local authority or statutory authority, he is not required under this section to disclose details which he is required by law to keep confidential.

Obligation to record and document

82. (1) Notwithstanding section 82A, and subject to this section, any person carrying on a business -

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(a) shall, for a period of seven years from the end of the year to which income from that business relates, maintain and retain sufficient records to account for income from that business for each year

the valuation or adjusted loss of that business for the base period of each valuation year is promptly reviewed by the chief executive officer or an authorized officer; and

(b) if the gross receipts from the transaction for the base year of a valuation year exceed one hundred and fifty thousand ringgit from the sale of goods or one hundred thousand ringgit from the performance of

services, you must issue a printed serial receipt

numbered for each sum received that year

Valuation relating to goods or services sold

carried out under or in connection with the transaction and must keep a duplicate of all receipts issued.

(1A) If a person who operates a company has not submitted a declaration in accordance with Section 77 (1), Section 77A (1) or (2) for an assessment year, this person must keep and keep the records in accordance with Section 1) ). relating to that year of assessment, for a period of seven years after the end of the year in which the declaration is made.

(2) Where a sales entry machine is used in the course of the business, the issuance of receipts under paragraph (1)(b) may be waived unless the manager is not satisfied with:

(a) that the machine automatically records all sales made; or

(b) that the sum of all sales made on a day is transferred to a sales register at the end of the day.

(3) The Director-General may, by statutory order in respect of any class or description of business (or by notice in his office in respect of a particular person's business) - (a) determine the form of records to be kept pursuant to paragraph (1)(a ) and the way they are to be maintained and

maintain; and

053e.FM Page 181 Thursday April 6, 2006 12:07 PM182 Malaysian Law ACT 53

(b) the form of receipts to be issued and retained duplicate receipts referred to in paragraph (1)(b) and the manner in which they are to be issued or retained.

(4) The chief executive officer may waive all or any of the provisions of subsection (1) relating to transactions or records or any class or description of transactions or records. (5) The Director-General, if he considers that any account or record submitted by any person to the Director-General in order to determine whether a person's income is insufficient or insufficient for that purpose, may, under his responsibility, issue a notice , require that such person, for each period specified in the notice and within a specified period (which shall be not less than thirty days from the date of the notice), submit financial statements audited by a professional accountant together with a report prepared by that auditor who, where relevant , which must include matters listed in subsection 174(1) and (2) of the Companies Act 1965.

(6) Any person required to keep records under subsection (1) shall, within sixty days of each transaction, make the appropriate entries in those records in respect of transactions.

(7) Any person required under this section to keep records and--

(a) does so electronically, must keep it in an electronically readable format and must have the

records in a manner that enables the records to be easily accessed and converted into writing; or (b) records originally maintained in a manual format and subsequently converts those records to an electronic format, must preserve those records prior to conversion to their original format.

(8) All records relating to business in Malaysia must be kept and retained in Malaysia.

(9) For purposes of this section, “records” include: (a) ledgers of receipts and payments from accounts or records of receipts and expenses;

053 .FM Page 182 Thursday, April 6, 2006 12:07 AM Income Tax 183

(b) invoices, vouchers, receipts and other documents as the Director General deems necessary to verify the entries in any ledger; and (c) any other records as may be specified by the Director-General in subsection (3).

Obligation to retain taxable income statement documents and payable taxes

82A. (1) Subject to this Section, any person who is required under this Act to disclose his or her income for a year of assessment shall, for a period of seven years from the end of the year of assessment, retain and retain sufficient documentation for the purpose of determining your taxable and taxable income .

(2) If a person referred to in subsection 1 has not submitted a declaration required under this Act for an assessment year, this person must keep the documents referred to in subsection 1 for this assessment year and keep them for a seven years after the end of the year in which the declaration is delivered.

(3) The Director-General may waive all or any of the provisions of paragraph (1) relating to income or deductions.

(4) Any person required under this section to retain documents and--

(a) does so electronically, must keep it in an electronically readable format and must have the

allow documents

Documents are easily accessible and convertible to written form; or

(b) originally held documents in manual format and later converts these documents into a

electronic format must preserve these documents prior to conversion to their original format.

(5) All documents related to income in Malaysia must be kept and kept in Malaysia.

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(6) For the purposes of this Section, “Documents” means: (a) Statement of Income and Expenditure; and

(b) Invoices, vouchers, receipts and other documents required to verify details of a declaration. return by the employer

83. (1) The Director-General may, by ordinance, require any employer to draw up and furnish, for each year and within a period so specified in the ordinance, a declaration in the prescribed form containing:

(a) the names and places of residence of the categories of persons employed by the employer

specified in the order; and

(b) the total amount of gross earnings covered by Section 13 paid, paid or provided by or on behalf of the employer to such persons in connection with their employment.

(2) If an employer begins to employ a person who is or is subject to tax in respect of income from labor income or profits, the employer shall notify the Director-General in writing no later than one month thereafter, stating the full name and address of the person and the conditions and start date of employment.

(3) If an employer intends to terminate the employment of a person who is or is subject to tax in respect of income from labor income or profits, the employer shall give written notice at least one month before the termination to the General Manager, who shall provide the full name and address of the person and the expected termination date:

Provided that the Director-General may, for the purposes of this Subsection, if he is satisfied that it is appropriate in the circumstances, accept termination given less than one month before termination or termination made on or after termination :053e .FM Thursday, April 6, 2006 12:07 AM Income Tax 185

Provided further that an employer is not required to provide any written notice under this subsection in respect of any person -

(a) if the income from employment thereof

individual subject to the deduction in accordance with the rules made pursuant to section 154(1)(a); or

(b) if that person's total monthly earned income is less than the minimum amount of income deductible under the rules made under section 154(1)(a);

and if you know that the person will not retire from employment.

(4) If a person who is subject to income tax on income or gains from employment is aware of his employer that he will be leaving or intends to leave Malaysia for a period of more than three months, the employer must state the intended date at least one month after departure, notify the Director General in writing of the departure of the person:

Provided that--

(a) if he is satisfied that it is appropriate in the circumstances, the Director-General may, for the purposes of this Subsection, accept a notice given less than one month before departure or a notice made on or after departure; and

(b) where it is satisfied that a person will need to leave Malaysia periodically in the course of his employment, the Director-General may waive the application of this Subsection in that regard

Individually.

(5) Notwithstanding any provision of law to the contrary, when an employer has in its possession sums payable or payable to or for the benefit of an employee who has left or is about to leave his employment or who intends to leaving Malaysia for a period of more than three months with no intention of returning, he shall not, without the permission of the Director General, pay any part of that money to or for the benefit of the official until ninety days after receipt by the Director General do notice053e .FM page 185 Thursday , 6 April 2006 12:07 p.m.186 Malaysian Law ACT 53

required under subsection (3) or (4) and if at any time the Director-General directs him to pay such money in whole or in part in payment of any tax due by the employee, he shall pay as indicated . (6) For the purposes of this section and subsection 107(4), any person for whom or for whose benefit another person performs or performs a service shall be deemed to be an employer, whether employed by or responsible to that other person to pay compensation to another person.

Returns relating to persons other than the originator of the return

84. (1) Any person who in any capacity receives money or property (as income of the kind referred to in Section 4) from or belongs to another chargeable person shall, if necessary, for that purpose by notice in writing from the Director-General to the Director-General within a within the period to be specified in the notification (not less than thirty days from the date of notification) to submit a statement in the prescribed form specifying income and an indication of the name and address of the person to whom it belongs.

(2) Any person selling goods in Malaysia on behalf of a person who is not a resident in the base year for an assessment year, if such goods are sold in the course of business of that second-named person, must deliver to the Director-General within 30 days of the end of each quarter of that assessment year, a statement of the gross proceeds of such sales made during that quarter.

(3) In paragraph (2) "Quarter" in relation to a Valuation Year means each three-month period ending on the last day of March, June, September or December.

return by the inmates

85. The Director-General may, by notice of his authorship, require the owner of any property or site in Malaysia, within a period to be specified in the notice (not less than thirty days from the date of service of the notice), to issue an instruction containing:

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(a) the name and address of the person registered (under a title registration act) as the owner of the land or premises or the name and address of the person to whom he pays rent; and

(b) a statement of any rent or other charges payable in relation to the occupancy or in relation to any furniture taken in connection with the occupancy.

return through partnership

86. (1) When a business is conducted by a partnership – (a) the previous shareholder, i.e. the shareholder present as an active shareholder in Malaysia –

(i) first mentioned in the memorandum of association; or (ii) if there is no memorandum of association, that is the case

indicated by name or initial alone or with

Priority over the other partners in the usual way

Company Name; or

(b) if no managing partner is present in Malaysia, any lawyer, agent, manager or factor of the partnership in Malaysia,

submit a declaration in the prescribed form to the Director-General for each assessment year by 30 June of the year following the assessment year.

(2) For the purposes of paragraph (1), an annual assessment report shall:

(a) state the income or loss that can be divided that is accrued in accordance with the relevant provisions of

§§ 55, 56, 57, 58 and 59 relating to the partnership for that year;

(b) contain the information necessary to determine the legal income from all sources of the members of the partnership; and

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(3) Where a partnership has been dissolved for all of its members, this section shall survive in respect of the dissolved partnership, and partners shall be deemed to be those persons who were partners in the partnership immediately prior to the dissolution section.Power to Demand More Return

87. The Director-General may give notice in writing to any person whenever he considers it appropriate and may request that person to provide, within a reasonable time (to be specified in the notice), full or additional explanations on any matter requiring explanation by or according to this law.

Returns are deemed to have been made with proper authorization

88. Unless proven otherwise, a restitution to be made under this Act by or on behalf of a person shall be presumed to have been made by that person or, as the case may be, under his authority; and anyone who signs such a declaration is presumed to know its contents.

change of address

89. Any taxpayer who changes his address in Malaysia (an address which he has notified to the General Manager) to another address in Malaysia must notify the General Manager in writing of the change within three months.

PART VI

REVIEWS AND RESOURCES

Chapter 1 - Reviews

reviews in general

Section 90. (1) If a person has submitted a declaration to the Director General for an assessment year in accordance with section 77 or 77A, an assessment by the Director General shall apply to this person in the amount of the tax 053e due on the day on which the declaration is submitted .FM Thursday April 6, 2006 12:07 pm Income Tax 189

Income, where tax and taxable income are the respective values included in the declaration.

(2) For the purposes of this Act, if the Director-General is deemed to have made an assessment pursuant to subsection (1)-(a), the declaration referred to in that subsection shall be deemed to be the assessment notice; and

(b) The deemed collection notice shall be deemed to have been served on the person on the date the Director General is deemed to have given the notice

Valuation.

(3) If a person has not submitted a declaration in accordance with Sections 77 or 77A for a year of assessment, the Director General may, to the best of his or her discretion, determine the amount of that person's eligible income for that year and carry out a corresponding review:

Provided that the making of an evaluation in respect of any person under this subsection shall not affect any liability incurred by that person as a result of his or her failure to make the Declaration.

Additional ratings and reviews in specific cases

Art. 91. (1) If, for a year of assessment, it turns out that no assessment or no assessment was sufficient for a taxpayer, the Director General may make another assessment in that year or within six years of its due date, as the case may be , in respect of that person, in the amount or amount of additional income and tax payable or additional tax which, in the best judgment of the Director-General of the assessment, should have been made by that person for that year.

(2) If the Director-General finds that any tax has been refunded in whole or in part to a person (other than pursuant to an agreement made in respect of an assessment under Subsection 101(2) or pursuant to an assessment established on appeal) actually or has been wrongly recovered in law, the Director-General may, in respect of that person, make an assessment of that tax or part of that tax, as the case may be:

053e.FM Page 189 Thursday 6 April 2006 12:07 PM190 Malaysian Law ACT 53

If such an assessment is not made -

(a) whether the reimbursement was actually made on the basis of or in accordance with the director's practice

Generally valid at the time of payment; or

(b) in relation to taxes more than six years after the refund of the tax.

(3) The Director-General if he believes that - (a) there has been any form of fraud or willful default

committed by or on behalf of any person; or

(b) someone has acted negligently,

in connection with or in connection with taxation, at any time make an assessment for that person for each year of assessment for the purpose of making up for any loss of tax arising out of the fraud, intention or negligence in question.

(4) If in an assessment year--

(a) any rating made in respect of a person for a rating year has been established by the court on appeal or for review; or

(b) any exemption, exemption, remission or allowance granted to a person for a year of assessment under any provision of this Act or any other written law in respect of that person's income chargeable under this Act has been revoked or

canceled because a condition for the granting of such exemption, exemption, remission or subsidy has not been satisfied,

the Director-General may, in the first-mentioned year of assessment or within six years after the expiration thereof, make an assessment in respect of that person for each year of assessment to effect the determination, revocation, revocation or annulment as the case may be.

early reviews

92. (1) Subject to this section - (a) when a person ceases to own a source consisting of a corporation containing income tax 191 in a year of assessment

In general, an evaluation can be made this year

in respect of that person and income from that source for that year of assessment and the following year of assessment;

(b) when a person begins in a year of assessment, income in proportion to the income of a

employment, or in respect of annuities, annuities or other periodic payments falling under paragraph 4(e), the Director-General may make an assessment in that year in respect of that person and the income from that source for that year of assessment and each year in the subsequent assessment years ;

(i) that person is expected to cease to own that resource in that year of assessment or that

following evaluation year; or

(ii) is desirable for reasons other than a

an assessment is made in relation to that person,

he may make an assessment in that year in respect of that person and income from that source or any source for that year of assessment and the following year of assessment;

(d) if a person who ceases to have a source in a year of assessment receives income from that source (being income that has not been included or is not expected to be included in that person's gross income from that source) after the end of that year ). any previous base period) the Director General may in the year

assessment at which that income is obtained, make an assessment in relation to that person and that income for that assessment year;

(e) if in a tax year an individual is subject to tax in connection with the application of subsection 54(2) to a corporation, the director general may at any time in that year make a valuation in respect of that person and all the income of that entity for that tax year; and

(f) if the base period for an assessment year in relation to an individual's source or sources is a period

twelve months ending on a day other than the 31st

December of a base year, the Director-General may, if he thinks fit, make an estimate in that year in respect of that person and the income from that or those sources, as the case may be, for that year

Valuation.

(2) When an assessment is made under paragraph (1) in relation to a person, it must be assumed that - (a) all the provisions of this Act shall apply to the assessment year in which the assessment is made

apply to the assessment year for which the assessment is made; and

(b) if that person is an individual, the personal circumstances of that person in the base year for the assessment year for which the assessment is made are the same as in the base year for the assessment year for which the assessment is made,

and if, in the assessment year for which the assessment is being made, the director-general is of the opinion that the assessment on that assumption is more or less favorable to that person than if it had been made in accordance with section 90, he may take such action under section 91 seize or make such tax refunds as the judge in the case seems to him to require.

(3) Wo--

(a) this Section confers authority to make an assessment in relation to an individual;

(b) an assessment was made for that individual in a particular assessment year; and

Subsection 91(1) in relation to that person in that particular year,

Section 91 (1) applies as if the year of assessment mentioned there were the relevant year of assessment.

(4) For the avoidance of doubt, it is hereby established that -- 053e .FM Page 192 Thursday April 6, 2006 12:07 p.m. Income Tax 193

(a) The fact that an assessment has been made under subsection (1) in relation to a person and his source shall not prevent the Director-General from doing so

make an assessment under this Act in relation to that person and any other source thereof; and

(b) the fact that a valuation which would otherwise have been made under paragraph (1) in respect of an individual for a valuation year was not made because the aggregate income was insufficient to establish taxable income for that year prevents this not general director from conducting an assessment under

any other provision of this Act relating to that person for that year of assessment or an amount equal to that total income.

Form and implementation of evaluations

93. A review that is not a review under subsection 90(1) with respect to an individual must:

(a) be performed in the prescribed manner;

(b) state, in addition to any other information contained therein, the relevant year of assessment and the amount or additional amount of taxable income

and the tax levied on it or the amount of the tax or the additional tax; and

and if this form is duly completed, unless proven otherwise, the assessment shall be presumed to have been conducted on the date so stated.

Registration of reviews

94. The Director-General shall ensure that records are kept of any evaluation which he considers appropriate for each evaluation year.

053e .FM Page 193 Thursday 6 April 2006 12:07 p.m.194 Malaysian Law ACT 53

No double ratings

95. Where two or more entries have been made in respect of a person on the same income in the same year of assessment, the Director-General may make the necessary entries to ensure that the income for that year is taxed only once.

Review notice

96.(1) As soon as practicable after an evaluation that is not an evaluation under subsection 90(1), the Director-General shall cause a notice of evaluation to be served on the person for whom the evaluation was made. (2) If the tax levied on the basis of an assessment is increased on appeal to the special commissioners or a court, notification of the increase in assessment as soon as possible after the decision on the appeal.

(3) Where subsection 99(2) applies to an agent and another person, any notice to be given under subsection (1) or (2) must be given to both the agent and the other person. (4) A notification has been sent. pursuant to subsection (1) or (2) shall be in the prescribed form and shall state in addition to any other material therein:

(a) in the case of notification under paragraph 1, the year of assessment, the amount or additional amount of taxable income and the tax thereon, or the amount of the tax or additional tax, as the case may be;

(b) in the event of termination under paragraph 2, the year of assessment and the amount of increased tax charged; and

(i) the place where payment is to be made;

(ii) the increase for arrears imposed by the

Subsection 103(5), (6), (7) or (8); and

053 .FM Page 194 Thursday, April 6, 2006 12:07 AM Income Tax 195

(iii) any right of appeal that may exist under this Act.

composite rating

96A. (1) Subject to Section 91, if a person - (a) fails to make a declaration under subsection 77(1) or 77A(1);

(b) fails to disclose the fee pursuant to subsection 77(3);

(c) misrepresents, by omitting or understating, any income that he is required to disclose under this Act on his own behalf or on behalf of any other person; or (d) make any false statements in relation to any matter affecting your own tax liability or the tax liability of any other person,

for one or more assessment years (the year or years referred to in this section as the relevant year or years), the Director General and that person may agree in writing that that person pays an amount of money (referred to here in section as the aggregate value) is--

(i) the amount of tax undercharged or not charged in the relevant year or years as a result of such failure to make a declaration or to notify of liability for tax or to make a false declaration or provide false information; and

(ii) the amount of any penalty or penalties that person may be required to pay in that relevant year or years under subsection 112(3) or 113(2) or both (or if such penalty is reduced or waived under subsection 124 ). (3) either the penalty that was not reduced or waived). Total quantity.

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(3) As soon as practicable after a composite assessment has been made, the Director-General shall cause notification of the composite assessment to be sent to the person in respect of whom the composite assessment was made.

(4) A notice sent pursuant to subsection (3) shall be in the prescribed form and shall contain, in addition to any other material contained therein, the following:

(a) the relevant year or years;

(b) the amount or total of taxes under-collected or not collected in the relevant year or years; (c) the value or total value of any penalty imposed under subsection 112(3) or 113(2) or both (or, if such penalty is written off or forgiven under subsection 124(3), either, if any, by

penalty not written off or forgiven); and (d) the place where payment in full is to be made.

(5) The total amount will be charged as if it were part of the tax liability of the person for whom the total assessment was made, but will not be treated as tax due for the purposes of the provisions of this Act, except for sections 103 to 106.

(6) Notwithstanding any other provision of this Act - (a) a composite valuation made pursuant to this Section shall be final and conclusive for the purposes of this Act; and

(b) No appeal may be lodged against a composite score. (7) For the purposes of this section, references to sections of this Act in paragraphs (1), (4) and (5) shall be construed as references to corresponding sections of the repealed Acts and references to the year of assessment in paragraph (1) should be so understood that it contains a reference to the year before the assessment; the repealed statutes and prior year assessment having the same meaning as subparagraph 1(1) of Part I of Schedule 9.053e.FM Page 196 Thursday April 6, 2006 12:07 p.m. Income Tax 197

purpose of the evaluation

97. (1) If - (a) no valid complaint against a review under Section 99 has been filed within the time limit set forth in this Section (or any extension thereof);

(b) agreement has been reached on an assessment in accordance with paragraph 2 of Subsection 101;

(d) a valid appeal against an evaluation has been filed, but the appellant dies before the Special Commissioners can begin hearing the appeal

or is completed and no personal representative of the deceased applicant's estate requests the Special Commissioners to continue or complete the hearing within two years of his death,

The assessment made, agreed upon or determined is final and conclusive for the purposes of this Act.

(2) Subsection (1) does not prevent the exercise of powers that have been transferred to the Director General by Sections 91, 95 or Section 143 (3).

Chapter 2 - Resources

The special commissioners and the chancellor

Article 98. (1) For the purposes of this Act, there are three or more Special Income Tax Commissioners and one Secretary of Special Commissioners.

(2) Sonderkommissare werden von Yang di-Pertuan Agong appointed.

(3) Special Representatives shall include the number of persons with judicial or other legal experience (i.e. experience as a barrister, member of the judiciary and legal service or holder of an office to which the Judges Remuneration Act 1971 [Act 45] applies) as required 053e .FM page 197 Thursday 6 Apr 2006 12:07 PM198 Malaysian Laws ACT 53

for the purposes of Annex 5 paragraph 1; and when the Yangdi-Pertuan Agong deems it appropriate, he may appoint one of these persons as the head of the special commissioners.

(4) Each Special Representative -

(a) hold office for the period and under the terms (including terms of remuneration and allowances) determined by the Minister; and

(b) be a civil servant within the meaning of Section 21 of the Criminal Code [Act 574]. (5) The notary is a public office of the Federation

99. (1) A person aggrieved by a determination concerning him may appeal to the Special Commissioners against the determination by lodging an appeal with the Director-General within thirty days of the dispatch of notification of the determination or, in the event of an appeal, a evaluation made pursuant to Section 92 within the first three months of the evaluation year following the evaluation year for which the evaluation was made (or within the extended days or months permitted in Section 100), written notice of appeal on the prescribed form , stating the reasons for the appeal and other information , which may be required in this form. (2) If an assessment has been made in respect of a person referred to in Section 68 as a representative of another person, the representative and that other person shall, for the purposes of this Section and the other provisions of this Act relating to remedies, should any person like the person in relation to whom the assessment was made should be treated and, if both disagree with the assessment, their resources should be treated together whenever possible:

If a recipient who is deemed to be appointed pursuant to Section 68 (4) pursuant to Section 68 (1) is deemed to be the agent of a court, this subsection shall not apply. (3) If, in a case to which Section 67 applies, the principal has filed an objection to the decision, the representative himself has filed an objection to the decision or is entitled, without prejudice to the powers conferred on him Thursday, April 6, 2006 12: 07

pursuant to subparagraph 14(c) of Schedule 5, to represent and generally act on behalf of the principal for the purposes of the Appeals Provisions of this Act (“the principal” and “the agent” have the same meaning herein as in Section 67). time for appeal

100. (1) A person wishing to object to a review may at any time submit to the Director-General a written request in the prescribed form for an extension of the period within which the review may be objected under subsection 99(1).

(2) Upon receipt of a request under paragraph (1), the Director General -

(a) if it is satisfied that the applicant was prevented for any reasonable reason from filing the complaint within the reasonable time under subsection 99(1), it shall extend such time as it deems appropriate under the circumstances, and shares this with writing the

extension to the applicant; and

(b) If you are not satisfied, you must forward the request to the Registrar together with a statement of the reasons for your dissatisfaction and your address for the purpose of the request.

(3) When the Director-General makes an application and a declaration under paragraph (2)(b), he shall give written notice thereof to the applicant and transmit a copy of the declaration to the applicant; and the applicant may send written explanations of the application and explanation to the Registrar within twenty-one days of receipt of the information and copy.

(4) Any application and declaration made pursuant to paragraph (2)(b) and any declaration made pursuant to paragraph (3) shall be brought to the notice of the Registrar by one of the Special Commissioners, who shall decide whether or not to extend the Time limit it deems appropriate under the circumstances, the time limit within which an appeal may be lodged.

(5) The decision of one of the Special Commissioners to deny an application or to grant an extension under subsection (4) is 053e .FM Thursday, April 6, 2006 12:07 PM200 Malaysian Law ACT 53

shall be communicated in writing to the applicant and the Director General by the Registrar and shall be final.

Review by the General Manager

101.(1) Upon receipt of an appeal under subsection 99(1), the Director-General shall, within twelve months of receipt of the appeal, review the assessment being appealed and for that purpose may (a) require the appellant to disclose such data provide what the Director-General deems necessary in relation to the income to which the valuation relates and any other matter which in the opinion of the Director-General is relevant to the valuation;

(b) require the Complainant to produce any books or other documents in its custody or under the Complainant's control relating to sources to which the Assessment relates or to other matters which the Director-General considers relevant to the Assessment are;

assessment appearing before the general manager; and (d) investigate any person appearing under oath or otherwise. (1A) If the Director-General needs a period of more than twelve months to carry out the review referred to in paragraph (1), the Director-General may request the Minister for an extension of that period at least thirty days before the end of the twelve months.

(1B) Upon receipt of a request under subsection (1A), the Secretary may grant such extension as he thinks fit and reasonable in the circumstances, provided that such extension does not exceed a period of six months from the date of expiry of the twelve months exceeds month period. .

(1C) The Minister's decision under subsection (1B) shall be notified in writing to the Director-General and shall be final. (2) If the Director-General and the Complainant reach a written agreement as a result of a review under paragraph (1) -

053 .FM Page 200 Thursday, April 6, 2006 12:07 p.m. Income Tax 201

(a) in relation to the amount of taxable income and taxes due or the amount of taxes or additional taxes; or

(b) that no income or taxes accrue,

the contested notice is deemed to be confirmed, reduced, increased or revoked as agreed.

(3) Subject to subsection (5), if, as a result of a review under subsection (1), the Director-General and the Complainant agree orally on the matters referred to in paragraph (2)(a) or (b) and the Director-General provides the Complainant with written confirmation of the Agreement, the Oral Agreement shall be confirmed unless the Complainant notifies the Director-General in writing within twenty-one days of the notification of the Director-General being deemed to be in writing after the expiry of that period between the Director-General and the Complainant Agreement as defined in paragraph 2. (4) Subject to paragraph (5), if, as a result of a review under paragraph (1), the Director-General proposes in writing to the Complainant to confirm, reduce, increase or withdraw the Rating and the Complainant neither agrees nor accepts rejects proposals, unless the Complainant notifies the Director-General in writing within 30 days of receipt of such Proposals (or within such period as the Director-General may request from the Complainant), the Proposals shall be deemed accepted and constitute a written agreement within the meaning of paragraph 2 between the Director-General and the complainant reach the end of that period or, where applicable, the grace period.

(5) If, pursuant to paragraph (3) or (4), an agreement as referred to in paragraph (2) is concluded between the Director-General and the Complainant, one of the Special Commissioners shall, at the request of the Complainant, notify the Special Commissioners within thirty days of the conclusion of the agreement it may, after giving the Director-General an opportunity to comment orally or in writing, cancel the Agreement if it deems it fair and reasonable to do so in the circumstances.

053e.FM Page 201 Thursday 6 April 2006 12:07 p.m.202 Malaysian Law ACT 53

(6) The decision of any of the Special Commissioners on an application under paragraph (5) shall be communicated in writing by the Registrar to the applicant and the Director-General and shall be final.

(7) References in this Section to agreements between the Director-General and the complainant and to acknowledgments and inquiries sent to the complainant include references to agreements made between the Director-General and a duly authorized person who carries out correspondence or otherwise acting on behalf of the complainant in relation to the complaint and for acknowledgments and inquiries to that person. (8) In proceedings against a valuation, an agreement pursuant to paragraph (2) or an agreement applicable pursuant to paragraph (3) or (4) shall increase the tax attributable to the valuation and shall not overrule paragraph (5). , the Director-General shall, in the prescribed manner, notify the complainant who:

(a) state, in addition to any other information contained therein, the amount of any additional tax charged and the place of payment; and

(b) have the same effect as a notice of an increase in rating for the purposes of Part VII.

(9) The notification referred to in subsection (8) will be given - (a) if an agreement is reached under subsection (2), as soon as practicable; and

(b) if an agreement is made under subsection (3) or (4) and does not become invalid under subsection (5), as soon as practicable after the expiry of the period specified in subsection (5), or, if a

Application for special commissioners below

Paragraph 5 as soon as possible after rejection of the application.

Complaints Procedure

102. (1) Subject to paragraph (3), the Director-General may at any time within a period of twelve months from the date of receipt of the notice of appeal or, if an extension has been granted under paragraph 101 (1B), within the extended period if you so to wish

that there is no reasonable prospect of reaching an agreement with the Complainant under subsection 101(2) with respect to the Complaint and if subsections 101(3) and (4) do not apply; and if he makes a complaint under this subsection, he must notify the complainant in writing. (2) (Excluded by Law 600).

(3) No appeal shall be made to the Special Commissioners if the Director-General and the Appellant have reached or are deemed to have reached an agreement thereto pursuant to subsection 101(2), (3) or (4).

(4) If an appeal is sent to the Special Commissioners under this section, the appeal must be sent in the manner provided in Schedule 5 and this schedule shall apply to the hearing and determination of the appeal and otherwise as provided therein.

(5) If an appeal has been sent to the Special Commissioners under this section -

(a) the Director-General and the Complainant at any time prior to the hearing of the Complaint by the Special Council

Commissioners is completed can achieve a

Consent of the kind specified in subsection 101(2) in relation to the assessment referred to in the Complaint; or

(b) The Complainant may withdraw the Complaint at any time. (6) If the Director-General and the Complainant reach an agreement under paragraph (5)(a), the Director-General and the Complainant may send a true copy of the agreement to the Special Commissioners.

(7) If the Special Commissioners are satisfied that the Director-General and the Appellant have reached an agreement under paragraph (5)(a) as to the assessment referred to in an appeal -

(a) the proceedings before the Special Commissioners regarding the appeal are dismissed;

(b) the Agreement shall be effective as if made pursuant to Subsection 101(2); and

053e.FM Page 203 Thursday 6 Apr 2006 12:07pm204 Malaysian Law ACT 53

(c) Subsections 101 (8) and (9) apply accordingly. (8) If the Special Commissioners are satisfied that the Complainant has withdrawn his complaint pursuant to paragraph (5)(b)-(a), the proceedings before the Special Commissioner relating to the appeal shall be dismissed; and

(b) the assessment referred to in the objection is for the purposes of this Act, Sabah Income Tax Ordinance 1956 [Sabah Ord. 29 of 1956], the Income Tax Ordinance 1960 dated

Sarawak [Sawarak Ord. 13 of 1960] or the West Malaysia Income TaxOrdinance 1947 [Ord. 48 of 1947], as the case may be.

(9) In this Section, “Objection” means an objection to a review.

TEIL VII

TAX COLLECTION AND REFUNDS

tax payment

Section 103. (1) Except as otherwise provided in subsection (2), the tax payable under an assessment for an assessment year shall be due and payable on the due date, whether or not the person appeals the assessment.

(2) If an assessment is made in accordance with Section 90 (3), 91, 92 or 96A or if an assessment is increased in accordance with Section 101 (2), the tax owed after the assessment or increased assessment is the amount of The delivery of the assessment notice or of the composite assessor or increase in service is due and payable by the person being assessed at the location specified in that notice, whether or not that person appeals the assessment or the extended assessment.

(3) If any tax due and payable under subsection (1) has not been paid on the due date, the greater part of the tax unpaid after the due date of that date shall be increased without notice by an amount equal to ten per cent of the unpaid tax, and this sum is recoverable as if due and payable under this Act.

053 .FM Page 204 Thursday, April 6, 2006 12:07 AM Income Tax 205

(4) If the tax due and payable has been increased in accordance with subsection (3), any balance remaining unpaid after the due date sixty days after the due date shall be increased, without notice, by an amount equal to five percent of the unpaid balance , and that amount is recoverable as if it were taxable and payable under this Act.

(5) Subject to paragraph (7), if any tax due and payable under paragraph (2) has not been paid within thirty days from the date of dispatch of notice, the greater part of the tax unpaid after the expiry of that period will become due without further notice an amount equal to ten percent of the unpaid tax will be added and such amount will be recoverable as if due and payable under the provisions of this Act.

(6) If the tax due and payable has been increased in accordance with paragraph (5), any balance remaining unpaid after the expiry of sixty days from the date of such increase shall be increased, without further notice, by an amount equal to five per cent of the balance . unpaid, and that amount is recoverable as if it were taxable and payable under this Act. on the dates specified by him and in the event of default in payment by an installment on the date specified for payment, the balance of the then outstanding tax shall become due and payable on that date and shall be increased without notice by an amount equal to ten per cent of that balance , and that amount is recoverable as if it were taxable and payable under this Act. (8) If the tax due and payable has been increased in accordance with subsection (7), any balance remaining unpaid after the expiration of sixty days from the date of such increase shall be further increased, without notice, by an amount equal to five per cent of the unpaid balance, and that amount is recoverable as if it were taxable and payable under this Act. (9) Notwithstanding the preceding subsections, if the tax due and payable is increased by an amount under subsections (3), (4), (5), (6), (7) or (8), the Director-General may: may, at his discretion, for just cause, transfer all or part of this amount and when the amount transferred has been paid, the Director-General will refund that amount.

053e.FM Page 205 Thursday 6 Apr 2006 12:07pm206 Malaysian Law ACT 53

(10) When applying Section 45 (2) to an assessment year, the part of the tax that is levied in that year by the husband or wife for whose account the assessment was made, which is attributable to the total income of the wife in that year the voting wife or husband may, if necessary, be deducted from the voting wife or husband; and this part applies (with any necessary modifications) as if on the date a notice of rating or increase in rating for that year is sent to the husband or wife, the notice of rating or increase in rating would have been granted to the wife who chose them or to the husband who chose them, as the case may be:

Provided that nothing in this subsection shall be construed as giving the electing wife or husband, as the case may be, any right of appeal under Section 99. (11) For the purposes of subsection (10), the proportion of tax levied on the husband or wife from the year of assessment that is attributable to the total income of the elector in that year shall be determined by the formula:

A × C

___

Where from--

(a) in the case of the wife who chooses:

A is this woman's total income for one year

Valuation;

B is the man's household and the one

total income of wife or wives; and

C is the tax levied in the assessment year

if paragraph 45(2)(a) applies; or

(b) in the case of the husband she chooses -

A is this man's total income for one year

Valuation;

B is the woman's household and such

total income of husband; and

053 .FM Page 206 Thursday, April 6, 2006 12:07 AM Income Tax 207

C is the tax levied in the assessment year

if paragraph 45(2)(b) applies.

(12) For the purposes of this Section, “Maturity Date” means: (a) in the case of a corporation, trust or cooperative, the last day of the seventh month from the date following the end of the accounting period;

(b) in the case of a person referred to in paragraph 77(1)(a), the 30th June of the year following the year of assessment; and

(c) in all cases other than those referred to in sub-paragraphs (a) and (b), 30 April of the year following the year of assessment.

103A. (Excluded by Act A1151).

Rescuing people leaving Malaysia

104. (1) The Director-General when he considers that a person will leave or is likely to leave Malaysia without -(a) paying all taxes (whether due or due and payable) due by him ;

(b) any amounts owed by him under subsection 103(3), (4), (5), (6), (7) or (8); and

may issue a certificate to any Police Commissioner or Director of Immigration Services detailing the taxes, amounts and debts payable with a request that that person be prevented from leaving Malaysia unless and until he has paid all taxes payable , Amounts and debts paid or a guarantee thereof shall be the satisfaction of the Director-General for his payment.

(2) Subject to any order made or made under any written statute relating to exile or immigration, any police commissioner or director of immigration who receives a request under subsection (1) in respect of a person shall accept or cause such action to be taken taken (including the use of reasonable force and the confiscation, removal or withholding of identification documents)

and any passport, exit permit or other travel document relating to that person) to the extent necessary for it to be effective. (3) The Director-General shall arrange for the notice of issue of the certificate referred to in paragraph (1) to be served in person or by registered post on the person to whom the certificate relates, unless it does all that is under this section was made invalid.

(4) If a person to whom a certificate has been issued under subsection (1) -

(a) provide a written declaration, signed by the Director-General or an authorized officer on or after the date of the certificate, that all taxes, amounts and charges specified in the certificate have been paid or that security for their payment has been given; or (b) pays all taxes, amounts and duties specified in the certificate to the chief of a police department or an immigration officer,

the declaration or payment, as the case may be, must be of sufficient authority to allow that person to leave Malaysia. (5) No judicial proceeding shall be instituted or maintained against any government, any state government, any police officer or any other public official in connection with any lawful activity under this section or subsection 115(2).

(6) In this section--

"police commissioner" includes a police chief; “Immigration Director” means the Immigration Director in Sabah, Sarawak or West Malaysia;

“Immigration Officer” means an officer who carries out official duties related to the control of immigration into or into Malaysia.

Refusal of customs clearance in certain cases

105. (1) When the tax is payable by a person engaged in the activity of air or sea transportation of passengers or cargo (or tax 209

payable by an agent of that person) has not been paid for more than three months (whether that person was liquidated directly or the agent was liquidated on his behalf), the Director-General, with the consent of the Minister of Customs Service, may issue a certificate stating the Name of this person or representative and details of the tax evader; and Customs will then refuse clearance from any port, airfield or airport in Malaysia to any vessel or aircraft owned or chartered in whole or in part by that person until the duty is paid.

(2) No judicial proceeding shall be instituted or maintained against any Government, Customs Authority or any official for any refusal of clearance under this section, nor shall the fact that a ship or aircraft is detained under this section affect the liability of the owner, charterer or agents to pay port or other fees and charges for the period of detention. (3) In this Section, “Customs Authority” means the Director General of Customs and Excise and includes the Regional Directors of Customs in Sabah, Sarawak and West Malaysia and any other authority that may authorize customs clearance. recovery per share

106. (1) Taxes owed and payable may be recovered by the government in civil proceedings as debts to the government. (2) The Director-General and any authorized officer shall be deemed to be public officers authorized by the Minister under Subsection 25(1) of the Governmental Procedures Act, 1956 [Act 359] in relation to any procedure under this Section. (3) In a proceeding under this section, the court shall not accept any allegation that the amount of tax to be reclaimed was excessive, incorrectly assessed, contested, or incorrectly increased under subsection 103(3),(4),(5). , (6), (7) or (8). Tax deduction of wages and pensions

107. (1) When income is related to earnings or gains from employment or related to an annuity, annuity or annuity

a payment covered by paragraph 4(e) is owed to an individual, then the person in respect of whom the income is payable shall, if the Director General so directs, deduct from the income in the account any tax payable by him or are payable individually for each assessment year.

(2) Subject to the rules set forth in Section 154, tax deductions under this Section shall be made at such times and in such amounts as the Chief Executive shall determine, whether or not tax has been charged.

(3) Nothing in this section shall prevent, in connection with any event, the imposition of taxes (not deductible from tax under this section) under section 103 or the payment of any such tax enforced under section 106: provided that in In such a case, for the purposes of Section 103, the Director-General shall determine the period within which the tax is payable.

(4) An employer who violates subsection 83(2), (3), (4) or (5) or this section in respect of an employee of his employer shall be liable for a violation of subsection 83(2), ( 3), (4) or (5), pay in full the amount of tax owed by the employee and, in the event of failure to comply with this Section, pay the amount of unpaid tax withheld: provided that --

(a) The Director-General shall apply any amounts paid or recovered by him under this Subsection

for the payment of the tax owed by the employee; and

(b) The employer may recover from the employee as a debt to the employer any amount paid by the employer to the general manager or claimed by the employer

Compliance with this Subsection.

(5) If a person who is owed income of the kind referred to in paragraph 4(e) fails to comply with this Section in respect of a recipient of that income, that person shall be liable to pay the amount of tax which he did not deduct:

053 .FM Page 210 Thursday, April 6, 2006 12:07 p.m. Income Tax 211

Provided that--

(a) The Director-General shall apply any amounts paid or recovered by him under this Subsection

for the payment of taxes payable by the recipient; and

(b) the person may recover from the addressee as a debt to that person any amount paid by that person to the Director-General or collected by the Director-General from that person under this Subsection.

Tax deduction from the contract payment

107A. (1) If a person (referred to in this section as “the payer”) is responsible for paying a contract payment to a non-resident contractor in respect of services under a contract, when paying or crediting that contract payment, that person shall deduct the tax in Height of -

(a) ten per cent of the contract payment due to tax payable or payable by that non-resident

contractors for each assessment year; and

(b) three percent of the contract payment due to tax payable or payable by employees of that non-resident contractor for a year of assessment and (whether or not such tax is deducted or not) within one month of payment or credit to the contract account and pay the tax amount to the general manager: Provided the general manager can

(i) notify the payer in writing and require the payer to deduct and pay tax on other charges or to pay or credit the contract payment without tax deduction; or

(ii) allow, in special circumstances, an extension of the deadline for payment of the tax deducted.

(2) If the payer fails to pay any amount owed by him under paragraph (1), that amount which he fails to pay shall be increased by an amount equal to ten percent of the contractual payment that is tax-deductible under paragraph (1). 1) and 053e .FM Page211 Thursday 6 April 2006 12:07 p.m.212 Malaysian Law ACT 53

the total amount is his debt to the government and will be paid immediately to the Director-General.

(a) The Director-General shall apply the amount paid or collected pursuant to paragraph (1)(a) to the payment of tax due for a year of assessment by the non-resident contractor to whom the payer was obliged to pay the tax payment contract to which that amount relates ; (b) the Director-General shall reimburse the amount paid or recovered pursuant to paragraph (1)(b) to the non-resident contractor to whom the payer was obligated to make the Contract Payment to which such amount relates, as and when the Director-General determines appropriate ; and

(c) if the payer has not deducted any amount from the payment of the contract payment to which the amount relates, he may not deduct the amount from the

resident contractor as a debt to the payer.

(4) In respect of any event, paragraph (1)(b) precludes the deduction of taxes (not deductible under this subsection) under Section 107. (5) In this section:

"Contract Payment" means any payment for Services under a Contract to the Non-resident Contractor or its agent or any other person acting on its behalf;

“Contract Design” in relation to a Non-Resident Contractor includes any undertaking, project or plan whether any development, project or plan is undertaken, undertaken or carried out in Malaysia;

"Non-Resident Contractor" means any person who is not a resident of Malaysia as defined in Section 7 or 8 and who, under a contract or subcontract (other than a service or learning contract) or agreement or arrangement (other than as an Employee) enters into any and all of the subject matter of the Contract Services; "Person" includes a partnership;

053 .FM Page 212 Thursday, April 6, 2006 12:07 p.m. Income Tax 213

"professional service" in relation to a non-resident contractor includes any advisory, consulting, technical, industrial, commercial or scientific service;

“Contract Services” in relation to a non-resident contractor means the performance or provision of any work or professional service in Malaysia, which is professional work or service in connection with or in connection with a Contract Project. Payment in installments

107B. (1) Subject to this section, each taxpayer of an assessment year who is not a corporation, trust company or cooperative within the meaning of section 107C must pay the tax in installments without the applicable tax on income or profits from dependent work carried out by this person for be paid or may be paid in that year of assessment, at such times and at such rates as the chief executive shall determine, whether or not the tax has been charged.

(2) In determining the amount payable under paragraph 1, the Director-General may take into account any tax that may have been levied on the person in the year of assessment preceding that year of assessment:

Except that the Director General, at the request of the interested party, may change the amount to be paid in installments due to the tax and the number of installments until June 30th of the calculation year.

(3) If any installment amount due and payable on the date determined by the Director General pursuant to paragraph (1) or (2) is not paid within thirty days of the due date, the unpaid amount shall be increased by an amount without further notice equal to ten percent of the unpaid amount, and such amount is recoverable as if taxable and payable under this Act:

Provided that the unpaid amount is subsequently paid, the Director-General may treat it as paid when due.

(4) In any event, subsection (2) applies where the tax payable on a valuation for that valuation year exceeds the total number of installments payable and Malaysian Laws ACT53

If the difference exceeds thirty percent of the tax payable under the assessment, then, without further notice, the difference that exceeds thirty percent of the tax payable under the assessment will be increased by an amount equal to ten percent of that amount of the difference, and this Amount is recoverable as if taxable and payable under this Act: Provided, in the case of an individual whose income includes income or gains from employment, the tax due under an assessment for that year, the tax will be reduced by the amount of tax attributable to those profits or gains.

(4A) For the purposes of subsection (4), the amount of tax attributable to income in respect of income or gains derived from the employment of an individual shall be determined in accordance with the formula:

A × C

___

where A is your statutory income in relation to wages or earnings for an assessment year;

B is your total income for that assessment year; eC is your tax liability for that assessment year. (5) Nothing in this section shall prevent any tax from being levied on or the payment of any such tax enforced under section 106 by any person to whom this section applies in accordance with section 103:

Provided that in such a case, for the purposes of Section 103, the Director-General shall determine the period by which the tax is payable.

Estimation of taxes and installments to be paid for companies

107C. (1) Each corporation, trust or cooperative shall submit to the Director General an estimate of its tax liability for each year of assessment.

(2) Except as provided in paragraph (4)(a), the estimate of tax payable for a tax year shall be made in the prescribed manner.

completed and returned to the Director General at least thirty days before the start of the base period for that assessment year.

(3) The estimated tax payable for a tax year shall not be less than eighty-five percent of the revised estimate of tax payable for the immediately preceding tax year, or, if no revised estimate is provided, not less than eighty percent. five percent of the estimated tax payable for the immediately preceding year of assessment.

(4) When a company, trust or cooperative is admitted for the first time in a valuation year –

(a) the estimate of his tax payable for that year of assessment shall be made in the prescribed manner and communicated to the Director-General within three months of the date of commencement of business; and

(b) Paragraphs 2 and 3 apply to the partnership, trust or cooperative from the second year of assessment.

(5) If an estimate of the tax payable for a year of assessment is provided in accordance with paragraph (2), that amount will be paid to the Director-General in equal monthly installments determined according to the number of months in the base period and each installment will expire on the due date paid the second month of the base period for the assessment year for which this estimate was prepared. (6) Where an estimate of the tax payable for a year of assessment has been submitted in accordance with paragraph (4)(a), that amount shall be paid to the Director-General in equal monthly installments determined according to the number of months the base period and each installment are payable from the sixth month of the base period of the valuation year for which the estimate is made. (7) A corporation, trust or cooperative may, in the sixth month, or the ninth month, or both months of the tax period for any year of assessment, submit to the Director-General a revised estimate of its tax payable for that year in the prescribed form and--

(a) if the revised estimate exceeds the amount of installments made in the previous year 053e .FM

revised estimate, the difference will be paid equally in the remaining installments; or

(b) if the amount of installments payable in the year prior to such revised estimate exceeds the revised estimate, the remaining installments will immediately cease.

(8) Notwithstanding subsections (1), (3), (5), (6) and (7), the Director General may direct any company, trust or cooperative to be able to make installment payments in respect of tax which is or is from a be paid to such corporation, trust or cooperative for any assessment year at such times and in such amounts as the Chief Executive shall determine.

(9) If any installment due and payable has not been paid on the due date or on the date determined by the General Manager, the unpaid amount shall be increased without further notice by an amount equal to ten per cent of the unpaid amount., and the unpaid amount and the increase of the unpaid amount are recoverable as if they were taxes due and payable under this Act.

(10) If the tax payable under a valuation for a valuation year exceeds the revised estimate of the tax payable for that valuation year, or if no revised estimate is provided, the estimate of the tax payable for that valuation year by more than thirty percent of the tax payable on assessment, the difference between that amount and thirty percent of the tax payable on assessment will be increased without notice by an amount equal to ten percent of the value of that difference and that sum are recoverable as if they would be taxable and payable under this Act. (11) Notwithstanding the foregoing subsections, if the estimate of taxes payable for a year of assessment is increased by an amount pursuant to subsection (9) or (10), the Director General may, in its sole discretion, waive all or part of the taxes for any Proven Fair concerned of this amount, and when the amount transferred has been paid, the Director-General refunds it.

(11A) Nothing in this section shall prevent the imposition of any tax on any person to whom this section applies under section 103 or the payment of any such tax that is enforced under section 106.

053 .FM Page 216 Thursday, April 6, 2006 12:07 p.m. Income Tax 217

(12) For the purposes of this section –

"Expiry Date" means the tenth day of a calendar month; "Revised Estimate" means a revised estimate made in the ninth month of the Base Period or, if no revised estimate was made in the ninth month of the Base Period, the revised estimate made in the sixth month of the Base Period.

Dividend Tax Deduction

108. (1) If within the base period of a valuation year a dividend is paid or credited by a company to one of its shareholders then, if the dividend is deemed to have originated in Malaysia in accordance with Section 14, the company shall be entitled to deduct tax at the rate rate applicable to the corporation on the taxable income for that year of assessment or, if there is no taxable income of the corporation for that year, at the rate that would apply if such taxable income existed. (1A) For the purposes of subsection (1), entities to which paragraph 2A of Schedule 1 applies shall apply the higher of the two rates specified in that paragraph.

(2) If an entity pays, credits or distributes, without deduction of tax, any dividend from which it is entitled to deduct tax (or any dividend from which it would have been entitled to deduct tax if the dividend had been paid entirely in cash), the Dividend is deemed to be a dividend of a gross amount determined by the formula -

1 ×

_____

(1A)

where A is the rate of tax applicable to the Company for a tax year at the time of payment,

dividend credit or distribution; and

B is the amount actually paid or credited or, if the dividend consists of an asset other than cash, the market value of that asset at the time the dividend is paid,

053e.FM Page 217 Thursday 6 April 2006 12:07 pm218 Malaysian Law ACT 53

and an amount equal to the difference between that gross amount and the amount in B in the above formula will be considered tax deducted from the dividend.

(3) Notwithstanding any other provision of this Act, if a dividend with or without tax deduction is paid, credited or distributed in the base period of a valuation year and the rate of corporation tax for that valuation year is changed (referred to in this subsection as the revised rate), the amount of the dividend paid by the shareholder dividend received will be considered as a dividend of a gross amount determined according to the formula:

1 ×

_____

(1A)

where A is the revised tax rate applicable to the entity in that tax year at the date of

payment, credit or distribution of dividends; and

B is the amount actually paid or credited or, if the dividend consists of an asset other than cash, the market value of that asset at the time the dividend is paid,

and an amount equal to the difference between that gross amount and the amount in B in the above formula will be considered tax deducted from the dividend.

(4) Every corporation shall, on the payment, credit or distribution to a shareholder of a dividend of the kind to which paragraph (1) or (2) applies (whether tax deductible or not) be issued a certificate of dividend -

(a) the gross amount;

(b) the tax amount -

(i) which the entity is entitled to deduct under subsection (1); or

(ii) which are deemed to be deducted pursuant to

subsection (2); and

053 .FM Page 218 Thursday, April 6, 2006 12:07 p.m. Income Tax 219

(c) the amount actually paid or credited or, if the dividend is not in cash, the market value of such property at the time the dividend was paid.

(5) Within seven months of the close of the accounting period, each resident company shall furnish the Director General with a declaration in the prescribed form stating that for one year of valuation -

(a) the total amount of tax—

(i) which the entity is entitled to deduct under subsection (1); and

(ii) which are deemed to be deducted pursuant to

paragraph 2 or 3,

such Dividend paid, credited or distributed to its Shareholders in the Base Period of that Calculation Year (this total amount is referred to in this section as the Settlement Total); and

(b) the total amount—

(i) taxes paid (if applicable) and a tax adjustment amount under section 110 (if applicable) (limited to the amount of tax on taxes owed).

Company turnover minus any discounts below

Section 6B or any relief granted for one year

Assessment according to section 132 or 133) minus any

Tax refund to the company based on

period for this assessment year; and

(ii) the balance (if any) that will be transferred to the Company's balance pursuant to

paragraph (8),

(This aggregated value is referred to in this section as the aggregated comparison).

(6) If, in relation to a rating year and a company, the compared total exceeds the compared total at the end of the base period for a rating year, an amount equal to the amount of the excess will be owed by the company to the government and such debt will become due on the due date and payable.

053e.FM Page 219 Thursday 6 Apr 2006 12:07pm220 Malaysian Law ACT 53

(7) If any deductible due and payable by an entity under paragraph (6) has not been paid on the due date, both deductibles unpaid on the due date shall be increased on that date, without further notice, by an amount equal to ten per cent of the unpaid excess, and the The unpaid amount and the increase in the unpaid amount constitute the company's debt to the government, and such debt is immediately paid to the general manager.

(8) If the overall comparison for a company exceeds the overall comparison at the end of the base period for a valuation year, an amount equal to the excess will be carried forward as a balance on the company's credit balance for the following year of valuation.

(9) If a company defaults over a rating year –

(a) make the declaration referred to in sub-paragraph (5); or (b) provide the information requested in the declaration pursuant to subsection (5),

and the Director General is of the opinion that the Company has paid, credited or distributed any dividends to its Shareholders in the base period of that Calculation Year, he may calculate the amount of the excess referred to in sub-section (6), if any, and shall notify the Company in writing deliver in the form prescribed, requesting the Company to pay an amount equal to such deductible and an increase amount not to exceed the amount equal to such deductible and the amount equal to such deductible and any increase in amount is a debt owed by the company to the government, and this debt will be paid immediately after the request is served on the Director-General. (10) If a company--

(a) shall not be entitled to deduct tax under this Section from any dividend paid or credited to any of its Shareholders in respect of any assessment year; and

(b) issue to each of its shareholders a certificate certifying that any amount of tax under this section has been deducted or deemed to have been deducted from any dividend paid, credited or credited

distributed to this shareholder,

053 .FM Page 220 Thursday, April 6, 2006 12:07 p.m. Income Tax 221

an amount equal to what would have been the full amount of tax deducted or deemed to be deducted if paragraph 1 or 2 applies, from the gross amount of dividends (as determined in accordance with paragraph 2) paid, credited or credited to all of its shareholders at the time of the Amounts paid, credited or distributed to such Shareholders constitute an amount owed by the Company to the Government and such amount shall be increased by an amount not exceeding the amount due; and the Director-General shall serve a written demand on the Company in the prescribed manner, requesting the Company to pay the amount due and increase in the amount due, and such amount is a debt of the Company to the Government and must be paid promptly to the Director General upon request:

Provided that if the Company satisfies the Director that such Certificates have been issued only to certain Shareholders designated by the Company, such debt shall be reduced to an amount to be determined by reference to the Certificates issued to such designated Shareholders.

(11) Where a Section 103 tax payment or Section 107C installment payment or tax refund is made in respect of a year of assessment, the Chief Executive Officer may: stated balance (if any);

(b) any repayment, in whole or in part, of any debt paid under subsection (6), (9) or (10); and (c) any request under subsection (9) or (10) as deemed appropriate under the circumstances. (12) Paragraph 23(b) in relation to the date on which a dividend should be treated as paid or distributed shall apply to the interpretation of this Section and where this Section applies to a dividend credited it shall not apply to that dividend upon payout.

(13) All debts due under this Section shall be collectible as if taxable and payable under this Act.

(14) In this section--

“Expiration Date” has the same meaning as in subsection 103(12)(a);053e

“Taxes Paid” means any tax payment made by the entity in the base period of a assessment year, whether or not paid in installments under Section 107C, less payments (if any) in respect of:

(a) the tax payable for the year of assessment 2000 based on the current and previous year of assessment; (b) any penalties imposed under subsection 112(3) or 113(2);

(c) any tax increase under Section 103, 107B or 107C; or (d) any deductible or increase in deductible pursuant to Section

108.(14A) In this Section, a reference to “tax refund” or “a tax refund” refers to:

(a) the amount of installments paid under Section 107C for a year of assessment less the amount of tax payable for that year of assessment (excluding the penalty imposed under Section 112 or 113);

(b) the amount of tax payable (excluding penalties under section 112 or 113), released by

due to the reduced or paid contribution:

Provided that the amount of tax payable under this assessment (without any penalty imposed under Section 112 or 113) has been paid; or

(a) a cooperative;

(b) an offshore company in connection with any dividend paid, credited or distributed by -

(i) Income from an offshore business

Activity; or

(ii) tax-exempt income;

(c) a life insurer in respect of its chargeable income which is subject to taxation under Part VIII of Schedule 1; or (d) a limited liability company.

053 .FM Page 222 Thursday, April 6, 2006 12:07 p.m. Income Tax 223

(16) Notwithstanding the foregoing subsections, if (a) the Excess is increased by an amount pursuant to subsection (7) or (9); or

(b) the amount due is increased by an amount in paragraph (10),

the Director-General may, at his sole discretion, for any proven just cause, refund any or all of this amount and when the amount transferred has been paid, the Director-General shall refund it.

Deduction of interest or royalties in certain cases

109. (1) If a person (referred to in this section as the payer) is obligated to pay interest or royalties from Malaysia to another person known not to be a resident of Malaysia, except for interest or Royalties attributable to a business conducted by such other person in Malaysia shall be deducted when paying or crediting interest (other than interest on an approved loan or interest of the kind specified in Schedule 6, Part I, paragraph 33 or 35) or royalties the taxes at the rate applicable thereto after interest or royalties, and (whether or not such taxes are deducted) account for and pay the amount of such taxes to the General Manager within one month of the payment or crediting of the interest or royalties:

Provided the general manager can...

(a) notify the payer in writing and require the payer to deduct and account for certain other charges or to pay or credit interest or royalties without tax deduction; or

(b) allow, in special circumstances, an extension of the time limit for payment of the tax deducted.

(2) If the payer fails to pay any amount owed by him under paragraph (1), the unpaid amount shall be increased by an amount equal to ten percent of the tax-deductible interest or royalties under paragraph (1) and the total amount is his debt to the Government and is payable forthwith to the Director-General.

(3) If any amount is paid by the payer to the Director-General or collected by the payer from the Director-General under this Section -

(a) The Director-General shall apply this amount in the manner provided in section 110 to the payment of tax due from the person with whom the payer was

obliged to pay the interest or royalties to which this amount relates; and

(b) if the payer has not deducted that amount in paying interest or royalties in respect of that amount, it may collect that amount from that person as a debt to the payer.

(4) In this section, “person” includes a partnership. Application of sections 109 and 110 to income of a public entertainer

109A. The provisions of Sections 109 and 110 apply mutatismutandis to remuneration or other income in respect of services rendered or rendered in Malaysia by a public performer. Special income bracket tax deduction in certain cases from Malaysia

109B. (1) Where a person (referred to in this Section as "the payer") is responsible for making payments to a non-resident - (a) for services rendered by the non-resident or his employee in connection with the use of any property or rights, associated therewith, or the installation or operation of any plant, machinery or other equipment acquired from such non-resident;

(b) for technical advice, support or services related to technical administration or

Management of any scientific, industrial or

business venture, venture, project or undertaking; or

(c) for rent or other payment made under any agreement or arrangement for the use of movable property deemed to be of Malaysian origin, he shall deduct tax at the rate 053e.FM Page 224 when making the payment or crediting the payment Fifth Thursday, April 6, 2006 12:07 p.m. Income Tax 225

applicable to such payment and shall (whether or not such tax is deducted or not) account for and pay to the Director General the amount of such tax within one month of the payment or crediting of such payment:

Provided the general manager can...

(i) notify the payer in writing and require him to deduct and pay taxes with other charges or to pay or credit payments without tax deduction; or

(ii) allow, in special circumstances, an extension of the deadline for payment of the tax deducted.

(2) If the payer fails to pay any amount owed by him under paragraph (1), the unpaid amount shall be increased by an amount equal to ten percent of the tax-deductible payments under paragraph (1) (a), (b ) or (c) and the total amount is his debt to the Government and payable forthwith to the Director-General. (3) If any amount is paid by the payer to the general manager or collected by the general manager of the payer under this Section -

(a) The Director-General shall apply that amount in the manner provided for in Section 110 in the payment of tax levied by the person to whom the payer was obliged to make payment of that amount

refers to; and

(b) if the payer has not deducted that amount from the payment under subsection (1) to which the amount relates, he may collect that amount from that person as a debt to the payer.

(4) In this section, “person” includes an entity. Tax deduction for interest paid to a resident109C. (1) Where a person (referred to in this Section as “the Payer”) is responsible for the payment of interest (other than interest exempt from tax under this Act or an order issued under this Act) paid in Malaysia to a Malaysian resident person shall, in paying or crediting such interest, deduct therefrom the rate applicable to such interest and shall (whether or not taxis be deducted) within one month of the payment or crediting of 053e .FM

Calculate interest and pay the amount of this tax to the director:

Provided that the Director-General may, in special circumstances, permit an extension of the time limit for payment of the tax deducted.

(2) If the payer fails to pay any amount owed by him under paragraph (1), the amount which he fails to pay is his debt to the Government and shall be paid promptly to the Director-General.

(3) If any amount is paid under this section by the payer to the Director-General and the payer has not deducted that amount in making the payment under subsection (1) to which the amount relates, he may have that amount from that person collect as a debt to the payer. (4) In this section, “person” means a bank or financial entity licensed under the Banking and Financial Institutions Act 1989 [Act 372] or Islamic Banking 1983 [Act 276], incorporated cooperative, Bank Simpanan Nasional, Bank Pertanian Malaysia, Lembaga Urusan dan Tabung Haji, Malaysia Building Society Berhad or any other institution that may be approved by the Minister.

Tax deduction on the distribution of income from a fiduciary entity109D. (1) This section applies only to income from a unitary trust exempt under Section 61A.

(2) Where an investment trust (referred to in this section as a payer) distributes income to a non-resident shareholder who is deemed to be a Malaysian resident, the payer must deduct tax on the distribution of income at the appropriate rate applicable to such income and must within a month after the distribution of this income, pay and pay the amount of this tax to the Director General:

Provided the general manager can...

(a) notify the payer in writing and require him to deduct and pay tax at different rates or to distribute proceeds without deduction of tax; or

053 .FM Page 226 Thursday, April 6, 2006 12:07 p.m. Income Tax 227

(b) allow for an extension of the deadline for payment of the amount of tax deducted in special circumstances.

(3) If the payer fails to pay any amount owed by him under paragraph (2), that amount which he fails to pay shall be increased by an amount equal to ten per cent of his tax-deductible income under that paragraph, the entire sum being his debt to the Government and is paid immediately to the Director General.

(4) If any amount is paid by the payer to the Director-General or recovered by the payer from the Director-General under this Section -

(a) The Director-General shall apply that amount in the manner provided in Section 110 in the payment of tax due by the holder of the Share to whom the payment is made

distributes the income to which this amount relates; and (b) if the payer has not deducted such amount

distributes the rent in accordance with subsection (2) in respect of that amount, it may collect that amount from that Shareholder as a debt to the payer.

(5) § 110 applies accordingly to the tax deduction according to this section.

Compensation for taxes deducted

110. (1) All taxes deducted from dividends under Section 108, or from interest or royalties under Section 109, or from payments for services, technical advice, assistance, or rent or other income under Section 109B (including any amounts returned by the Chief) . Executive pursuant to subsection 109(2) or 109B(2), but excluding any increase thereto), if the dividends, interest, royalties, or payments for services, technical advice, assistance, or rent or other income are gross income of any person is a source of the base period of a calculation year, are offset against the tax that may be levied on their taxable income for that year.

(1A) Notwithstanding subsection (1), if tax is deducted on dividends paid, credited or distributed in the base period of a valuation year, it shall be deducted at the tax rate applicable for that year Malaysian Act ACT 53

Year of assessment and the tax rate for corporations changes for this year of assessment, the tax to be credited pursuant to paragraph 1 shall be deemed to be the tax to be deducted from this dividend in Article 108 paragraph 3.

(1B)(1E) (Excluded by Act A1093).

(2) Subject to this Section, if, in respect of any assessment year, Chapter 3 or Part III pursuant to Section 41 has been applied to an accounting period as if it were the base period for that assessment year and all dividends, interest, royalties, services, technical advice, assistance, Rent or other income was included in a person's gross earnings from their business for that accounting period, so...

(a) if such accounting period falls entirely within the base period for that valuation year, for the purposes of subsection (1), the dividend, interest, royalties,

Services, technical advice, assistance, rent or other income shall be deemed to be included in that person's gross income from that business for that base period for that year and the dividends, interest, royalties,

services, technical advice, support, rent or other revenue;

(b) whether such accounting period overlaps with the base period for that assessment year –

(i) the dividend, interest, royalties, services,

technical advice, assistance, rental or otherwise

Income and taxes are deducted from this

be distributed in the manner provided by the

subsection 41(2);

(ii) the portion of dividends, interest, royalties, services, technical advice, assistance, rent or other income also allocated to the overlapping portion of that accounting period

will be treated for the purposes of the subsection

(1) as dividends, interest, royalties, services,

technical advice, assistance, rental or otherwise

Income included in that person's gross income

this deal for the base period for it

Year; and

(iii) in relation to the part of the dividend, interest, royalties, services, technical advice, support,

053 .FM Page 228 Thursday, April 6, 2006 12:07 AM Income Tax 229

Any rent or other income contained therein must be taken into account

for the purposes of paragraph 1 of the

part of this tax is thus distributed to the

overlapping portion of that billing period.

(3) Notwithstanding paragraphs (1) and (2), if interest, royalties, services, technical advice, assistance, rent or other income is included in a person's gross earnings from an enterprise for the assessment period of one year or , pursuant to Section 41, for any accounting period, as if it were the base period for that year, then if interest, royalties, services, technical advice, assistance, rent or other income, or any portion thereof, is paid to that person after the end of that accounting period or At the end of the accounting period, such tax deducted therefrom shall be offset against any tax levied on his taxable income for the assessment year following the year in which he received interest, royalties, services, technical advice, assistance, rent or other income or any part thereof been paid or, if no tax is payable, the tax so deducted to you will be refunded.

(4) For purposes of subsection (1), if, by virtue of any provision of Sections 55 through 59, dividends, interest, royalties, services, technical advice, assistance, rent or other income is a person's gross income from any property or continuation of his business for the base period of an assessment year, only part of the tax shall be deducted under paragraph 1 from such dividends, interest, royalties, services, technical advice, assistance, rent or other income that he has in the same proportion to the amount of that tax as you do Share of that entity's divisible income for that period is charged on that entity's divisible income for that period. (5) For the purposes of subsections (1) and (2), if, by virtue of any provision of Sections 55 through 59, dividends, interest, royalties, services, technical advice, assistance, rent or other income are included in the gross income of any one property or an enterprise in perpetual possession of his periodic account, then in respect of the amount of tax referred to in those subsections in respect of that person, but for that subsection only an equal share of that amount should be considered his share of that enterprise's divisible income for that period will be charged to that company's divisible income for that period.

053e.FM Page 229 Thursday April 6, 2006 12:07 PM230 Malaysian Law ACT 53

(6) In all cases to which paragraph (4) or (5) applies, paragraph (3) shall be amended accordingly, as the case may be. (7) For the purposes of the preceding subsections, if only a portion of dividends, interest, royalties, services, technical advice, assistance, rent or other income is a person's gross income from an own source for the base period of a year of assessment or for a Accounting period treated as if it were the base period of that year, taking into account this part and for that purpose any taxes deducted from such dividends, interest, royalties, services, technical advice, assistance, rent or other income which has the same proportion of that tax as the value of that portion of the dividends, interest, royalties, services, technical advice, assistance, rent or other income levied on the total of the dividends, interest, royalties, services, technical advice, assistance, Rent or other income, depending after case; and therefore where this subsection applies --

(a) the reference in subparagraph (2)(b)(i) to dividends, interest, royalties, services, technical advice, assistance, rent or other income shall be deemed a reference to that part;

(b) The reference in subparagraph (2)(b)(i) to taxation shall be construed as a reference to the extent

mentioned above; and

(c) The reference in subparagraph (2)(b)(ii) to the dividend, interest, royalties, services, technical advice, support, rent or other income portion shall be deemed to be part of that dividend, interest, royalties, services portion , technical advice,

Help, rent or other income.

(8) Any tax payable on a person's legal income from his or her ordinary source in respect of a trust for any assessment year (other than a portion of the total income of the corporation of the trust for that year which has been deducted from that total income in a given taxable year Trustee's Income for that year), where statutory income is included in an individual's total income for an assessment year, will be offset against tax, if any, levied on that individual's taxable income for that tax year assessment.

(9) For the purposes of paragraph (8), the tax applicable to the statutory income for a year of assessment of any person of yours

Ordinary source in respect of a trust shall be deemed to be an amount for that year which is in the same proportion as the taxable amount on income attributable to the trustee of the trust for that year (or, if the trustee is entitled to an Section has the aid funder.

(9A) Notwithstanding subsections (8) and (9), if income distributed by a common fund is included in a person's total income for a year of assessment, tax levied on the common fund shall be included in the income included in that person's total income (or, if where the trust is entitled to an exemption under Section 132 or 133, such tax less the amount of such exemption) will be credited against any tax which may be charged on that person's taxable income in that person's assessment. (10) In any event to which paragraph 4 of subsection 68 applies, income of a recipient is distributed to an eligible person and such income is that person's gross income from its source up to the base period of any assessment year, any paid by the liquidator and such offsetting any taxes attributable to gross income against the tax due on that person's taxable income for that year (the amount of any tax so allocated will be determined by the General Manager).

(11) Where tax under this section is, or would have been, offset against tax assessed for a year of assessment if any tax had been offset, the tax offset or offset shall not be offset against tax assessed for any other assessment year.

(12) Where paragraph 45(2)(a) applies to an individual and his or her spouse for an assessment year, any reference in the preceding subsections to an individual shall be deemed to apply to that individual and spouse for the purposes of those subsections for that year Reference to that person, including that wife, shall be construed as if he were that person and where paragraph 45(2)(b) applies, this subsection shall apply mutatis mutandis.

(13) If tax has been or is to be accounted for in respect of a dividend in accordance with subsection (1) and the Chief Executive Officer determines that the corporation which paid, credited or distributed the dividend for which the tax in accordance with subsection 108 was deducted (1) or deemed 053e .FM Page 231 Thursday April 6, 2006 12:07 PM232 Malaysian Laws ACT 53

deducted under subsection 108(2) has made no or an underpayment of tax under section 103 or made an installment under section 107C or made the excess referred to in subsection 108(6) or (9), the director-general, having regard to all the circumstances, may, if he does so deemed necessary - (a) declare such dividend on a net basis and no tax shall be accounted for under paragraph (1) in determining the Shareholder; or

(b) make such assessment under Section 91 in respect of the Shareholder where tax has been offset under subsection (1) to offset any benefit of the offset tax and if such assessment is made the Shareholder will do so for the tax on such dividend on a net basis and no tax will be accounted for under paragraph (1).

An offshore company is not entitled to 110A compensation. Notwithstanding subsection 110(1), if an offshore company receives a dividend from which tax has been deducted in accordance with Section 108, the tax so deducted will not be offset against the tax levied on the offshore company's chargeable income.

Refund of Overpayments

111. (1) Subject to this Section, if it is proved to the satisfaction of the Director-General that a person has paid tax (by deduction or otherwise) for any year of assessment in excess of the amount due under this Act, that person shall be liable to pay the right to a Government refund of the deductible and, if that person is not satisfied with the amount to be refunded, may appeal to the Special Commissioners within thirty days of notification of that amount, as if the notification were a notice of tax, the provisions of this Act on applicable remedies are subject to any necessary changes.

(1A) If a corporation has filed a tax return under subsection 77(1A) for a year of assessment with the Chief Executive Officer and that corporation has taxed in excess of the amount payable -

053 .FM Page 232 Thursday, April 6, 2006 12:07 p.m. Income Tax 233

(a) such statement shall be deemed a notice under subsection (1); and

(b) such company shall be deemed to have been notified of the excess amount on the date the declaration is made. (1B) Where subsection (1A) applies -

(a) the reference to the tax shall be deemed to indicate a tax withholding amount under section 110; and

(b) the reference to the amount payable shall be construed as a reference to the amount of tax payable before accounting for tax under section 110.

(2) A claim for a refund under this section is only valid if it is made within six years of the end of the accounting year to which the claim relates, or if the claim is for a refund of the tax levied by an assessment, within of six years after the end of the assessment year in which this assessment was made.

(3) Nothing in this section shall work –

(a) to extend any appeal period, validate an otherwise invalid appeal, or authorize review of any review or other matter that has become final and final; or

(b) to compel the government to reimburse (by deduction or otherwise) the amount of tax overpaid in connection with a valuation, unless the valuation has been finally determined.

(4) The agent of an incapacitated or deceased person shall be entitled to a refund under paragraph 1 in favor of that person or his estate for any excess referred to in that paragraph and for the purposes of this paragraph a payment of tax by that person's agent shall be deemed done by that person.

(5) Notwithstanding Section 108 (11), a payment to settle or partially settle a debt of the type referred to in Section 108 (6), (9) or (10) shall be deemed to be a payment of taxes for the purposes of this section.

(6) In this section--

053e.FM Page 233 Thursday April 6, 2006 12:07 PM234 Malaysian Law ACT 53

“Disabled Person”: a person who, through disability, bankruptcy or liquidation, or any other reason, is unable to manage his or her own affairs;

"Representative" means, in the case of a deceased person, their executor and, in the case of a person with a disability, the guardian, commissioner, receiver, receiver or other person who administers or controls their estate, property, property or business. No - an offshore company's right to reimbursement

111A. Notwithstanding Section 111, where tax has been deducted under Section 108 from a dividend received from an offshore company, that offshore company shall not be entitled to a refund of the tax so deducted from the Government.

PART VI

TAX REFUND FUND

Establishment of a tax refund fund

111B. (1) A fund known as the Tax Refund Fund (hereinafter referred to as the "Fund") is hereby established, as provided for in Schedule Two of the Financial Procedure Code Act, 1957 [Act 61].(2) From time to time the amount of tax levied under this Act paid to the Fund with the approval of the Minister.

(3) Funds from the Fund shall be used for the reimbursement of any amount of tax paid in excess of the amount payable under Section 111 of this Act, or for any other reimbursement or payment payable by the Fund under the provisions of any other written Act .

(4) The Fund is managed by the Accountant General of Malaysia.

(5) Notwithstanding paragraph (2) and the Financial Procedure Code Act 1957, the Secretary of State may from time to time authorize the deposit of all or any part of the Fundo's monies into the consolidated revenue account in the Federal Consolidated Fund. 053d.FM Page 234 Thursday, April 6, 2006 00:07 Income Tax 235

Inapplicability of Section 14A of the Financial Procedure Act 1957

111C. Section 14A of the Financial Procedures Act 1957 does not apply to refunds in excess of the amount payable under Section 111.

PART VIII

INJURIES AND PENALTIES

Failure to Provide Feedback or Notify Enforceability

112. (1) Anyone who fails to submit a declaration pursuant to Section 77 (1) or Section 77A (1) or to report a complaint pursuant to Section 77 (3) shall, if he does so without a valid excuse, commit and im If convicted, shall be punishable by a fine of not less than two hundred ringgit and not more than two thousand ringgit or imprisonment for a maximum of six months, or both.

(2) In all proceedings pursuant to paragraph 1, the accused person bears the burden of proof for the return or notification.

(2A) If a person has been convicted of an offense under subsection (1), the court may issue a further order that the person comply with the relevant provision of this Act under which the offense was committed within thirty days or such other period shall comply at the discretion of the court from the date of application. (3) If, with respect to any year of assessment, a person fails to provide a declaration under subsection 77(1) or 77A(1) or to withdraw under subsection 77(3) and no proceeding under subsection (1) has been taken in connection therewith default introduced--

(a) The Director-General may require that person to pay a fine equal to three times the amount of tax due prior to any offset, refund or reduction under this Act for that year; and

(b) if that person pays that penalty (or, if the penalty is reduced or waived under subsection 124(3), the greater portion of the penalty not reduced, if any, or: 07 PM236 Malaysian Law ACT 53

enacted), he is not liable for the same facts as a criminal offense under paragraph 1.

incorrect returns

113. (1) Any person who (a) makes a false statement by omitting or understating any income for which he is required under this Act to make a declaration on his or her behalf or on behalf of any other person; or (b) makes false statements in relation to any matter affecting your own tax liability or the tax liability of any other person,

failing to satisfy the court that the false statement or misinformation was made or given in good faith shall be guilty of an offense and shall, if convicted, be fined not less than one thousand ringgit and not more than ten thousand ringgit and has to pay a special penalty equal to twice the tax which was undercharged as a result of the incorrect declaration or incorrect information or which would have been underestimated if the declaration or information had been accepted as correct. (2) If a person--

(a) misrepresents, by omitting or understating, any income that he is required to disclose under this Act on his own behalf or on behalf of another person; or (b) makes false statements in relation to any matter affecting your own tax liability or the tax liability of any other person,

If no proceeding has been instituted under subsection (1) in respect of the misstatement or misstatement, the Director-General may require that person to pay a penalty equal to the amount of tax undercharged as a result of the misstatement or misstatement or that you would have been charged less if the return or information had been accepted as correct; and if that person pays that fine (or, if the penalty is reduced or waived under subsection 124(3), so much of the penalty that was not reduced or waived, if any), he cannot be charged with the suspected facts under paragraph 1 .

053 .FM Page 236 Thursday, April 6, 2006 12:07 AM Income Tax 237

intentional evasion

114. (1) Any person who willfully and willfully evades taxes or assists another person in evading taxes—

(a) omit in a statement under this Act any income that must be included;

(b) makes a false statement or entry in any statement made under this Act;

(d) creates or maintains or authorizes the creation or maintenance of false accounts or other false records;

(e) falsify or authorize the falsification of any books or other records; or

(f) uses or authorizes the use of fraud, art or device,

be guilty of an offense and, if convicted, face a fine of not less than one thousand ringgit and not more than twenty thousand ringgit or imprisonment for a maximum of three years, or both, and pay a special penalty of three times the amount of tax under-levied as a result of the offence was or would have been underestimated if the breach had not been detected. (1A) Any person who assists or advises in connection with the preparation of a return when the return would result in an understatement of another person's tax liability is guilty unless he persuades the court that the assistance or advice has been done with reasonable care a criminal offense and, if convicted, shall be punishable by a fine of not less than two thousand ringgit and not more than twenty thousand ringgit or imprisonment for a maximum of three years, or both. (2) If it is established in any proceeding under this Section that a false statement or false entry (whether by omission or otherwise) was made on any statement made under this Act by or on behalf of any person or in business books or others Records kept by or on behalf of a person, that person053e .FM page 237 Thursday 6th

Until proven otherwise, it is assumed that he made this false declaration or entered the country with the intention of evading taxes. Get out of Malaysia without paying taxes

115. (1) Any person leaving or attempting to leave Malaysia voluntarily without paying or providing security for the satisfaction of all taxes, fees and charges specified in the certificate, knowing that he is entitled to a certificate under Section 104 The Director General for payment of the same shall be found guilty of an offense and, if convicted, shall be fined not less than two hundred ringgit and not more than two thousand ringgit or imprisoned for a period not exceeding six months or both.

(2) A police or immigration officer may, without a warrant, arrest any person whom he reasonably suspects of committing or committing an offense under this section. (3) In this Section, “immigration officer” has the same meaning as in Section 104.

obstruction of officials

116. Any person who (a) obstructs or denies entry into any country to the Director-General or any authorized officer,

building or premises according to § 80;

(b) prevent the Director General or any authorized officer from discharging his duties under this Act;

(c) refusing to produce any books or other documents in his custody or under his control because he is required to do so by order of the Director General or an authorized officer within the meaning of this Act;

(d) fails to provide the Director-General or any authorized officer with adequate facilities or assistance, or both, in the exercise of his powers under this Act; or

(e) refuses to answer any questions for any of these purposes which the Director may lawfully ask of him

general or an authorized officer,

053 .FM Page 238 Thursday, April 6, 2006 12:07 AM Income Tax 239

be guilty of a criminal offense and, if convicted, be fined not less than one thousand ringgit and not more than ten thousand ringgit or imprisoned for a period not exceeding one year, or both.

breach of trust

117. (1) Any person found to be in violation of Section 138 -

(a) disclose classified information to any other person; or

(b) grant another person access to classified information;

guilty of a criminal offense and, if convicted, shall be fined not more than four thousand ringgit or imprisoned for a term not exceeding one year, or both.

(2) In this section, "VS" and "VS" have the same meaning as in Article 138.

crimes committed by employees

118. Any person performing an official function under this Act that (a) contrary to good faith demands from a person an amount in excess of any tax or fine due under this Act;

(b) withhold for its own use or otherwise any portion of any taxes or penalties imposed or received by it; (c) otherwise than in good faith, makes a false report or returns (orally or in writing) the amount of any tax or fine imposed or received by him;

(d) defraud any person, embezzle money or

otherwise uses his position to deal unfairly with the CEO or others,

guilty of a criminal offense and, if convicted, shall be fined not more than twenty thousand ringgit or imprisoned for a maximum of three years, or both.

053e.FM Page 239 Thursday 6 April 2006 12:07 PM240 Malaysian Law ACT 53

unauthorized pickup

119. Any person who, without being authorized to do so by this Act, levies or attempts to levy taxes or fines under this Act is guilty of an offense and, if convicted, shall be liable to a fine not exceeding twenty thousand ringgit or imprisonment of a maximum of three years or both.

Failure to keep records

119A. Any person who, without reasonable excuse --(a) fails to comply with an order or notice under subsection 82(3) or (5); or

(b) violates Subsection 82(1), (1A), (6), (7) or (8) is guilty of a criminal offense and, if convicted, shall be fined not less than three hundred ringgit and no more than ten thousand ringgit or imprisonment not exceeding one year or both.

other crimes

120. (1) Any person who, without good excuse, fails to: (a) comply with a notice under section 78, 79, subsection 80(3), section 81, subsection 84(1), section 85 or 87;

(b) fails to comply with an order under subsection 83(1);

(d) violates subsection 84(2), 86(1), section 89 or subsection 153(1);

(e) failure to comply with any instruction under

Section 83 (5) or Section 107;

(f) fails to provide an estimate under subsection 107C(2), 107C(3) or paragraph 107C(4)(a); or

053 .FM Page 240 Thursday, April 6, 2006 12:07 p.m. Income Tax 241

(g) fails to make a declaration or to provide the information required in the declaration pursuant to paragraph 5 of subsection 108;

be guilty of a criminal offense and, if convicted, shall be fined not less than two hundred ringgit and not more than two thousand ringgit or imprisoned for a maximum of six months, or both.

(2) If a person has been convicted of an offense under subsection (1), the court may issue an additional order for the person to comply within thirty days with the relevant provision of this Act under which the offense was committed, or any other such Such period as the court deems appropriate from the date of the order.

Section 121. (1) Prosecution for a criminal offense pursuant to Sections 113, 115, 116, 118 or 120 may only be initiated twelve years after the commission of the criminal offense.

(2) Anyone who supports, instigates or incites another person to commit a criminal offense pursuant to Sections 113, 115, 116 or 118 commits the same criminal offense and shall be punished with the same penalty.

Taxes etc. due despite the initiation of proceedings

122. The commencement of any proceeding or the imposition of any penalty, special penalty, fine or imprisonment under this Part shall not relieve any person from the obligation to pay any tax (or any penalty deemed to be taxable by another Party). Act) or any debt or other sum for which he is or may be required to make any restitution that he is required to make under this Act.

123. (Excluded by Act A1028). Power to aggravate crimes and reduce or waive penalties

124. (1) If a person has committed an offense under this Act, the Director-General may at any time prior to a conviction.

aggravate the offense and require that person to pay such an amount of money not exceeding the amount of the maximum fine and any special penalty that person would have been subject to if convicted of the offense as he or she deems appropriate: provided that the Director-General shall not exercise any powers under this Section unless such person admits in writing that he has committed the offense and requests the Director-General to deal with the offense in accordance with this Section.

(2) When the Director-General, pursuant to this section, aggravates an offense committed by a person and issues an order to that effect:

(a) The application must be made in writing and in the hand of the Director General, and the written approval and application referred to in the

paragraph (1);

(b) the order must state:

(i) the crime committed;

(ii) the amount of money ordered for payment; and

(iii) the date on which payment is due or the dates on which installments of that amount are due

be paid, if

and if the order requires payment by

Installments and default in payment of any installments, the entire balance then due shall become due immediately;

(d) that person will not be held liable in any proceeding or, as the case may be, other proceeding relating to the offense and if such proceeding or other proceeding is instituted it will provide a good defense to that person that the offense has been committed

links under this section;

(e) the order is final and not subject to appeal;

(f) the order may be enforced in the same manner as a judgment of a lower court (as defined in

053 .FM Page 242 Thursday, April 6, 2006 12:07 p.m. Income Tax 243

Attachment 5) for payment of the amount contained in the order or the outstanding amount; and

(g) the order, if brought before a court, will be treated as evidence of that person's commission of the offense and the other matters set out therein.

(3) The Director-General may reduce or cancel any penalty imposed under this Act, except for a penalty imposed by conviction. Recovery of penalties imposed under Part VIII

Section 125. (1) Special penalties imposed pursuant to Section 113 (1) or Section 114 (1) shall be reimbursed in the same way as fines imposed as a result of a conviction.

(2) Any penalty imposed on a person under subsection 44A(9), 112(3) or 113(2) shall be calculated as if it were part of the tax payable by that person but shall not be counted as payable Tax addresses purposes of a provision of this Act other than Sections 103 through 106.

Jurisdiction of the lower court

126. Notwithstanding any other written statute, a lower court (as defined in Schedule 5) shall have the power to try any offense under this Act and, upon conviction, to impose the full sentence.

PART IX

EXEMPTIONS, DECREES AND OTHER DECREES

Tax exemptions: general

127. (1) Notwithstanding any other provision of this Act, but subject to Section 127A, all items of income listed in Part I of Schedule 6 are exempt from tax, subject to this Section. (2) The Dewan Rakyat may, by resolution, delete any paragraph or item in Schedule 6 or add further paragraphs or items to it.

053e.FM Page 243 Thursday 6 Apr 2006 12:07pm244 Malaysian Law ACT 53

(3) The Minister may by ordinance

(a) to provide that interest payable on a loan payable to the Consolidated Fund or a State Consolidated Fund shall be exempt from tax either generally or in respect of interest payable to persons of a particular class;

(b) exempt any category of persons from all or any provision of this Act, either generally or in respect of income of a particular kind or any class of income of a particular kind;

(c) designate part of the Forces in addition to the Forces referred to in that paragraph as a reserve force for the purposes of paragraph 9 of Part I of Annex 6; or

(d) amend paragraph 18 of Part I of Annex 6 by adding other goods to those mentioned therein

paragraph or by deleting any of the goods so

mentioned.

(3A) The Minister may in any particular case exempt a person from all or some of the provisions of this Act, either generally or in relation to income of a particular kind or any kind of income of a particular kind.

(4) All applications under subsection (3) must be submitted to the Dewan Rakyat.

(5) Any income exempt from tax under this Section shall be disregarded for the purposes of this Act: provided that -

(a) this Subsection does not apply to Sections 107A, 108, 109 or 109B; and

(b) any tax deducted from income under Section 107A, 108, 109 or 109B will be returned under Section 111.

(6) Nothing in this section shall be construed to exempt, in the hands of a recipient, any income with respect to dividends, interest, bonuses, wages or wages paid in whole or in part from exempt income under this section, unless because the income mentioned first is itself tax-free.

053 .FM Page 244 Thursday, April 6, 2006 12:07 p.m. Income Tax 245

termination of liberation

127A. (1) Notwithstanding any other provision of this statute or any other written statute, if a person's income is exempt by virtue of a repealed statute and the exemption is deemed to have been granted by an order under Section 127, that exemption shall end. (2) ) In this section, "repealed right" has the same meaning as in Schedule 9.

128. (Excluded by Law 624) Tax Waiver

129. (1) Taxes paid or payable by a person may be remitted in whole or in part -

(a) for reasons of poverty, by the Director General; or (b) in the interests of fairness and equity by the Minister and any tax so paid shall not be deemed to be tax payable for the purposes of any other provision of this Act.

(2) Where a person who has been granted a waiver under subsection (1) has paid any tax to which the waiver relates, he shall be entitled to a refund of the amount he has paid as if it were an overpayment. Section applies 111. Other exemptions

129A. Notwithstanding any other provision of this Act, the Secretary may, for the purposes of Section 127, grant any relief in relation to the treatment of expenses, losses and capital deductions to arrive at a person's taxable income as he thinks fit unless otherwise provided in this Act is determined. Nonresident Citizen Assistance

130. (1) A person who is a citizen but has no resident in the base year of an assessment year shall be exonerated for employment outside Malaysia in the public service or in the service of a statutory authority.053e .FM Page 245 Thursday April 6, 2006 12 :07 am246 Malaysian Law ACT 53

(2) The exemption reduces the amount of tax that is levied on him in relation to his taxable income for that year of assessment to an amount that is in the same proportion as the amount of tax that would be levied if he were a resident of Germany that year and tax was levied on your total income because the value of your total income equals the value of your total income.

(3) An individual requesting an exemption under this Section shall make his request on the prescribed form and provide any additional details the Director-General may request.

(4) In this section, “total income” in relation to an individual claiming a tax allowance under this section for a assessment year means their total income accrued or received in Malaysia or elsewhere and calculated in accordance with the provisions of this Act:

To the extent that paragraph 2 of subsection 45 applies to the calculation of total income, reference to total income includes the total income of the elector, as the case may be.

Relief in respect of mistake or error

Section 131. (1) If a person who has paid taxes for an assessment year claims that a charge for that year is excessive because of a mistake or error in a statement or statement made by him for the purposes of this Act and which he to the Director-General before the assessment is final and final, he may apply in writing to the Director-General for a remedy within six years of the end of the assessment year in which the assessment was made. (2) Upon receipt of a request under subsection (1), the Director-General shall investigate the matter and fairly and reasonably grant such exemption in respect of the alleged error or apparent oversight in accordance with this section in the form of a tax refund.

(3) In deciding on applications under this Section, the Director-General shall take into account all relevant circumstances of the case and in particular:

053 .FM Page 246 Thursday, April 6, 2006 12:07 p.m. Income Tax 247

(a) determine whether granting the exemption would result in the applicant's income tax being excluded; and

b) To this end, it may take into account the applicant's request for credit years other than the year to which the application relates and the statement issued to him.

(4) No exemption shall be granted under this section in respect of any error or misunderstanding as to the basis on which the applicant's enforceability should have been calculated if the statement or statement containing the error or error is in fact based on was made, or in accordance with the general practice of the Director-General at the time the declaration or declaration was made.

(5) A claim under paragraph 1 must be equivalent to a complaint under Section 99 as far as possible; and if the applicant is disadvantaged by the Director-General’s decision on the application –

(a) The applicant may, within six months of the notification of the decision, request in writing that the Director-General forward the application to the Special Commissioners;

(b) The Director-General shall, within three months of receipt of the application, make the application as if he were lodging an appeal under the

section 102; and

double tax treaty

132. (1) When the Minister declares by ordinance that - (a) the arrangements referred to in the ordinance have been made by the Government with the Government

Territories outside of Malaysia to be exempt from double taxation in respect of taxes under this Act and any foreign taxes in that territory; and

(b) it is expedient for these regulations to take effect,

053e.FM Page 247 Thursday 6 April 2006 12:07 pm248 Malaysian Law ACT 53

then such arrangements shall have effect with respect to taxation under this Act for so long as the order remains in force, notwithstanding any provisions of any written Act.

(2) Where agreements are in force under this Section, Section 138 shall not preclude the disclosure of such information as is required to be disclosed under the agreements to a duly authorized official or agent of the Government with whom agreements have been made.

(3) The relevant provisions of Schedule 7 shall apply where, under any arrangement governed by this Section in respect of a territory outside Malaysia, foreign taxes payable under the laws of that territory are offset against those payable hereunder Taxes are allowed by law.

(4) Any agreement given effect under this Section may include:

(a) Tax Exemption Provision for Persons of a Certain Class;

(b) provisions for income not itself subject to double taxation;

(c) Provision to exempt a person or a person of a certain class from tax or to exempt (in whole or in part) the income of a person or a person of a certain class from tax; and

(d) in addition to the double taxation relief provisions, other provisions relating to taxes under this Act or foreign taxes of the jurisdiction to which the Conventions relate;

and any agreement containing a provision may remain in effect with respect to that provision for periods prior to the enactment of this Act or prior to the conclusion of the agreements and the subsections above shall be construed accordingly. (5) Where--

(a) any bilateral relief (as defined in Schedule 7) must be granted to a person for one year of evaluation pursuant to an order under this Section; and

(b) for the year ended before the date of this order, 053e .FM page 248 Thursday, April 6, 2006 12:07 p.m. Income Tax 249

any unilateral relief (for the purposes of this Schedule) granted to that person under Section 133 that year will no longer be granted after that date; and if he was granted a unilateral remedy that year, the amount of that bilateral remedy will be reduced by the amount of the unilateral remedy granted.

(6) Any order placed under this section must be presented to the Dewan Rakyat.

Unilateral relief from double taxation

133. Relief from double taxation with respect to tax under this Act and any foreign tax from a territory where no order under Section 132 is in force in respect of that territory shall be granted in accordance with the relevant provisions of Schedule 7: Provided that no exemption shall be granted under this Section with respect to taxes payable under the laws of any province or other part of that territory, or taxes imposed by or on behalf of any municipality or other local entity.

PART IX

SPECIAL INCENTIVE RELIEF

special incentive relief

133A. Notwithstanding any other provision of this Act, special incentive benefits are granted in accordance with Schedule 7A and Schedule 7B.

PART X

ADDITIONALLY

Chapter 1 - Administration

The manager and his team

Section 134. (1) There will be a director general of federal finances who will take care of and administer the tax.

(1A) The Executive Director of the Inland Revenue Board of Malaysia appointed pursuant to Section 6A of the Inland Revenue Board of Malaysia Act 1995 is the Director General of the Inland Revenue Board.

(2) The Minister, after hearing the Director General of Federal Treasury, appoints by notice in the Diário da República --(a) two or more Deputy Directors General of Federal Treasury;

(b) state directors, directors, deputy directors, chief deputy directors and deputy directors of InlandRevenue;

(c) Chief Tax Counsel, Deputy Tax Counsel, Chief Tax Advisors and Tax Advisors; and (d) other directors necessary and expedient for the proper administration of this Act,

among the staff of the Inland Revenue Board of Malaysia.

Power of the Minister to give instructions to the Director General

135. The Minister may give instructions of a general nature (not contrary to this Law) to the Director-General in relation to the exercise of the Director-General's duties under this Law; and the Director-General will carry out all instructions so given.

Delegation of CEO functions

136. (1) Any function of Director-General under this Act (other than a function exercisable by statutory instrument or Section 152) may be exercised by a Deputy Director-General.

(2) Any officer appointed pursuant to Section 134(2)(b) and (c) may hold any office of director-general under this Act (no office executable by statutory order or any office on Thursday). , April 6, 2006 12:07 p.m. Income Tax 251

exercisable according to § 152), with the exception of his function according to § 44 paragraph 137 paragraph 1 and § 150.

(3) (Excluded by Law 644).

(4) (Excluded by Law 644).

(5) The Director General may authorize in writing any officer or employee of the Inland Revenue Board of Malaysia (subject to the exceptions or limitations contained in the authorization) to perform or assist in the performance of any function of Director General under this Act, provided for by paragraph ( 2) Can be exercised by the appointed officers.

(6) When an officer or employee of the Inland Revenue Board of Malaysia performs any of the duties of the Director-General under any provision of Subsections (1) to (5), he must do so under the supervision and control of the Director-General.

(7) The delegation by or pursuant to any provision of subsections (1) through (5) of the exercise of any function of the Director-General shall not preclude the exercise of such function by the Director-General himself.

(8) References in this Act to the Director-General shall be construed in relation to any case where an officer or employee of the Inland Revenue Board of Malaysia is authorized by a provision of Subsections (1) to (5) to perform the functions of Director-General , including references to that director or employee.

employee identification

137. (1) Any person exercising a right of access or possession under Section 80 shall carry with him an arrest warrant in the prescribed form issued by the Director-General (or in the case of a warrant issued to the Director-General by a Deputy Director-General), identifying the Holder and his or her position and submitted by the Holder upon request of any person who has legitimate grounds for making the request.

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(2) If a person posing as an officer or employee of the Inland Revenue Board of Malaysia and carrying out duties under this Act produces an order in the form prescribed in subsection (1) or produces written identification or a written power of attorney, then, until proven otherwise, the search warrant, identification or power of attorney must be presumed to be genuine and presumed to be the person named therein. Certain material must be kept confidential

138. (1) Subject to this section, each classified person shall examine and handle material classified as confidential; and if he is an official, he shall make and sign a declaration to the prescribed authority in the prescribed form that he will do so.

(2) No Confidential Material shall be created or used in court or otherwise, except

(a) for the purposes of this Act or other tax laws; (b) initiating or assisting in the prosecution of any criminal offense relating to tax or relating to any tax or charge imposed by any other tax law; or

(c) with the written permission of the Minister or of the person or company to whose affairs it relates. (3) An official is not required of any court –

(a) create or distribute classified material made available to him or any other employee, except by or on behalf of the person or entity whose business it concerns; or

(b) to identify the person who provided the material. (4) Nothing in this section excludes:

(a) the creation or disclosure of material confidential to the Auditor General (or officers under his direction and control) or the use of material classified by the Auditor General to the extent

053 .FM Page 252 Thursday, April 6, 2006 12:07 AM Income Tax 253

necessary or expedient for the proper performance of the functions of his position;

(b) the Director-General, from time to time, in such a manner as he deems appropriate, to disclose the following details in relation to any person found guilty or convicted of a crime under this Act or treated under subsection 113 (2 ) or Section 124- -(i) Name, address and occupation or other

description of the person;

(ii) such details of the offense or tax evasion as the Director General deems appropriate;

(iii) the year or years of verification to which the breach or tax evasion relates;

(iv) the amount of undisclosed earnings;

(v) the total amount of evaded taxes and fines (if any) levied or imposed;

(vi) the penalty or other order imposed:

Provided that the Director-General may refrain from disclosing details of any person to whom this paragraph applies if the Director-General is satisfied to do so before an inquiry or inquiry into a criminal offense or circumvention has been opened

pursuant to Section 113 or 114, such person has voluntarily fully and disclosed to the General Manager or an authorized officer

Details of any such crime or tax evasion.

(5) In this section--

"Other Tax Law" means any regulation repealed in its entirety by this Act, any written law relating to estate tax, film distribution tax, payroll tax or sales tax and any other written law declared by statutory order by the Minister and other tax law for the purposes of this section;

"Classified Information" means any statement or other document prepared for the purposes of this Act relating to the income of a person or entity, and any information or other matter or thing, which comes to the knowledge of a person classified as such ;

053e.FM Page 253 Thursday April 6, 2006 12:07 PM254 Malaysian Law ACT 53

"classified person" means...

(a) an employee;

(b) the Auditor General and officers under his direction and control;

Person who does or advises whether he is a worker and in his capacity as such has access to classified information

Material; or

(d) all employees of the Inland Revenue Board of

Malaysia;

"Official" means a person who has an official duty under this Act or is employed in fulfilling the provisions of this Act. Chapter 2 - Controlled Entities and Powers to Protect Income in Certain Transactions

controlled companies

Section 139. (1) For the purposes of this Act, a person controlling an enterprise is -

(a) when he exercises or may exercise control (directly or indirectly) over the affairs of the Company, or has the right to exercise control over the affairs of the Company, and in particular without prejudice to the generality of the preceding words, if he

owns or has the right to acquire the majority of the share capital or voting rights of the company; (b) whether it owns or has the right to acquire any of these; (i) the majority of the issued share capital of the company;

(ii) that portion of that capital which would be if the total income of the Company were actual

distributed to members, give the right to do so

get most of the value that way

distributed; or

(iii) the redeemable share capital entitling to receive the highest share

Part of the property that

053 .FM Page 254 Thursday, April 6, 2006 12:07 AM Income Tax 255

billing, would be available for distribution

among the members; or

(c) whether, in the event of liquidation, he would be entitled to most of the property available for distribution among the members.

(2) If, in relation to an enterprise, two or more persons satisfy any of the conditions of subsection (l), they are presumed to control the enterprise.

(3) For the purposes of paragraphs (1) and (2), each person shall be entitled to any right or power of a nominee over him, i.e. H. to any right or power which any other person has or may be required to exercise on his behalf or on his behalf.

(4) Where the trustees of a trust are members of a controlled company, only one of such trustees shall be deemed a member thereof; and if each such trustee is a person of the kind referred to in subsection (1) or (2), only one of such trustees shall be deemed to be a person of that kind. (5) For the purposes of subparagraph (1)(b)(iii) and paragraph (c) any person who is a borrower of a company loan (other than loan principal or debt instruments obtained from the company through money lent to the company in the ordinary course of a banking transaction carried out by it) may be treated as a member, and references to Share capital can be treated as including loan capital.

(6) For the purposes of subsection (l), any person may be vested with all the rights and powers of any corporation that he or she and his employees have, or two or more of those corporations, or by any employee of his or two or more of his employees , including those assigned to a company or an affiliate under subsection (3), but not those assigned to an affiliate under this subsection; and such assignments shall be made in accordance with this Subsection so that the Company shall be treated as if controlled by five or fewer persons, where practicable.

(7) In this section--

"Partner" means in relation to an individual -

053e.FM Page 255 Thursday 6 Apr 2006 12:07pm256 Malaysian Law ACT 53

(a) a person in any of the following relationships to that person, i.e. husband or wife, parent or distant ancestor, child or distant descendant, brother, sister and partner;

(b) the trustee or trustees of any arrangement in respect of which such person or a relative of such person (living or deceased) is or was a settlor within the meaning of paragraph (a) of this definition ("settlement" and "settor" have). same meaning here as in paragraph 65);

(c) where such person has an interest in any shares or liabilities of a company which are subject to a trust or form part of the estate of a deceased person, any other interested person;

"Member" in relation to a corporation includes any person who has any interest or interest in the capital or income of the corporation and for the purposes of subsection (1) a person shall be treated as having the right to anything acquire has the right to acquire or will have the right to acquire at a future date.

Power to ignore certain transactions

140. (1) The Director-General, when he has reason to believe that a transaction has the direct or indirect effect (a) of altering the effect of any taxes due or accrued or which would otherwise have been

payable or incurred by any person;

(b) indemnify and hold harmless any person arising out of or that would otherwise have arisen out of the payment or declaration;

any person under this Act; or

(d) impede or impede in any way the application of this Act,

may, without prejudice to the validity it has in any other respect or for any other purpose, ignore or modify the transaction and make the adjustments it deems appropriate to neutralize all or part of the direct or indirect effects of the transaction.

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(2) In exercising his powers under this Section, the Director-General may:

(a) treat any gross income from any source of one person as the gross income and source of another person, or if the gross income is that of a

controlled entity as distributed to a shareholder (within the meaning of subsection 139(7)) of that entity;

(b) make such a calculation or recalculate any gross income, adjusted income or adjusted loss, legal income, total income, total income or taxable income of one or more persons if it is necessary to change a person's tax liability or impose any tax obligation imposed on them in accordance with his exercise of such powers; and

as a result of the exercise of these powers, withdraw the right to a refund of the tax or request reimbursement of the tax already paid.

(3) Notwithstanding the generality of the preceding subsections, the powers of the Director-General conferred by this section shall extend to:

(a) the levying of taxes on any person or persons who, save for an adjustment made pursuant to this section, would not be and would not be required to levy taxes

taxable to the same extent; and

(b) charging a higher amount of tax than would otherwise have been due on that adjustment.

(4) If the Director-General, pursuant to this section, requests a person to refund the amount of any tax payment already made:

(a) the Director-General shall send that person a notice of that request and the notice shall be treated as an Opinion for the purposes of an appeal, Chapter 2 of Part VI applying as amended; and

053e.FM Page 257 Thursday 6 April 2006 12:07 p.m.258 Malaysian Law ACT 53

(b) such amount shall be regarded as tax payable under any assessment and Section 103 and others

the provisions of Part VII apply accordingly.

(5) If a tax assessment is made, a refund claim is denied, or a tax refund refund is required as a result of an adjustment made under this Section, details of the adjustment must be notified with the tax assessment notice, the notification of refund refusal, or with the notice of request to return a refund.

(6) Transactions--

(a) between persons, one of whom has control over the other;

(b) between persons who are related to each other; or (c) between persons both controlled by another person,

Transactions of the kind to which subsection (1) applies where, in the opinion of the Director General, such transactions were not effected on terms which could reasonably be expected to be effected by independent persons engaged in the same or similar activities each other at arm's length.

(7) Notwithstanding any other provision of this Section, if a transaction referred to in this Section consists of an agreement involving a relative or a relative and other persons, nothing in this Section and no exercise of authority shall affect the interests of the relative under the agreement.

(8) In this section--

“Relative” means a parent, child (including a stepchild and a child adopted under any law), brother, sister, uncle, aunt, nephew, niece, cousin, ancestor or direct descendant;

"Transaction" means any trust, promise, agreement, understanding, agreement or other arrangement or transaction, made or entered into, whether oral or written (whether before or after the passage of this Act), and includes a transaction , which is concluded by two or more persons with another person or persons .053e .FM Page 258 Thursday, April 06, 2006 00:07 Income Tax 259

Powers in Relation to Certain Transactions with Non-Residents

141. (1) If - (a) a person who is not a resident of the base year for an assessment year transacts business with another person who is a resident of that base year (that person, that other person and that assessment year). referred to in this section as non-resident, resident and relevant year respectively); and (b) the Director-General is of the opinion that, because of the close relationship between the resident and the non-resident and the substantial control that the non-resident exercises over the resident, the course of business between them can and will be regulated so that the

Transactions that the resident carries out in fulfillment of his connection with the non-resident provide for the

is a resident in respect of the base period of the relevant year and derives no income or less income than expected from that transaction, the non-resident is deemed to be taxable income and is therefore subject to taxation in respect of the year in cause for the resident by reference to the expected Income from the resident's business as if the resident were an agent of the non-resident. (2) If the actual amount of income from a non-resident's business cannot be readily determined for the purposes of subsection (1) -

(a) The Director General may, if he thinks fit, charge and invoice the non-resident a fair and reasonable percentage of the turnover of the company for the year in question

Transactions done by the non-resident through or with the resident (the percentage depends on the type of transaction); and

(b) the provisions of this Act relating to the making of statements or information by persons acting on behalf of third parties are extended to require returns or

Details of transactions entered into by the non-resident through or with the resident are to be provided by the resident in the same manner as income statements or details are to be provided by persons acting on their behalf

non-resident persons.

053e.FM Page 259 Thursday April 6, 2006 12:07 PM260 Malaysian Law ACT 53

Chapter 3 - Miscellaneous

Rules of Evidence

Section 142. (1) In proceedings pursuant to Section 106, the submission of a certificate signed by the director general, showing the name and address of the defendant and the amount of the tax owed by him, is sufficient as evidence of the amount owed and as sufficient power of attorney over the latter The court decides the amount.

(2) In criminal or civil proceedings under this Act, any declaration intended to be signed by the Director General or an authorized officer and forming part of or attached to the information, claim or statement of claim shall, until proven to the contrary, be deemed evidence of a Fact stated therein: Unless this subsection applies to (a) a statement of intent by the accused person or another accused person; or

(b) prosecution for an offense punishable by imprisonment. (3) A transcript of data contained in a tax return or other tax-related document shall be acceptable as evidence of that information if certified by the Director-General or an authorized officer as a true copy of the data.

(4) No declaration or document made by or on behalf of any person shall be inadmissible as evidence against that person in any proceedings against him for an offense under Sections 112, 113 or 114 or in order to collect any sum owed by taxes or fines, solely by virtue of the fact that he was or could have been induced to make the declaration or produce the document by any legal inducement or promise of the Director-General or an authorized officer.

(5) (a) Except as provided in paragraph (b), nothing in this Act shall -

(i) interfere with the application of Chapter IX of Part III of the Evidence Act 1950 [Act 56]; or

(ii) be construed as requiring or permitting any person to produce or surrender to a court, the Special Commissioners, the Director-General or any other person

053 .FM Page 260 Thursday, April 6, 2006 12:07 AM Income Tax 261

person any document, thing or information which he would not be required or authorized to produce or deliver to a court under this Chapter or these Regulations. (b) Without prejudice to any other written law, when any document, thing, matter, information, communication or advice consists in whole or in part of or relates in whole or in part to any receipt, payment, receipts, expenditure or financial transaction or business of any person (whether it be a lawyer and Solicitor, your client or any other person), disclosure shall not be privileged to any court, the Special Commissioners, the Director-General or any authorized officer if contained in or comprised of, in whole or in part, any book, accounts, statements or other records created or maintained by a professional or company of professionals in conjunction with one or more clients of the professional or company of professionals or any other person.

(c) Paragraph (b) shall also apply to any document, thing, matter, information, communication or advice made or prepared before the beginning of this paragraph.

Errors and deficiencies in reports, notifications and other documents

143. (1) No assessment, notice or other document to be drawn up or issued for the purposes of this Act shall be null or void or voidable for lack of form or affected by any error, defect or omission therein, if that is the case in Substance and effect in accordance with this Act or in accordance with the spirit and purpose of this Act and--

(a) in the case of a review, the person who is, or is to be, reviewed or is affected by the review

named for the common intention and

To understand; and

(b) in all other cases, the person to whom it is addressed and any other person referred to in it are as follows

fixed.

(2) A review to be made or issued for the purposes of this Act shall not be contested or prejudiced because of any error relating to

(a) the name of a taxable person;

053e .FM Page 261 Thursday 6 April 2006 12:07 p.m.262 Malaysian Law ACT 53

(b) the description of a prescription; or

and a notice of assessment to be made or issued shall not be contested or affected by error if served (or served under subsection 67(5)) on the person for whom the assessment was or is to be made and contains it the content and effect of the information contained in the valuation report.

(3) Notwithstanding subsection (2), if the amount of tax calculated for a comparison has been incorrectly calculated by reference to the amount of taxable income and the corresponding tax rate, the amount of tax shown in the assessment and assessment may be calculated if the Director-General so determines the amount of tax to be taken into account that would have been charged had it been calculated correctly.

(4) A tax assessment that is to be issued for the purposes of this Act may not be contested because of an error about the name of the person responsible for paying the taxi if the assessment is addressed to them.

Authority to determine where to send returns etc

144. The Director-General may provide by regulation that any information, feedback or document to be submitted, sent or served on the Director-General for the purposes of this Act, subject to any conditions contained in the application, shall be provided to such government official or employee of Inland Revenue Board of Malaysia or sent or delivered to the address specified in the order.

notification service

145. (1) Subject to an express provision of this Act, notices for the purposes of this Act may be given in person or by post or registered mail.

(2) A tax notice sent by post or registered mail shall be deemed to have been given to the person (including an entity) to which it is addressed at 053e .FM Page 262 Thursday April 6, 2006 12:07 PM Tax Revenue 263

after the date the notice would have been received by ordinary mail if addressed - (a) in the case of a company, partnership or group of persons having its registered office in Malaysia -

(i) at that registered office;

(ii) to your last known address; or

(iii) to anyone authorized by her to accept Quotations;

(b) in the case of a company, partnership or association not having its registered office in Malaysia - (i) to any registered office of the company,

Partnership or corporation (wherever that location may be

lies);

(ii) to the principal place of business or others

Company, partnership or corporation activity

(wherever that place is); or

(iii) to any authorized person (by or under the law of any place where the Company,

incorporated partnership or corporation

or established), to accept quotations;

(c) in the case of an individual, at their last known address. (3) If a person to whom a registered letter has been addressed with a notice under this Act - (a) is informed that a registered letter is waiting for him at a post office but refuses or fails to deliver the letter; or

(b) refuses to accept service of such registered mail on presentation,

the notification is deemed to have been received on the day on which he was informed that the letter was waiting for him or on which the letter was delivered to him. (4) For the purposes of subsection (3), an affidavit from the officer in charge of a post office, stating to the best of his/her knowledge and belief -

053e.FM Page 263 Thursday 6 Apr 2006 12:07pm264 Malaysian Law ACT 53

a) a notification of the post office, informing the recipient about the presence of a registered letter waiting for him, was delivered to the address indicated on the registered letter; or

(b) a registered letter has been proposed for delivery to the addressee,

shall be deemed to be proof that the addressee has been informed or that the registered letter has been delivered to him or her, unless proven otherwise.

Certification of notices and other documents

146. (1) Subject to paragraph (2), any notice or other document issued, served or served for the purposes of this Act by the Director-General or an authorized officer shall be duly authenticated where the Director-General's name and title are given printed, stamped or otherwise described on it.

(2) Where this law provides that a notice, certificate or other document is the responsibility of an official, the notice, certificate or document must be signed by that official.

(3) A notice, certificate or other document issued, prepared, served or given for the purposes of this Act which purports to be handwritten by the Director General or an authorized officer shall be deemed to have been signed unless the contrary is proved.

free postage

147. All tax returns under this Act and all tax remittances (and any correspondence arising out of or in connection with such tax return or remittance), if sent in Malaysia in envelopes marked “Income Tax”, may be sent postage paid to be sent to the director-general, or an officer or address specified in an order under Section 144:

Provided that in certain cases the Director General may, by written notice, require any person to send returns, documents or correspondence by registered post.

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Provisions on authorizations and instructions from the Minister or Director General

148. If the Minister or the Director-General is empowered by or under this Act to give any authorization or direction of any kind (a power not exercisable by statutory instrument)— (a) any authorization or direction which in the exercise is granted this power shall not be considered subsidiary legislation; (b) this power includes:

(i) Authority to give such approval or direction

with hindsight;

(ii) power to retrospectively or otherwise modify or revoke any permit or policy; and

(iii) Power to issue permits or instructions under conditions to be determined by the Minister or

the Director General may, if necessary

find it convenient to impose; and

(c) any authorization or guidance shall come into effect when it is given or, if the Minister or Director-General fixes an effective date as the case may be, on that date.

Cancellation of rules and orders submitted to the Dewan Rakyat

149. When this Law provides that a rule or order must be submitted to the Dewan Rakyat, the rule or order must be submitted to the Dewan as soon as possible after its issuance and, when the Dewanat has commenced or before the second session thereafter Rule or If an Order is issued before it is decided that the Rule or Order or any provision thereof shall be invalid, the Rule or Order or provision thereof shall be superseded, notwithstanding any previous action or the creation of a new Rule or Order:

Provided this section does not apply to an order placed pursuant to subsection 6(2).

Authority to approve pension or provident funds, plans or partnerships

150. The Director-General may, subject to such conditions as he deems appropriate, authorize any pension or provident fund, scheme or partnership for the purposes of this Act.

053e.FM Page 265 Thursday 6 Apr 2006 12:07pm266 Malaysian Law ACT 53

Procedures for Refunds and Refunds

151. Whenever the director-general is authorized or required under this law to make a refund or reimbursement, he shall certify the value of the amount to be refunded or refunded and arrange for the prompt refund or reimbursement.

to shape

152. (1) The Director-General may, by ordinance or any other form he deems appropriate, prescribe the forms prescribed by this Act and any other forms which in his opinion should be prescribed in connection with the application of this Act, and may the Authorize the use of an appropriate substitute for each shape so prescribed:

Insofar as this paragraph does not apply to the form of the declaration to be prescribed under Section 138 (1).

(2) If a person is required to comply with any provision of this Act by using a prescribed form, that provision shall not be deemed to have been complied with unless he takes all reasonable care to obtain and use:

(a) a printed copy of the form referred to in paragraph (1); or

(b) a copy of any substitute for the authorized form in subsection (1), which will be a hard copy, unless the

permission says otherwise.

electronic means

152A. (1) The Director-General may allow any form prescribed by this Law to be submitted by any person or group of persons in an electronic medium or by means of electronic transmission.

(2) For the purposes of paragraph (1), the conditions and specifications under which prescribed forms must be submitted shall be determined by the Director-General.

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Restriction to persons who act as tax agents, tax advisors, etc.

*153. (1) No one posing as a tax agent, tax adviser or tax adviser (or any other similar designation) may act in Malaysia on behalf of a person for any of the purposes of this Act, other than a tax agent as in defined in this section:

Provided that--

(a) upon incorporation of a partnership, association, or partnership in any calendar year if, at the time of incorporation, an employee of the partnership, a director, or a member of the partnership

(whether or not such employee, member or partner is located in Malaysia) a tax agent within the meaning of

(i) it is sufficient for the purposes of this Subsection to have a presence in Malaysia for: a

Total period or periods of this year

more than one hundred and eighty-two days

Employees, partners or partners, as the case may be

can be (does not necessarily have to be the same

Employee, Member or Partner

Period or those periods) which is such a tax

Agent; and

(ii) such company, corporation, or partnership is not in breach

Section unless after the end of this year it is

demonstrably not complied with

subparagraph (i);

(b) nothing in this subsection shall be construed as restricting an attorney from practicing his profession.

(2) In this Section (and in Section 120 for this Section), “person” includes partnerships.

(3) For the purposes of this Act –

*NOTE--See Section 31 of Act 644 for explanation

"Tax Agent" means...

(a) (Excluded by Act 644);

(b) any professional accountant approved by the Minister; or

(4) An application for approval under paragraph (3)(b) or (c) or renewal of such approval shall be made to the Minister.

(5) A fee which may be prescribed by the Minister for an order published in the Official Gazette shall be payable upon application for renewal of the permit of a permit under paragraph (4). (6) An approval or renewal of an approval under this section shall be valid for a period of twenty-four months from the date of such approval or extension.

(7) An authorization granted by the Minister prior to October 24, 1986 shall expire on December 31, 1987 unless renewal of that authorization is obtained by that date in accordance with this section.

154. (1) The Minister may make regulations - (a) providing for the deduction and payment of withholding taxes in respect of income from employment and income of the kind referred to in paragraph 4(e) and the reclaim of such tax which has been deducted or should have been deducted;

(b) prescribe anything that is required to be prescribed under this Act except where subsection 152(1) applies;

(d) regulate the practice and procedure for appeals to the Special Commissioners and the

Own procedure of the commissioners;

053 .FM Page 268 Thursday, April 6, 2006 12:07 AM Income Tax 269

(e) require any taxable person who intends to leave Malaysia to produce a certificate that he has paid all taxes and other amounts due to him under this Act or that the Director-General raises no objection

departure, and prevent anyone from doing so

leave Malaysia if he cannot produce such

Certificate;

(ea) prescribe penalties for violation or non-compliance with any provision of the rules set forth in this section:

If such a contractual penalty does not exceed the

punishment according to § 120;

(f) to facilitate the implementation of this Act generally. (2) All rules established pursuant to paragraph (1) must be submitted to the Dewan Rakyat.

Power to pay 154A tax liability. (1) Notwithstanding any other provision of this Act, the Government may enter into an agreement with any person for the determination of his or her adjusted income or adjusted loss or the taxes thereon, if, in the opinion of the Minister, such an agreement would be fair and just or in the interests of the Government or any state government.

(2) Such an agreement may include:

(a) Provision prohibiting (in whole or in part) any outflow or expense that would have been allowable as a deduction absent the Arrangement; or

(b) Provision for the waiver (in whole or in part) of any person's right to relief or credit to which he is entitled under law.

revokes

155. (1) The laws and ordinances listed in Appendix 8 are repealed to the extent specified with effect from January 1, 1968.

053e.FM Page 269 Thursday April 6, 2006 12:07 PM270 Malaysian Law ACT 53

(2) Any subsidiary legislation made pursuant to an ordinance repealed in its entirety by subsection (1) shall be repealed with effect from January 1, 1968.

Transitional and savings regulations

156. Subject to Section 127A, the transitional and savings provisions in Schedule 9 shall have effect notwithstanding Section 155 or any other provision of this Act.

ANNEX 1

[Section 6]

tax rates

PART ONE

1. Except as provided in paragraphs 1A, 2 and 3, income tax for a year of assessment shall be levied on each person's taxable income at the following rates:

1A Unless otherwise provided in paragraph 2, income tax for one year of assessment is levied on the taxable income of an individual (other than a corporation). Irrecoverable income RM income tax rate

For every ringgit of the first 2,500 0 percent

For each ringgit of the next 2,500, 1 percent

For each ringgit of the next 15,000, 3 percent

For each ringgit of the next 15,000, 7 percent

For each ringgit in the next 15,000, 13 percent

For each ringgit in the next 20,000, 19 percent

For every ringgit in the next 30,000, 24 percent

For each Ringgit in the next 150,000 27 percent For each Ringgit over 250,000 28 percent

053 .FM Page 270 Thursday, April 6, 2006 12:07 AM Income Tax 271

resident in the base year for that year of assessment at a rate of 28 per cent on each ringgit of taxable income.

2. Subject to paragraph 3, income tax for a year of assessment shall be levied on taxable income

(a) an entity that is not an entity to which paragraph 2A applies; (b) (Excluded by Act 578);

(d) an executor of an estate of a deceased person who was resident outside Malaysia at the time of their death;

(e) a recipient to whom subsection 68(4) applies, at a rate of 28 per cent on each ringgit of taxable income.2A. Subject to paragraph 3, income tax for a year of assessment shall be payable on the taxable income of a Malaysia resident company having realized capital in respect of common shares of two million five hundred thousand ringgit and less at the beginning of the base period of one year evaluation at the following rates:

3. Income tax is levied on the taxable income of an insurer's domestic reinsurance business or offshore insurance business for a year of assessment at a rate of 5 per cent on each ringgit of the taxable income. PART II

Notwithstanding Part I, income tax is levied on the following items of income at the following rates:

Eligible Income RM income tax rate

For each Ringgit of the first 500,000 20 percent For each Ringgit over 500,000 28 percent

Type of income Income tax rate

1. Income of a non-resident consisting of interest (other than interest on an approved loan or interest of a kind specified in paragraph 33 of Part I Schedule 6) from Malaysia … … … . .. .. ... 15% gross053e .FM page 271 Thursday 6 Apr 2006 12:07 PM272 Malaysian Laws ACT 53

PART III

(Excluded by Law 451)

TEIL IV

Notwithstanding Part I, income tax is levied on the taxable income of each cooperative for a year of assessment at the following rates - PART V

Notwithstanding Part I and Part II, income tax is levied on the income of a non-resident consisting of:

(i) Amounts paid in consideration for services provided by the person or his employee in connection with the use of any property or rights owned by him or the installation or operation of any plant, machinery or other apparatus used by acquired by that person;

2. Non-resident income consisting of royalties from Malaysia ... ... ... ... ... ... 10% of the gross amount

3. Income of a non-resident person (not a business) consisting of remuneration or other income related to services rendered in Malaysia by a public artist ... ... ... ... ... ... . .. ... 15% of gross taxable income RM income tax rate

For every ringgit of the first 20,000 0 percent

For every ringgit in the next 10,000, 3 percent

For every ringgit in the next 10,000, 6 percent

For every ringgit in the next 10,000, 9 percent

For each ringgit in the next 25,000, 12 percent

For each ringgit in the next 25,000, 16 percent

For every ringgit in the next 50,000, 20 percent

For each Ringgit of the next 100,000 23 percentFor each Ringgit of the next 250,000 26 percentFor each Ringgit of the next 5,000,000 28 percentIncome Type Income Tax Rate

053 .FM Page 272 Thursday, April 6, 2006 12:07 AM Income Tax 273

(ii) Amounts paid in consideration for technical advice, assistance or services relating to the technical direction or administration of any scientific, industrial or commercial enterprise, venture, project or plan; or

(iii) rent or other payments made under any agreement or arrangement for the use of tangible property,

originating from Malaysia in the amount of 10% of the gross value. PART VI

Notwithstanding Part I, income tax shall be payable on income of a Malaysia resident consisting of interest (other than interest exempted under this Decree and any order thereunder) accrued or derived in Malaysia and received from a person referred to in Section 109C received the rate of .. .. .. .. .. .. .. .. .. .. .. .. .. 5% of the gross amount PART VII

(Excluded by Law 624)

PART VIII

Notwithstanding Part I and Part II, income tax is payable on a life fund's taxable income other than income from life reinsurance business and in-house life reinsurance business of a resident or non-resident insurer having a registered office in the amount of .... .. .. 8 percent.

PART IX

Contrary to Part I, income tax in the amount of ... is levied on the taxable income of a foreign fund management company from the provision of fund management services for foreign investors pursuant to Section 60G. . .. 10 percent.

PART X

Notwithstanding Part I, a non-resident Shareholder's income consisting of income distributed to that Shareholder pursuant to Section 109D will be subject to income tax at a rate of 28% of the gross amount originating in Malaysia. 053e.FM Page 273 Thursday April 6, 2006 12:07 PM274 Malaysian Law ACT 53

APPENDIX 2

[§ 34]

Deductions for capital expenditures in mines

Eligible Mining Expenditures

1. Subject to paragraph 2, qualifying mining expenses for the purposes of this Annex are expenses incurred in connection with the work of a miner or in preparation for the work of a mine -

(a) in acquiring the Mine or any rights in the Mine; (b) in the exploration, discovery and testing of or access to mineral deposits;

(c) in the construction of any plant or building which, after cessation of mining, should be of little or no value to anyone except in connection with the exploitation of another mine; or

(d) in development, general management or management prior to commencement of mineral production or during any period when minerals are not being produced.

2. If a deduction has been made under section 44 in accordance with Schedule 4 (or under an equivalent provision of any repealed statute as set out in Schedule 9) in respect of expenses and such expenses have not been added to any income recognized under Section 43 (1)(c) are aggregated in accordance with subparagraph 5(a) of Schedule 4, such expenditure shall not be considered Mining Expenditure for purposes of this Schedule.

Deductions for qualifying mining costs

3. Where a person's enterprise, subject to this Annex, consists or consists principally in the exploitation of a mine with or without other mines (such enterprise and person are referred to in this Annex as the relevant enterprise and operator, respectively) and the operator's qualifying mining costs have been incurred in relation to that mine, then in determining the Operator's adjusted earnings for the base period for a relevant business valuation year pursuant to this Annex, in accordance with Section 34, a deduction from the gross earnings for that period of the relevant business shall be an amount calculated by dividing the remaining cost at the end of that period by the remaining life at the beginning of that period.

4. (1) The operator shall, at the commencement of the exploitation of any mine forming part of the relevant business, and thereafter from time to time as required, provide the director general with a written declaration estimating the useful life of the mine indicating the number of years, over which mining can be expected to continue, and by making calculations 053d .FM

on which this estimate is based; and the Director-General by reference to that estimate or, if no reasonable or sufficient representation has been made under this paragraph, by reference to a similar estimate made by him in his best judgment from time to time as he thinks fit set a value for the number of years of mine life, and that number represents the estimated life of the mine for the purposes of this Annex:

Provided that if employment commenced before January 1, 1968, this subparagraph shall not apply to such commencement but shall apply from time to time as appropriate.

(2) Except where a provision of paragraph 15 applies, a change in the estimated useful life of a mine shall not affect any deduction that has been or would have been made under Section 34 in accordance with this Annex in determining adjusted income from that mine operations may be undertaken for the base period of an assessment year if that base period ended before the change.

5. If, in a case to which section 41 applies, it is necessary in respect of a mine to establish a deduction under section 34 in accordance with this Schedule for an accounting period greater or less than twelve months - (a ) the balance of expenditure shall be on end of this period divided by the remaining lifetime at the beginning of this period; and (b) the resulting amount shall be increased or decreased in the same proportion as the duration of that accounting period for a period of twelve months and then constitute the deduction amount. Mine transferred etc.

6. Paragraphs 7 to 14 shall apply in relation to each specific mine forming part of the relevant business for which the operator has incurred qualifying mining costs and in those paragraphs:

“Consideration” means consideration, monetary or non-monetary, or both (which does not constitute and constitute revenue); “the mine” means the relevant mine; “Mining Facility” means the mine or facility at or for which Qualifying Mining Expenditure has been incurred by the Operator in connection with or in preparation for the operation of the Mine;

“Other Property” means property that is not a Mining Asset; "Value" means--

(a) in relation to a monetary consideration, the amount of the consideration; (b) in relation to consideration in kind, the market value of the consideration at the time of the transaction to which the consideration relates.

053e.FM Page 275 Thursday April 6, 2006 12:07 PM276 Malaysian Law ACT 53

7. Subject to paragraph 8 - (a) if the operator transfers a mining property for consideration, the amount of consideration in respect of the mine shall be treated as reimbursed expense and shall be receivable by the operator on the date of transfer;

(b) if the operator receives consideration for the granting of rights in the mine or any part thereof, the amount of the consideration will be treated as a reimbursed expense in respect of the mine and the operator; and

(c) if the operator receives any amount or property as compensation, reclaim or otherwise for qualifying mining expenditures (which are expenditures of a nature that do not produce a mining asset) incurred by it in connection with or in connection with the preparation for the operation of the Mine, what amount or market value of such property at the time of receipt is deemed to be reimbursed expenses in relation to the Mine and the Operator.

8. If the operator transfers a mining property along with other property, then...

(a) If the transfer is for undivided consideration and the operator and transferee can agree how much of the consideration amount is to be treated as given for the mining property and for the other property, respectively, they must report to the general manager within three months of the joint transfer provide a written statement showing the agreed allocation of consideration and subject to sub-paragraph (c) that portion of such amount allocated to the Mining Property shall be treated as reimbursed expenditure in respect of the Mine and be received by the Operator on the Delivery Date;

(b) Where the transfer is made in return for separate consideration, the operator shall, within three months of the transfer, provide the Director General with a written statement stating the amount of each consideration and, notwithstanding subparagraph (c), the amount of the consideration set out in that is specified in the Mining Sector Statement, the asset will be considered a reimbursed expense in relation to the mine and must be received by the relevant person on the date of transfer; and

(c) if the Chief Executive Officer is dissatisfied with the distribution referred to in sub-paragraph (a) or with any amount set out in the declaration referred to in sub-paragraph (b) or if he fails to make a declaration in accordance with any such sub-paragraphs specified the Director General shall, to the best of his or her discretion, determine the amount of consideration for the Mining Assets and the amounts so determined shall be deemed to be reimbursed expenses in respect of the Mine to be received from the Operator on the Transfer Date.

9. If a transfer of mining property by the operator (with or without other property) occurs together with a grant by the operator of a right of the kind referred to in subparagraph 7(b), then for the purposes of Section 8--053e .FM Page 276 Thursday, April 6, 2006 00:07 Income Tax 277

(a) the donation should be treated as part of the transfer of that asset; and (b) the right is treated as part of that asset and this paragraph will apply subject to any necessary changes.

10. If the operator transfers a mining property (with or without other ownership rights) or--

(a) for undivided consideration (in respect of such property and such other property, if any) together with any property or property of the kind referred to in sub-paragraph 7(c); or

(b) for separate considerations (relating to that asset and other property, if any) together with that value or property, paragraph 8 shall apply with the necessary modifications.

11. For the purposes of paragraphs 7 to 10-(a), if a consideration consists partly of cash and partly of non-monetary goods, the amount of the cash portion of the consideration and the amount of the in-kind portion thereof shall be aggregated, if necessary, or aggregated and be shared, as the case may be; (b) if the subject of a transfer consists of two or more mines, or of a right in or over two or more mines, any amount allocated under these paragraphs for those mines shall be divided and apportioned among each of those mines in proportion to the remainder of the expenses for each of these mines at the time of the transfer equal the total remaining spend on those mines.

12. If the operator transfers the mine and on the transfer date, the remaining costs calculated immediately before that date exceed the difference between

(a) the total amount of all expenses reimbursed by the operator received on or before that date; and

(b) the aggregate amount of all reimbursed expenses received prior to that date, with the excess amount being permitted as a deduction from its gross receipts from the relevant business for the base period (the base period being reasonable for the relevant entity for a valuation year) in accordance with Section 34 of this Schedule) in which the transfer took place.

13. (1) If the operator incurs costs related to the transfer of the mine to itself and other matters or things related to the mine, these costs will be treated as qualifying mining costs incurred by the operator in connection with the mine.

(2) (Excluded by Act A226).

053e.FM Page 277 Thursday April 6, 2006 12:07 PM278 Malaysian Law ACT 53

14. If a transaction takes place in respect of the Mine as a result of which any amount (other than this paragraph) would be treated as an expense reimbursed by the Operator in respect of the Mine under any of the provisions of paragraphs 6 to 13, and--

(a) the operator is a person over whom the other party to the transaction has control;

(b) such other party is a person over which Operator has control; (c) another person controls the operator and that other party; (d) the transaction is part of a reorganization or merger plan; or

(e) the Director-General considers that the transaction is or is part of a transaction to which Section 140 applies;

Residual expenses relating to the mine or other mining equipment immediately prior to the date of such initial transaction shall be deemed to be expenses received on that date in the hands of the operator and qualifying mining expenses incurred on that date in the hands of that other party date date; and paragraphs 6 to 13 shall not apply in relation to the former transaction. termination of work

15. If within the assessment period of one year the operator permanently ceases the operation of a mine (except in the event of death or transfer of the mine by him to another person), the expenses received from him after the date of cessation of work will be reimbursed (notwithstanding of the provisions of paragraphs 7 to 10) as if it had been received on that date, and - (a) if he so elect, exclude the deductions required under Section 34 from the amounts permitted under this Schedule in calculating his Adjusted Income the relevant Company for that base period and for the base period for each of the immediately preceding five assessment years (or if it commenced work at the mine in the base period for any of those five years). years other than the first, for the first-mentioned base period and for the base period that is a base period in which the mine was explored by it, for each of the previous assessment years) to be calculated for each base period as if the reference in paragraph 3 to the remaining lifespan at the beginning of the base period would be a reference to what the remaining lifespan would be if the estimated lifespan were taken equal to the number of completed years from the beginning of the first assessment base to the date of termination of employment; and

(b) Refunds of taxes and contributions will be made to the extent necessary to give effect to this paragraph.

additional rules

16. When two or more separate and distinct groups of mining operations are carried out at a mineral spring and none of these groups of operations is carried out.

contiguous to another of those groups of operations, each of those groups of operations will be treated for the purposes of this Appendix as being conducted in the exploration of a separate mine:

Provided that if a deduction is allowed under Section 34 in respect of an amount allowable under this Schedule for qualifying mining costs in respect of a separate mine, no amount is allowed under this Schedule for such costs in respect of another separate mine and that is allowed Expenses should not be treated as qualifying mining expenses incurred in connection with that other mine.

§ 17. (1) A person shall not be treated as a miner for the purposes of this Schedule unless he is actively involved in the exploitation of the mine and his gross receipts from any of his businesses include proceeds from the sale of minerals or from the Exploration of the mine can be gained.

(2) No active participant in the exploitation of a mine referred to in paragraph 1 shall be a person who subleases the mine or any other person to exploit the mine in return for payment of a premium, lease or tribute (for any name).

18. When - (a) the relevant business consists of or involves the exploitation of a mine; and (b) exploration of that mine commences at any time in the relevant base period for the relevant business for an assessment year, the number of years of mine life at the time that exploration of that mine commenced shall be determined as Remaining Life Value For the purposes of paragraph 3, the number of years of mine life at the beginning of that period has been taken into account.

1921. (Excluded by Act A226)).

22. In this Annex, "Estimated Life" in relation to a mine means the number of years of mine life as determined from time to time by the Director General in subparagraph 4(1) as the Estimated Mine Life; “Recovered Expenses” means any amount determined pursuant to paragraphs 6 to 11 or 14 to be recovered in connection with a specific mine forming part of the relevant transaction; "Residual Expenditure" in relation to a particular mine forming part of the relevant business and for a particular date, the total Qualifying Mining Expenditure incurred in relation to that mine prior to the date by the Operator less the amount of:

(a) any deductions made pursuant to Section 34 in accordance with this Annex in respect of such expenses from the gross receipts of the relevant operator

transactions relating to the base period of a calculation year, which base period ends before this date; and

(b) all charges related to that mine received by the operator on or before that date;

"Remaining Life" in relation to a particular mine forming part of the relevant business and at a given point in time the number of years of estimated mine life remaining at that point in time.

APPENDIX 3

[§ 42]

subsidies and capital costs

Eligible Expenses

1. Subject to this Annex, qualifying expenditure for the purposes of this Annex means qualifying capital expenditure or qualifying construction expenditure as defined in paragraphs 2 to 6.

2. (1) Subject to subparagraph (2) and paragraph 67, qualifying business expenses are capital expenses incurred in providing machinery or equipment used for business purposes, including

(a) costs incurred in converting an existing building for the purpose of installing such machinery or equipment and other costs associated with the installation of the same; and (b) costs incurred in preparing, milling, tunneling or leveling land to prepare a site for the installation of such machinery or equipment, but where the cost is ten per cent of the total cost itself and all other costs (which qualify as costs ) exceed Annex) for business purposes, this subparagraph does not apply; (c) Expenditure on fish ponds, pens, chicken coops, cages, buildings (other than those used in whole or in part for the housing of a director, a person in control of that company or a person who is a member of managerial, administrative or clerical staff performing the activity) and other structural improvements on land used for poultry, livestock, inland fisheries or other agricultural or pastoral activities. (2) For a motor vehicle that is not a motor vehicle registered by the competent authority for the commercial carriage of goods or passengers, the qualifying operating costs incurred from the first day of the base period for the assessment year 1991 are limited to a maximum of fifty thousand ringgit:

053 .FM Page 280 Thursday, April 6, 2006 12:07 AM Income Tax 281

Provided that if qualifying installation fees apply to a motor vehicle purchased on or after October 28, 2000, the maximum amount is increased to no more than one hundred thousand ringgit if the motor vehicle was unused prior to purchase and the total cost of the motor vehicle does not exceed one hundred and fifty thousand ringgit:

Provided further that if qualifying operating expenses were incurred between October 28, 2000 and December 31, 2000 and that period forms part of an individual's base period for the assessment year prior to assessment year 2001, such expenditure will be included for purposes of that assessment year Attachment incurred in the base period for assessment year 2001.2A. Subject to this Schedule, if a person uses machinery or equipment for non-business purposes and subsequently puts that machinery or equipment to use for his or her business purposes, he or she is deemed to have incurred qualifying installation costs relating to that machine or equipment and the expense amount for the qualifying equipment shall be deemed to be the market value of the machine or equipment on the date the machine or equipment is commissioned.2B. (Repressed by Law 644).

2C. Subject to this Schedule, if the machine or equipment is used for business purposes by a person in Malaysia and the machine or equipment has previously been used for business purposes outside of Malaysia, the person shall be deemed to have incurred qualifying operating expenses and the amount of those associated therewith qualifying operating expenses shall be deemed to be the market value or net book value of the machine or plant, whichever is less, on the date the machine or plant is commissioned in Malaysia.

3. (1) Qualifying construction expenditures are, subject to paragraph 6, capital expenditures for the construction or acquisition of a building used as an industrial building at any time after its construction or acquisition.

(2) For the purposes of this Schedule, qualifying construction costs when purchasing a building are the value of the purchase price for that building.

3A5. (Excluded by Act A639).

6. Qualifying construction costs do not include: (a) subject to paragraph 67, expenses that are qualifying installation costs for the purposes of this Schedule;

(b) subject to paragraph 42, expenditure that qualifies as agricultural expenditure for the purposes of this Annex; or (c) expenses that qualify as mining expenses for the purposes of Schedule 2.

053e.FM Page 281 Thursday April 6, 2006 12:07 PM282 Malaysian Law ACT 53

Qualified agricultural expenses

7. (1) Subject to this Schedule, eligible agricultural expenditures for the purposes of this Schedule are capital expenditures incurred by a person in - (a) clearing and preparing land for agricultural purposes; (b) planting (but not replanting) crops on land cleared for planting; (c) construction of a road or bridge on a farm; (d) erection of a building on a farm used for that person's business purposes and consisting in whole or in part of work on the farm, or erection of a building on a farm used by that person for the welfare of others is provided, or as lodging for any person, employee or in connection with work on that farm and which, when the farm is no longer working, is likely to be of little or no value to anyone other than in connection with work on another farm. (2) For the purposes of this paragraph, “agriculture” includes reforestation of timber.

Qualified forestry costs

8. (1) Subject to this Schedule, for the purposes of this Schedule, eligible forestry expenditures are capital expenditures incurred by a person in the construction of a forest by

(a) a road or building used for your business which consists in whole or in part of the Logging; or (b) any building provided by him for the welfare of any person or as accommodation for any person employed at or in connection with such extraction,

and that the forest, when it is no longer used for such extraction, is unlikely to be of little or no value to anyone except in connection with the extraction of timber from another forest or with an enterprise wholly or partially out of operation from exists a farm.

(2) For the purposes of this paragraph, “forest” in relation to a person means a forest for which he is a concessionaire licensed to harvest timber, which is a forest exploited by him for timber harvesting becomes of it for the purposes of any of your business consisting in whole or in part of such extraction. Eligible expenses: Initial grants

9. An allowance granted under paragraphs 10 and 12 is referred to as an initial allowance.

10. Subject to this Schedule, if an individual has any business related expenses at Qualifying Facilities during the Base Period of any Assessment Year, they will be billed in respect of the source consisting of that business for that 053e .FM Page 282 Thursday, April 6, 2006 12:07 am Income tax 283

Annual compensation equal to one-fifth of the cost or other prescribed fraction.

11-11A. (Excluded by Act A1028).

12. Subject to this Schedule, if a person has, within the base period of an assessment year, for the purposes of his business, qualifying building expenses incurred in constructing or purchasing a building, those costs shall be accounted for in respect of the source incurred in that transaction for that year subsidy of one tenth of these costs.

13. Notwithstanding paragraphs 10 and 12 – (a) no accruals shall be made by a person pursuant to paragraph 10 for a measurement year in respect of an asset and any transaction by him if at the end of the base period for that year the asset was not owns or was not used for the purposes of the business or, if the asset was disposed of by him during that period, he did not own the asset or was not used for the purposes of the business prior to its disposal at any point in that period;

(b) (Excluded by Act A1028);

(c) a person referred to in paragraph 12 shall not be accrued for a measurement year in respect of an asset and any business of his if at the end of the base period for that year he does not own or use the asset either should not be used as an industrial building or if the asset was sold during that period, it was not used by him as an industrial building for his business purposes prior to the sale at any time during that period;

(d) where a person has been awarded a grant for an assessment year in accordance with paragraph 12 in respect of a building and a business owned by him or her and that building has not been used as an industrial building or is not about to be used at any time in the base period for the next Valuation Year used by you for that deal, an equalization fee equal to the Grant Amount will be charged in respect of that deal for the Valuation Year for which the Grant was awarded. 13A. Notwithstanding paragraph 10, the initial grant for a valuation year may not be granted to a person in respect of any asset and transaction by him or her under paragraph 2A, 2B or 2C.

Eligible expenses: annual allowances

14. An allowance granted under paragraphs 15 to 16A is referred to as an annual allowance.

15. Subject to this Schedule, a person was if, for the purposes of his business, he suffered qualifying installation costs in relation to an asset and owned the asset at the end of the one-year assessment period and is in use for business purposes in relation to Source 053e .FM Page 283 Thursday April 6, 2006 12:07 PM284 Malaysian Laws ACT 53

arising out of that business for that year, compensation equal to the prescribed proportion of those costs.

15A (Repressed by Law 619).

16. Subject to this Schedule, a person who has qualifying construction costs for business purposes incurred in the construction or purchase of a building and at the end of the one-year assessment period owned the building and was in use as an industrial building for the purposes of the Company, so, with respect to the source existing in that enterprise, he is granted compensation for that year of three hundred avo, or such other fraction of that cost as may be prescribed.

16A. Subject to this Schedule, if a person has incurred qualifying building expenses in constructing a building to which Section 67B applies and the building is leased to the Government at the end of the one-year assessment period, that is payable to him in respect of the income from an allowance of three fiftieths on that lease for that year, or such other portion of those charges as may be prescribed.

17. (1) (Excluded by Law 619). (2) In this paragraph, "permissible fraction" in relation to qualifying construction costs when purchasing a building means a fraction whose numerator is one and whose denominator is the number of years beginning in a period beginning in the assessment year of the base year for which the building was acquired begins and ends in the fiftieth year of assessment following the year of assessment of the base year for which the building was constructed.

18. Any deduction granted to a person in respect of an entity in accordance with paragraph 15 or 16 for a measurement year in respect of expenditure on an asset shall not exceed the amount of the residual expenditure at the end of the base period for that year.

19. If the Director General considers in relation to a particular asset that the proportion prescribed in paragraph 15 is too high or too low in relation to the use of the asset, he may issue instructions for other proportions he deems appropriate, in proportion to the assume expenses of the qualifying facility.

Special deductions for low-value assets

19A. (1) When a person has incurred qualifying installation costs in relation to an asset or assets, the value of each asset not exceeding one thousand ringgit, within the base period of an assessment year and at the end of the assessment basis during the period in which he is the owner of the asset and it was used for business purposes, a reduction equal to that cost for that assessment year:053e .FM Page 284 Thursday, April 6, 2006 12:07 PM Income Tax 285

Provided that if the qualifying work's total expenses in respect of such asset exceed the amount of ten thousand ringgit for each year of assessment, the total compensation awarded in respect of such expenses under this paragraph shall be equal to such amount.

(2) Allowance under paragraph 10 or 15 in respect of eligible operating expenses under paragraph (1) -

(a) a person will be provided if that person has not made a claim in respect of those expenses under this sub-paragraph; or

(b) will not be reimbursed to that person in respect of expenses deducted under that paragraph.

agricultural subsidies

20. A subsidy granted under paragraph 22 or 23 shall be referred to as an agricultural subsidy.

21. A person who is entitled to an agricultural allowance for expenses shall not be entitled to an allowance under any other paragraph for the same expenses.

22. Subject to this Schedule, if a person has incurred Qualifying Agricultural Expenditure for business purposes on his property during the Base Period of an Assessment Year that is incurred in the construction of

(a) a building used for the welfare of persons or as a residence for a person referred to in subparagraph 7(1)(d) is assessed in respect of the source consisting of that business for that year and for each of the four consecutive years following the assessment a grant of one fifth of these costs; and

(b) any other building referred to in subparagraph 7(1)(d) shall be charged a valuation allowance of one tenth of that cost in respect of the source consisting of that business for that year and for each of the subsequent nine assessment years.

22A (Excluded by Act A643).

23. Subject to this Schedule, if a person has incurred qualifying agricultural expenditures for the purposes of a business of his business in the base period of any assessment year to which paragraph 22 does not apply, he shall be credited with respect to the source consisting of that business for a subsidy equal to half of these costs for this year and for the following year of assessment.

24. Subject to this Schedule, if a person (referred to in this paragraph as a sender) would be entitled to an agricultural subsidy for a assessment year in respect of qualifying agricultural expenses incurred in connection with an asset for the purposes of his business and in of the base period for that year, the property is transferred or transferred to another person (referred to in this paragraph as the recipient in this paragraph) by operation of law or otherwise -- 053e .FM Page 285 Thursday 6 April 2006 12:07 PM286 Malaysian Act ACT 53

a) The broadcaster is only entitled to a portion of this subsidy for that year, a portion in the same proportion to the total of this subsidy as the number of days included in the period beginning at the beginning of that year Base Period and ending on the date of transmission or transmission is for the number three hundred and sixty-five; and (b) where the asset is--

(i) an agricultural holding used by the recipient for the purposes of his business, which consists in whole or in part of operating the agricultural holding; or (ii) a building used by the Beneficiary for the purposes of that enterprise and which is adjacent to or in close proximity to that Farm or any other of its Farms that is part of that enterprise, the Beneficiary is entitled in the Assessment Year in the Base Period, for which the transfer or transfer of that subsidy to the other party occurred and, for subsequent years, the assessment of any agricultural subsidy that would have been awarded to the transmitter had the asset not been transferred or transferred and continued to be owned by the transmitter and used by him for the purposes of his business at all relevant times.

25. Notwithstanding paragraphs 22 to 24, no operating grant in respect of an asset and a business of his shall be made to a person for a valuation year - (a) if the asset is transferred or transferred in the base period for that year if it is within a month (or such other period as may be approved by the Manager) prior to the transfer or transfer: or

(b) in any other case, if you do not own the asset or it is not used for business purposes at the end of that year's base period. Agricultural taxes

26. Where a person's business consists in whole or in part of farm work and over a base period of one assessment year, any amount due to him, whether in connection with a grant or other payment for the government, of a state government or of a corporation under public law, which is intended to relieve him, directly or indirectly, of the investments made by him in this business, an agricultural levy of this amount shall be levied on him for the source in this business for that year:

Provided that the subsidy or other payment shall be deemed to have become due if that person ceased owning the agricultural holding within the base period of an assessment year (a base period which has elapsed before the date on which the subsidy or other payment is due) at the first times in this elapsed time.

27. If a person disposes of an asset within the base period of an assessment year and has been granted an agricultural subsidy for an assessment year in respect of that asset and a holding and related eligible agricultural expenses associated with that asset are incurred during a period beginning on a particular Day ends 053e .FM page 286 Thursday April 6, 2006 12:07 am Income Tax 287

and the disposal of the asset occurred less than six years after that date, it shall be charged, in respect of the source which is that enterprise, an agricultural levy for the first-mentioned year of assessment equal to the value of - (a) such agricultural subsidy; or

(b) if it has been granted an agricultural grant in respect of that asset for more than one year of assessment, the sum of all such grants for all those years,

and if that asset is disposed of by that person after the end of the base period (for any assessment year) in which that business is permanently ceased by that person, the disposal shall be deemed to have taken place in that base period : Provided that within three months (or one other period approved by the Director General) after the beginning of the valuation year after the first named year of valuation or, if that asset was disposed of by that person after the end of the last named base period, the year of assessment after that in which he disposed of that asset, he may by writing Notice to the Director-General that the amount of any agricultural levy payable to him in proportion to the value of that total for the first-named year shall be divided by the number of assessment years for which such grants have been awarded; and an agricultural levy equal to the amount resulting from that division shall be imposed on him in relation to the source existing in that business, for each of those years of assessment.

Forest subsidies and forest fees

28. A grant under paragraph 30, 30A or 31 is referred to as a forest grant and a levy levied under paragraph 32 is referred to as a forest levy.

29. A person who is entitled to a forest allowance for expenses is not entitled to an allowance under any other paragraph for the same expenses.

30. Subject to this Annex, if within the base period of an assessment year a person has incurred qualifying forestry expenditures for the purposes of an enterprise he owns in the construction of:

(a) A building of the kind referred to in sub-paragraph 8(1)(b) shall be awarded an allowance in respect of the source consisting of that business for that year and for each of the four subsequent years of assessment equal to one-fifth such Costs; and

(b) a street or building of the kind referred to in subparagraph 8(1)(a) shall be credited to it in respect of the source consisting of that enterprise for that year and each of the subsequent nine tax years an allowance equal to one-tenth of these costs.30A. Subject to this Schedule, a person in the base period of any year of assessment prior to the year of assessment shall have 1970 for his own purposes

qualifying forestry expenses incurred in the construction of a building of the type referred to in subparagraph 8(1)(b) and he was awarded a forestry subsidy for the resource consisting of that enterprise for a rating year prior to the 1970 rating year For such expenses he will receive for the assessment year 1970 and for each of the following four assessment years an allowance equal to one fifth of the difference between such qualifying forest expenditure and the forest subsidy granted to him in respect of that qualifying expenditure for assessment years prior to assessment year 1970.

§ 31. If a person permanently ceases timber production from a forest for which they have made qualifying forestry expenditures within the assessment period, this is done for them at the source allowance equal to any excess of such expenses over the total allowances granted to him under paragraph 30 or 30A in relation to such expenses; and shall not be entitled to any reimbursement under paragraph 30 or 30A in respect of such expenses for any year of assessment subsequent to the first named year of assessment.

Section 32. (1) If a person who has made qualifying forestry expenses in connection with a company and a forest sells this forest, the assessment basis for the assessment year is formed via him with regard to the source existing from this company for the period for which the disposal occurred, a forestry fee equal to the value of one license or the aggregate value of all licenses granted in respect of those costs under paragraph 30, 30A or 31; and if a forest is disposed of by that person after the end of the base period (for an assessment year) in which he ceased to operate, the disposal shall be deemed to have taken place in that base period:

Provided that within three months (or such other period as may be approved by the Director-General) of the commencement of the assessment year following the year in which he disposed of the forest, he may decide, by written notice to the Director-General, that the amount of such forest tax shall be paid by the number of assessment years for which these grants were made, and in lieu of this charge a forestry tax equal to the amount resulting from this division shall be levied in respect of the existing source of that holding for each of those assessment years. (2) For the purposes of this paragraph, a person who has disposed of a forest is deemed to be one who, having a concession or concession for logging there, assigns or assigns the concessionaire concession or surrenders that concession or license to an encumbering title.

Eligible expenses: reimbursement of subsidies and reimbursement of taxes

33. Allowances under paragraph 34 and charges under paragraph 35 are referred to as compensation allowances and compensation charges, respectively.

34. Subject to this Schedule, within the base period of a valuation year, a person disposes of an asset for which he has qualifying expenses for the purposes of his business and the remaining expenses in the 053e .FM Page 288 Thursday, April 6, 2006 00:07 Income Tax 289

If the date of its disposal exceeds its disposal value, it will be accrued for the excess value in relation to the source created by this transaction for that year.

35. Subject to this Schedule, if a person disposes in the base period of a measurement year of an asset in respect of which it has incurred qualifying expenses for the purposes of its business and the disposal amount exceeds the residual expenditure at the time of its disposal, credit to him in respect of that source of business for that year a fee equal to the excess amount will be imposed.

36. No provision should be made for a measurement year in accordance with paragraph 34 for a person in respect of an asset disposed of unless an initial or annual provision has been made or should have been made in respect of that asset where it is alleged that to her.

37. An encumbrance on a person under paragraph 35 in respect of an asset shall not exceed the sum of all provisions made to him or her under this Schedule in respect of that asset.

Eligible costs: approved private hospital, maternity home and nursing home

37A. The provisions of this Schedule relating to industrial buildings shall apply, mutatis mutandis, to a private hospital, maternity and nursing home licensed under the provisions of any applicable written law relating to the registration of a private hospital, maternity and nursing home, or where such law is applicable is not in force, approved by the Director-General after consultation with the Director-General for Health; and in such application reference to capital expenditures incurred in the construction of a building includes any capital expenditures incurred in the conversion or renovation of rented premises for the purpose of supporting a private hospital, maternity home or nursing home. Eligible expenditure: buildings used for research or training purposes37B . The provisions of this Schedule relating to industrial buildings shall apply, mutatis mutandis, to buildings or parts thereof used for: (a) research authorized by the Minister as defined in Section 34A(1)(a) ) and Subsection 34B(4);

(b) research carried out by a company participating in industrial adjustment authorized under Section 31A of the Investment Promotion Act 1986;

(d) training provided by the company referred to in sub-paragraph (b) in relation to its employees; or

(e) research carried out by a research and development company or a research and development contractor within the meaning of Section 2 of the Investment Promotion Act 1986,

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and in such application reference to capital expenditures incurred in the construction of a building or part thereof includes all capital expenditures incurred in the conversion or renovation of rented premises for the purpose of carrying out such research, industrial training or education and the building or any part thereof are deemed to be incurred for the purposes of the business referred to in Section 34A, notwithstanding that in the case of the research referred to in subparagraph (a), such research is unrelated to that business: provided that the provisions of this Schedule relate to The Industrial buildings shall not apply to capital expenditures made for the purposes referred to in subparagraph (b) or (d) of a building or part thereof if such expenditures have been incurred after ten years from the date of approval of the industrial adjustment in accordance with Section 31A of Investment Promotion Act 1986.

Eligible Expenses: Building used for Warehouse37C. The provisions of this table relating to industrial buildings apply mutatis mutandis to a building or part of a building used by a person solely for the storage of export goods or for the storage of import goods to be processed and distributed, and where it is re-exported in lieu of the allowance otherwise due to him under the Paragraphs 12 or 16 would be replaced by an allowance equal to one tenth of the eligible expenses for that year and for each of the following nine years after evaluation. Eligible expenditure: machinery or equipment used for research37D. The provisions of this Schedule relating to expenditure on qualified entities apply mutatis mutandis to capital expenditure for the supply of machinery or plant for research purposes approved by the Secretary of State under Section 34A; and in such an application the machine or plant shall be deemed to be used for the purposes of the business referred to in Section 34A notwithstanding any research not relating to that business. Eligible Expenditure: Building used for an approved service project

37E. The provisions of this Schedule relating to industrial buildings shall apply mutatis mutandis to a building, or any part thereof, rendered unusable by a person solely for the purpose of providing services and modernizing operations related to an approved service project as defined in Schedule 7B. Eligible expenses: Building used as a hotel

37F. The provisions of this table relating to industrial buildings apply, mutatis mutandis, to a building or part thereof occupied by a person solely for hotel purposes and that hotel is registered with the Ministry of Culture, Arts and Tourism.

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Eligible expenses: airport

37G. The provisions of this Annex relating to industrial buildings apply mutatis mutandis to an airport and reference to capital expenditures made in connection with that airport includes capital expenditures for the construction, reconstruction, expansion, improvement or purchase of a building, of a runaway or auxiliary structure.

Eligible expenses: Motorsport track

37H. The provisions of this table relating to industrial buildings shall apply, mutatis mutandis, to a Ministerial-approved motor racing circuit and references to capital expenditure incurred in connection with that circuit shall include capital expenditure in the construction, reconstruction, extension or improvement of that circuit or auxiliary constructions. Controlled disposal etc.

Section 38. (1) Sections 39 and 40 shall apply if a person has an asset for which an initial or annual subsidy or an agricultural or forestry subsidy was or would have been granted, at the time of the Utilization of disposal –

(a) the seller of the asset is a person over whom the buyer of the asset has control;

(b) the purchaser of the asset is a person controlled by the seller of the asset;

(c) another person controls both the seller and the buyer of the asset; (d) the sale is part of a reorganization plan or merger of companies; or

(e) the disposal is effected by agreement or gift or by transfer of title to the property mortis causa,

the transferor of the asset, the relevant asset and the transferee of the asset are referred to in these paragraphs as transferor, asset and transferee, respectively. (2) In this paragraph, “control” in relation to an entity means the power vested in a person to ensure that the business is conducted by owning shares or holding voting rights in or in connection with that or any other entity or by virtue of Powers conferred by the articles of incorporation or any other document governing this or any other corporation shall be exercised in accordance with the will of the first-named partnership and, in the case of a partnership, the right to an interest in excess of half the assets of the corporation or of more than the Half of the company's divisible profit means partnership.

Section 39. (1) Subject to any provision of Section 40, the alienation of the asset shall be deemed to have taken place on the first day of the transferor's last period for an amount equal to the transferor's remaining expenses on that day.053e .FM page 291 Thursday-Friday 6 April 2006 12:07 p.m.292 Malaysian Law ACT 53

(2) In this paragraph, “transferor's most recent period” means, in relation to the disposal and acquisition of the asset, the base period (which is appropriate to the transferor's transaction for the purposes of which qualifying expenses have been incurred in relation to the asset) for the assessment year , which coincides with the first year of valuation for which an initial or annual provision can be made to the acquirer for the land if it is used for the acquirer's business or as an industrial building.

40. Any qualifying expenses incurred by the acquirer in relation to the asset for which it would otherwise be considered, except as provided in this paragraph, are disregarded for the purposes of this Annex and the acquirer is deemed to have incurred qualifying expenses have arisen in relation to the asset in the amount specified in paragraph 39 in relation to the asset; and in relation to the asset - (a) the date on which the acquirer is to be treated as having made the expense deemed to have been incurred; (b) the withdrawal of any provision which would apply to the transferor other than paragraph 39 and this paragraph;

(d) other matters which the Minister may consider necessary shall be determined in such manner as may be prescribed by regulations to be made for the purposes of paragraphs 38, 39 and this paragraph. Goods used in more than one company

41. In any case where a person has incurred qualifying expenses in relation to an asset and one or more of the following circumstances are established – (a) those expenses have been incurred and that asset is being used for the purposes of two or more of your ;

(b) those expenses are incurred and the asset has been used for the purposes of one of its businesses and the asset is subsequently used in that business and one other business or two or more other businesses of its; (c) those costs are incurred and the asset has been used for the purposes of one of its businesses and the asset is subsequently no longer used in that business and is used in another business or two or more other of its businesses; or

(d) after any of the circumstances referred to in the preceding paragraphs, the asset is disposed of or, if it has been used in two or more of his businesses, disposed of in respect of one or more of those businesses, the amount of any initial or annual subsidy due to that person payable from time to time in such circumstances, as well as any allowances or indemnity charges payable to her on disposal of property, and other matters to be determined by the Minister, will be discussed in this 053e .FM page 292 Thursday 6th April 2006 12:07 Income Tax 293 fixed

Certain buildings treated as industrial buildings

Section 42. (1) If an industrial building is used within the assessment period of an assessment year for purposes of a person's business and a building is erected by him and made available by him as living space for a person employed by him in that business, the latter Each time an employee occupies the building, the same as an industrial building used for the purposes of this trade and replaced by the otherwise accruing initial allowance within the meaning of paragraph 12, an initial allowance of two-fifths of the qualifying costs that this person was granted in the latter buildings incurred: Provided that if the expenses incurred by that person in the construction of the latter building are expenses of a kind to which paragraph 7 or 8 applies, that person may within three months (or such other period as the Director-General may approve) after the start of the assessment year it at the base period for which such expenses have been incurred, by written notice to the Director-General designate, that in lieu of any allowances pursuant to paragraph 22 or 30 in respect of such expenses he shall be granted allowances under this paragraph.

(2) For purposes of this paragraph, “employee” in relation to any business of any person does not include a director, any person having control of that business, or any person who is a member of the management, administration or office therein Business involved personnel.

42A. (1) If a person who carries out a commercial, gastronomic or touristic activity or an approved service project according to Annex 7B has, within the assessment period of a tax year, incurred expenses for the construction or purchase of a building for this purpose enterprise for the provision of housing for persons employed by him in that enterprise, that building shall be treated as an industrial building for the purposes of that enterprise whenever it is occupied by persons employed, and it shall be replaced at the subsidy that otherwise applies under paragraph 12, 16 or 42 Allowance equal to one tenth of the eligible expenses for that year and for each of the following nine assessment years would be granted.

(2) If, within the assessment period of an assessment year, a person has incurred expenses for the construction or purchase of a building for the purposes of that company for the provision of childcare to individuals for the purposes of his own company, employed by him in that company, that building shall be used for the purposes of this enterprise shall be treated as an industrial building each time it is used by persons so employed and shall be compensated for the amount of the subsidy that would otherwise be awarded for it under paragraph 12, 16 or 42 and an allowance equal to one tenth of the eligible expenses for it year and for each of the following nine assessment years.

(3) Notwithstanding anything else in this Schedule, in the case of a purchased building, the qualifying expenses for purposes of this paragraph are the purchase price of that building.

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(4) For the purposes of subparagraph (1), “persons employed by it” does not include a director, any person having control of that company, or any person who is a member of management, administrative or clerical staff, the company involved.

42B. If within the base period of an assessment year an individual has made, for a business purpose, capital expenditures to construct or purchase a building for a school or educational establishment approved by the Department of Education or any relevant authority, such building will be used for the purposes of this shall be treated as an industrial building and the amount of subsidy it would otherwise receive under paragraph 12, 16 or 42 shall be replaced by a subsidy equal to one-tenth of the qualifying expenditure for that year and each subsequent nine years of evaluation.42C . If, within the base period of an appraisal year, a person has, for business reasons, approved by the Minister capital expenditure on the construction or purchase of a building for the purpose of commercial, technical or vocational training, that building shall be treated as a construction industrial building for the purposes of that enterprise and shall be deducted by the amount replaced by the subsidy it would otherwise have received under paragraphs 12, 16 or 42, a subsidy equal to one-tenth of the Qualifying Spend for that year-end for each of the subsequent nine evaluation years.

Interpretation

43. In this Annex, unless the context otherwise requires, “asset” means an asset on which qualifying expenditure, qualifying agricultural expenditure, or qualifying forestry expenditure, as the case may be, has been incurred.

44. Where appropriate, any reference in this Annex to an asset or a substantial interest therein shall be construed as including a reference to a portion of, or a substantial interest in, an asset (or in the case of an asset or a substantial interest therein). in the case of undivided shares, the undivided part of the assets or the respective participation); and when so interpreted the Director-General shall make such distributions as are fair and reasonable to give proper effect to this Schedule.

45. For the purposes of this schedule, capital expenditures for --(a) the supply of machinery or plant includes capital expenditures for the rebuilding of such machinery or plant; (b) the construction of a building, including capital expenditures incurred in the reconstruction or conversion of that building.

46. When a person makes investments under a lease for the supply of machinery or plant for the purposes of his business, he is deemed to be the owner of that machinery or plant for the purposes of this Annex; and the qualifying expenses incurred by him for that machine or plant in the base period of an assessment year shall be deemed the principal part of any installment payment made (or, if there is more than one such payment, the sum of such payments). by him under the contract for that period.053e .FM Page 294 Thursday April 6, 2006 12:07 pm

47. For the purposes of this Annex, when an asset consists of a building, the owner of the same is deemed to own the relevant interest in the building.

48. A building for which qualifying expenses have been incurred is disposed of for the purposes of this table when one of the following events occurs:

(a) the sale, transfer or assignment of any interest in the building; (b) if that interest depends on the duration of the concession, the termination of the concession;

(c) if that interest is a leasehold right, the determination of that interest is relevant to others than the person entitled to acquire the inverse;

(d) the demolition or destruction of the building or in the event that the building is no longer used as an industrial building.

49. In this Schedule, “relevant interest” in relation to a building for which eligible construction costs have been incurred means (subject to paragraphs 50 and 51) the interest on the building to which the person who caused those costs was entitled when she attacked her.

50. When - (a) a person is entitled to two or more shares in a building if he incurs corresponding expenditure thereon; and

(b) any such interest is a reversible interest in relation to all others, such reversible interest is the relevant interest for the purposes of this schedule.

51. An interest does not cease to be the relevant interest for the purposes of this Annex where a lease or other interest is established to which the former interest is subject; and if the relevant right is a leasehold right and is extinguished by its delivery, or the entitled person acquires the reversible right thereon, the right into which that leasehold right passes becomes the relevant right .

52. (1) An asset for which a person has incurred qualifying agricultural expenses is disposed of for the purposes of this Schedule when one of the following events occurs:

(a) upon sale of the relevant interest in that asset; (b) where the relevant interest is a lease interest and the lease terminates when a new lessee or the owner of the interest makes payment to that first-named person upon immediate reversal; (c) in the case of transfer or transfer of the asset for consideration; or (d) when the asset is no longer used by it for the purposes of any of its businesses which consists in whole or in part of the running of a farm. 53

(2) For the purposes of this paragraph, "relevant interest" has the meaning it would have if paragraphs 49 and 50 referred to: (a) a building, whether land or building;

(b) qualifying construction expenditures went to qualifying agricultural expenditures;

53. (1) Any reference in this Schedule to the sale, purchase, transfer or assignment of an asset includes a reference to the sale, purchase, transfer or assignment, as the case may be, of that asset together with another asset, whether or not qualifying expenditures, qualifying agricultural expenditures or qualifying forestry expenditures, as the case may be, have been incurred for the latter asset and, in each case, either the realizable value or the purchase price, as the case may be, such assets which, upon a reasonable apportionment, would be proper attributable to the first-named asset shall be deemed to be the realizable value or, where applicable, the purchase price of that first-named asset for the purposes of this Annex. (2) For the purposes of this Article, all assets sold, acquired, transferred or transferred pursuant to an agreement shall be deemed to be sold, acquired, transferred or transferred, as the case may be, together, excluding h, provided that separate prices are agreed for each such asset will be or are proposed or separate sale, purchase, transfer or assignment of such assets is or is proposed. (3) Subparagraphs (1) and (2) of this paragraph shall apply, with any necessary modifications, to any sale, purchase, transfer or transfer of any property or relevant interest in an asset together with any other property or substantial interest therein Asset.

54. If a person has incurred expenses in respect of an asset that are deductible in accordance with Chapter 4 of Part III in calculating that person's adjusted income or adjusted loss for the base period of a valuation year of an entity of his/her person, those expenses will be recognized in respect of does not treat that asset as an eligible expense or eligible agricultural expense or eligible forestry expense.

55. For the purposes of this Schedule - (a) in the case of costs incurred in the construction of a building, the date on which such costs are incurred is the date on which construction of the building is completed and in which, in the case of expenses for the provision of machines or systems for commercial purposes, the day on which these expenses are incurred is the day on which the machines or systems can be used for commercial purposes; and

(b) in all other cases, the date on which the amount of any expense becomes due shall be the date on which that amount of expense was incurred:

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Provided that if a person incurs expenses for the purposes of any of his business which he is about to carry on, such expenses shall be deemed to have been incurred when he commences the carrying on of the business.

56. For the purposes of this Annex, an asset that is temporarily unused in connection with a person's business is deemed to be used for the purpose of the business if it was used for the purpose of the entity immediately before it fell out of service and during kept ready for use again for these purposes during the period of non-use.

57. When an asset which is temporarily out of use in connection with a person's enterprise can no longer be used for the purposes of the enterprise or when its disuse can no longer reasonably be considered to be temporary, it is deemed to have ended at the beginning of the period of non-use for business purposes and any valuations are made as necessary to offset the benefit of any provision made for a measurement year as a result of applying paragraph 56 in relation to the asset.

58. For the purposes of this Annex, a building is acquired by a person through the sale, transfer or assignment of a significant interest in the building to that person.

59. Any reference in this Schedule to the date of sale, purchase, transfer or transfer shall be construed as a reference to the date of completion of the sale, purchase, transfer or transfer, as the case may be, or the date on which possession of the asset the subject of the sale, purchase, transfer or assignment (or the asset in which there is a substantial interest that is the subject of the sale, purchase, transfer or assignment, as the case may be) is, whichever occurs first.

60. If a person who owns a building leases it and that building is used as an industrial building, then in applying this Table to that person in relation to that building any reference to a business by him should be understood as such reference to the source in relation to any income to which that person is entitled under this Lease and any reference to a Base Period (in relation to any reference to an entity) shall be deemed a reference to the Base Period in relation to that Source.

61. Any plant or machinery used for business purposes and for which qualifying expenses have been incurred will be disposed of for the purposes of this Annex if it is sold, disposed of, destroyed or no longer used for the purpose of that business.

62. (1) Subject to subparagraph (2), for the purposes of this Annex, when an asset is disposed of by a person, its disposal value is an amount equal to its market value at the time of its disposal or, in the case of disposal by sale, transfer or assignment -

(a) value equal to its market value at the time of sale, transfer or assignment; or

(b) the net proceeds of the sale, transfer or assignment, whichever is greater:

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Provided if the asset is disposed of in such circumstances that that person receives insurance or indemnity payments in respect of the asset, its realizable value will be deemed to be an amount equal to its market value at the time of its disposal or so (2) On disposal of a Assets of the type to which paragraph 2 number 2 applies, the sale amount is an amount that is in the same ratio as the sale amount determined in accordance with paragraph (2). 1) ) as a qualifier, the set-up costs determined in accordance with paragraph 2, paragraph 2 refer to the eligible set-up costs determined in accordance with paragraph 2, paragraph 1.

(3) If, pursuant to an agreement with the government, state government or local authority in connection with a privatization project, an asset used in the privatization project is sold to the government, state government or local authority, as the case may be, the realizable value is a Amount equal to the net disposal proceeds.

(4) Notwithstanding subparagraph 62(1), where an asset for which a person has incurred qualifying establishment costs for the purpose of his business is disposed of by way of a gift, the realizable value shall be deemed to be nil if the gift is made for --

(a) a technical or vocational training institute established and maintained by the government or a public body;

b) technical or professional training institute approved by the Minister; or (c) an accredited research institute as defined in Section 34B.

63. Subject to paragraphs 64 to 66, a building is an industrial building for the purposes of this Annex if it is used for business purposes and --(a) is used as a factory;

(b) used as a wharf, pier, jetty or similar structure; (c) is used as a warehouse and the business consists, or principally consists, in leasing storage space to the public;

(d) the business is that of a company that supplies water or electricity for public consumption or that of a telecommunications company that provides telecommunications services to the public; (e) used in connection with the running of a farm and the business consists, or principally consists, in running the farm with or without other farms; or

(f) used in connection with the exploitation of a mine and the business consists or consists primarily of the exploitation of a mine, with or without other mines.

64. In subparagraph 63(a) “Factory” includes (a) a building consisting of a mill, workshop (other than a workshop used for the repair or maintenance of goods where repair or maintenance is specified in 053e .FM Page 298 Thursday, April 6, 2006 00:07 Income Tax 299

together with or adjacent to the business of selling such goods) or other buildings for the housing of machinery or factories of any kind for the manufacture of products or the subjecting of goods or materials to a process or the production of energy used for the purposes this manufacture or process; and

(b) a building (within the same area as a building used as a factory) used for the storage of raw materials, fuel or supplies necessary for the manufacture of that product or the processing of those goods or materials, or for warehousing of that product or those goods or materials if processed prior to their sale.

65. (1) When a building is an industrial building, any building furnished as a dining room, lavatory, lounge, lavatory, bathroom, lavatory or lavatory for persons employed in the enterprise for which that industrial building is used, treated the same as an industrial building. (2) In the case of a farm where a building is intended for the welfare of people or as housing for a person employed in connection with the running of a farm, when the building is likely to be of little or no value to anyone Person, except in connection with the operation of this agricultural holding or another agricultural holding, this building is to be treated as an industrial building.

(3) Subject to paragraph 67B, a building used as a dwelling (other than accommodation of the type referred to in subparagraph (2)) or as a retail store, showroom or office shall not be treated as an industrial building.

66. When part of a building or extension of a building is used as an industrial building and the other part of the building or extension, as the case may be, is unused, then when the capital expenditures incurred in constructing that part are unused if not more than one tenth of the capital expenditure incurred for the construction of the entire building or extension, the building or extension shall be treated as an industrial building for the purposes of this Annex; and, if all or part of the capital expenditure on the construction of the unused part is not identifiable as a capital expenditure on the whole building or extension, the latter expenditure or part thereof that was not incurred as the respective parts of the building or extension become as the case may be, distributed by reference to the respective bottom faces of those respective parts or in any other manner the Director General may direct.

67. If capital expenditures are incurred in preparing, cutting, tunneling or leveling land to prepare a site for the installation of machinery or equipment to be used for business purposes, then if such expenditures represent 75% of the total of such expenditures and the capital expenditure made for that machine or plant, the machine or plant shall be treated as a building for the purposes of this Annex in relation to that total expense, provided that such machine or plant is used for the purposes of that transaction; and that total expenditure should be treated as the amount of qualifying expenditure incurred on that building that should be treated as disposed of when that plant or machinery is disposed of.

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67A. If, pursuant to an agreement with the Government, a person incurs capital expenditures for the construction, reconstruction, expansion or improvement of public roads and ancillary works, the costs of which are recoverable by the collection of tolls, the roads and ancillary works in relation to such expenditures will be charged for the treated as buildings for the purposes of this Annex and the provisions of this Annex relating to industrial buildings shall apply mutatis mutandis to such buildings: Provided that -

(a) the balance of the remaining costs referred to in paragraph 68 of this Schedule shall be reduced by the amount of any compensation received; and (b) the realizable value of the asset is considered to be zero when the contract expires or is terminated.

67B. (1) A building erected by a person pursuant to an agreement between that person and the Government on a building lease and transfer basis shall be treated as an industrial building for the purposes of this Schedule, subject to the consent of the Minister.

(2) If subparagraph (1) applies:

68. A reference in this Annex to residual expenditure at any time in relation to an asset on which a person has incurred qualifying expenditure shall be construed as a reference to the total qualifying expenditure incurred by that person in the delivery, construction or purchase the asset accrued prior to that date less - (a) the amount of any initial provision made by that person in respect of that asset for any measurement year;

(b) any annual award made to that person in respect of that asset for any assessment year prior to that date;

(c) any annual grant that would have been (or could have been) claimed by that person in respect of that person if the expense related to the asset had been a qualifying expense and the asset was used for the purposes of its business would have been). so good would have been done to him for a rating year before that date.

69. Any reference in this Schedule to an allowance awarded to a person for a probationary year or to a bursary to which a person is entitled under this Schedule for a probationary year is a reference to:

(a) a provision recognized for a measurement year and accrued or expected to be accrued for that year (any accrual treated as if it were at the end of the reporting period to the appropriate source consisting of an entity, made for this year year) ;and

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(b) any subsidy that would have been granted or to which that person would have been entitled in respect of a source consisting of an enterprise of his year of assessment but for insufficient or absent adjusted income or the existence of an adjusted loss for the base period for this year.

70. In this Annex, the "purchase price" in connection with the purchase of an industrial building includes any legal fees, stamp duty or other incidental expenses incurred by the purchaser in connection with the purchase, but not so much the purchase price of the building and any land or interest therein, which were acquired together with the building and are attributable to the property or such shares; and for the purposes of paragraph 53 the building and land, or interest therein, as the case may be, are treated as separate assets.

additional rules

71. If, for a period of less than two years (other than as a result of that person's death), a person has incurred Eligible Expenditure in respect of any property belonging to him, the Director-General may determine that any subsidy, except as provided in this paragraph, it would be done to him in relation to that asset is not done; and, if such an allowance has been made, he is credited for the measurement year in the base period for which the asset was disposed of by him (the relevant base period for the source consisting of the transaction for which the expense was incurred).

72. (Excluded by Act A226).

73. If a person has incurred chargeable expenses in respect of an asset used for the purposes of an enterprise of that person, then if the asset is only partly used for the purposes of the enterprise, a deduction shall be made by that person in accordance therewith Notes for a measurement year in respect of the asset will consist of what would have been the amount of the provision claimed and payable for that year had the asset been fully utilized in the base period for that year for the purposes of the enterprise as of Director-General, taking into account all the circumstances of the case:

Provided that in determining the residual expenditure at any time in respect of the asset in respect of any provision recognized in respect of that asset for any assessment year, account shall be taken of the full amount of such provision other than as provided for in this paragraph , would have accrued to him that year in relation to that asset.

§ 74. If a person has a source within the meaning of §§ 55 to 58, any deduction or charge payable to him or her for a measurement year in respect of a source and an asset for a measurement year shall be determined in such a manner that required by regulations made for the purposes of this paragraph.

75. Subject to paragraph 75A, if by reason of a person's insufficient or no adjusted income from an enterprise he owns for the base period of a measurement year, or the existence of an adjusted loss from the enterprise for that period, effect 053e .FM page 301 Thursday April 6, 2006 12:07 PM302 Malaysian Laws ACT 53 not or not fully granted

Total value of all rebates to be granted to him in that year in relation to the source consisting of that deal, rebate or added value not granted (or to the extent not granted). accrued to him for that year) for the first subsequent assessment year for the base period for which there is adjusted income from that transaction and so on for subsequent assessment years until the full amount of the subsidy or total amount payable to him has been paid.

*75A. For the purposes of this Annex and Section 42, any benefit or addition of benefit in respect of a valuation year not made to a company in accordance with paragraph 75 shall not be made to that company unless the director is satisfied that the shareholders of that company on last day of the base period for the assessment year in which such accrual or addition was not made were substantially the same as the shareholders of that company on the first day of the base period for the assessment year in which such accrual or add-on would otherwise accrue to the company are made in accordance with this Appendix and are available for the purposes of this section, and such subsidy or value that would have accrued to the entity in a valuation other than this paragraph year shall be disregarded for subsequent years of valuation.

75B. (1) For the purposes of Section 75A ----

(a) the shareholders of the company on any date are substantially the same as the shareholders on any other date if on both dates (i) more than fifty percent of the paid-up capital in respect of the common stock of the company is paid by or on behalf of the same person held; and

(ii) more than fifty percent of the par value of the shares attributable in respect of the common shares of the Company are held by or on behalf of the same person;

(b) Shares in the Company held by or on behalf of another company shall be deemed to be held by the shareholders of the latter company; and (c) any subsidy or addition of subsidy not paid for a year of assessment referred to in this paragraph consists of a subsidy payable under this Schedule for that year of assessment but shall not include any subsidy amount treated as such made for that assessment year in accordance with paragraph 75. (2) In this paragraph, "common stock" has the same meaning as in subsection 44(5C).

75C. If there is a material change in the shareholders of a company referred to in Section 75A, the Secretary may, in special circumstances, exempt that company from the provisions of Section 75A.

*NOTE See Section 33 of Act 644 for explanation.053e .FM Page 302 Thursday, April 6, 2006 12:07 p.m. Income Tax 303

76. A person shall not be entitled to a grant under this Schedule for any assessment year unless he or she applies for a grant for that year under paragraph 77.

Article 77. (1) Any application by a person for a subsidy under this Annex for a year of assessment must be made in a written declaration containing the information necessary to prove the applicant's entitlement to the subsidy and a certificate signed by the applicant that this confirms details. (2) Any claim that a person has to make for a year of assessment under this paragraph shall be accompanied by a statement of their income under Section 77 or Section 77A for that year.

78. For the purposes of this list, where the base periods for two assessment years overlap for an OPE, the period common to those periods is deemed to be the first of those periods and not the last of those periods.

79. Where the Director General has exercised the power conferred on him by subsection 21A(3) in respect of a person's business to determine that the base period for a year of assessment shall consist of a specified period, any allowance or allowance shall apply into account or to that person pursuant to this table in relation to the source consisting of that business for that year shall be determined by reference to a period determined by the General Manager and such latter period shall be considered as the base period for that year in the application of this paragraph with this appendix.

80. The Minister may prescribe a building constructed or purchased by a person and used by him as an industrial building for the purposes of his enterprise and the amount of subsidy or subsidies that would otherwise be accorded to him under paragraph 12, 16 or 42 .

81. The Minister may prescribe any capital expenditure made by any person in his enterprise as qualifying agricultural expenditure under paragraph 7 and the amount of subsidy or subsidies in respect of such qualifying agricultural expenditure which would otherwise accrue to him under paragraph 7 with paragraphs 22 and 23. APPENDIX 4

[§§ 43 and 44]

Issues with prospecting operations

1. Eligible prospecting expenses for the purposes of this Annex are expenses incurred wholly and exclusively for the search for, discovery, access to or testing of mineral deposits in an eligible area, but excluding expenses for the acquisition of

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(a) place of origin of deposits;

(b) the location of works likely to be of little or no value when the source is no longer being worked on;

(d) Rights to Deposits.

2. (a) A person who incurred Qualifying Prospecting Expenses in the Base Period of a Assessment Year may elect to claim a deduction under subparagraph 5(a) (in this Schedule such person and Assessment Year are referred to as "the Prospector" and "the relevant year").

(b) If an election has not been held in accordance with subparagraph (a), a person who has incurred qualifying prospecting expenses may claim a deduction for the relevant year in accordance with subparagraph 5(b).

3. A claim under paragraph 2 must: (a) if an election is held, it must be in writing and be irrevocable; (b) indicate the eligible area to which the claim relates and the amount of qualifying prospecting expenses claimed to be deductible, (c) include the statement described in paragraph 4 if a claim for deduction is made under subparagraph 5(b). ; and

in the case of sub-paragraph (b) or (c), it shall contain any other information necessary for the Director-General to deal with the complaint in accordance with this Annex.

4. The statement referred to in sub-paragraph 3(c) is a statement by the prospector that--

(a) on a date prior to the end of the base year for that year, it has permanently ceased exploring for mineral occurrences in the area to which the claim relates in order to gain access to occurrences discovered by it in that area; and to test such deposits; and

(b) it has exercised no continuing intent and intends not to engage in any business consisting of or involving the exploitation of any mine in that area.

5. Subject to this Schedule, a deduction shall be made for the relevant year in accordance with subsection 44(1)--

(a) an amount equal to the amount of qualifying prospecting expenses incurred in the base period of the relevant year: provided that the area specified in point (b) of the third subparagraph is no longer an eligible area by virtue of a lease, license or certificate (other than a prospecting license or a certificate) granted or issued pursuant to any written Mining Regulation Act granted, issued or conferred upon the garimpeiro at 053e .FM Page 304 Thursday April 6, 2006 12:07 PM Tax Income 305

each assessment year after the relevant year, an amount equal to such assessment costs shall be added in accordance with paragraph 43(1)(c) in determining garimpeiro's total income for that assessment year after that relevant year, or if it has incurred costs for more than one relevant year for the prospecting incurred, the sum of all these costs for all these years; or (b) an amount equal to the amount of qualifying prospecting expenses incurred prior to but not more than ten years prior to the end of the base year for the relevant year.

6. Where --(a) a claim is ineligible under this Schedule because the area specified in subparagraph 3(b) is not an Eligible Area or is misdescribed, or because the amount of Cost so specified is excessive; and (b) the Director General is of the opinion that the claim would be admissible in whole or in part if changes were made which would affect the declared area or values,

he can make those changes and allow the claim to be changed (in whole or in part).

7. Subject to paragraph 8, whether or not a claim is eligible under this Schedule in respect of an Area and an Issue, no further claim may be made for any Assessment Year in respect of that Area or Issue.

8. If a claim under this Annex in respect of an area and cost is rejected because the Director-General is dissatisfied with a matter referred to in the statement described in paragraph 4, a new claim in respect of that area and these costs are provided for a subsequent assessment year.

9. If a claim is made under this Schedule in respect of an Area and Cost, the amount of any deduction that would otherwise be made under subsection 44(1) under this Schedule for any or all relevant years shall be reduced to the amount in which to the extent provided for in paragraphs 10 to 13 (this amount is referred to in these paragraphs as a preliminary deduction).

10. (1) If machinery or equipment has been purchased from the Garimpeiro and used in an operation involving qualifying prospecting costs to which the provisional deduction relates (regardless of whether it has been used in this way for the first time or not) , the provisional deduction under subparagraph 5(a) is reduced - (a) if the machine or plant was sold in the base period of the relevant year by the amount of any consideration for the sale (determined under paragraph 11);

(b) for an amount equal to any amount received or received by the garimpeiro in the base period of the relevant year for use of the machinery or equipment outside of an establishment; and

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(c) if the machinery or equipment has not been sold within the base period of the relevant year in which he has finally ceased prospecting for mineral resources in the area to which the claim relates, gain access to the deposits he has discovered in that area and to test those deposits for an amount equal to their market value on the date they finally ceased prospecting in that area.

(2) If the machinery or equipment was acquired from the garimpeiro and used in an operation related to qualifying prospecting expenses to which the provisional deduction relates (regardless of whether it was used for the first time in this way or not), the Der the provisional deduction under subparagraph 5(b) will be reduced --(a) if the machinery or equipment was sold before the date referred to in subparagraph 4(a), by the amount of consideration for the sale (determined in accordance with paragraph 11) ;

(b) if the machinery or equipment has not been sold before that date, for an amount equal to its market value on that date; and

(c) for an amount equal to any amount paid by the garimpeiro before that date (and in the case of machinery or equipment to which paragraph 14 applies, after the date on which the machinery or equipment is first used for such an operation were) received or has received) for the use of the machine or system, except in such an event.

11. For the purposes of paragraph 10, the consideration for the sale of machinery or plant shall be determined by taking into account the amount of any cash consideration and the market value of any consideration in kind or, if consideration is in kind only, by taking into account the amount of any consideration received from one of them--

(a) the non-monetary consideration; or

(b) the machinery or equipment at the date of sale, whichever is greater:

Provided the consideration is equal to the market value of the plant or machinery at the time of sale, in any case where the monetary consideration is less than market value and the general manager is satisfied that the sale is a transaction to which Section 140 applies .

12. The interim deduction shall be reduced--(a) by an amount equal to any amount received or to be received by the prospector at any time prior to the end of the base year of the relevant year or during the base period of the relevant year, as the case may be case, through the sale of rights or other benefits arising out of or in connection with the area to which the provisional deduction relates and for an amount equal to the market value of a consideration in kind at the time of sale so obtained or receivable; and

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(b) for an amount equal to any amount received or to be received by the prospector at any time before the end of the base year of the relevant year or during the base period of the relevant year, such as a grant or other payment by the government, any state government or any statutory authority intended, directly or indirectly, to reduce the burden of qualifying prospecting expenses to which the provisional deduction relates.

13. If, due to the fact that, in the perspective of the prospector, there is no total or an insufficiently defined total for the relevant year, a deduction that would otherwise be made under subsection 44(1) of this Annex is not made or can only be made in part , the deduction (or, if the deduction is only partially possible, the non-deductible amount) is made for the first year of assessment (the subsequent year of assessment of the year in question) for which there is a defined sum in the calculation of the prospector's total income , and then to the years of assessment after that first year until the full deduction has been made.

14. If, in the course of operations relating to qualifying prospecting expenses, the operator uses any machine or plant acquired by him, except for that use, the market value of the machine or plant when first used in such operation (and not its price or market value when first acquired by him) is deemed to be included in this edition.

15. If - (a) a reduction has been made under paragraphs 10 to 13 consisting of an amount equal to an amount owed (but not received) by the garimpeiro; and

(b) within six years of the year in question, the prospector shall certify to the Director-General that the amount in question, or part thereof, is unclaimable;

such adjustments in the assessment of the prospector's total income for a year of assessment shall be made as necessary to calculate the tax paid by him which would not have been paid had he been granted the deduction which was due to him on that amount or portion if this amount was not deemed due; and an amount equal to any tax so calculated shall be returned to the prospector by the director-general: provided that in applying this paragraph to a portion of that amount, that portion shall be left out of the account on any subsequent application of this paragraph .

16. If the garimpeiro is paid in the base year for an assessment year subsequent to the relevant year coinciding with the year in which he permanently ceased prospecting for, accessing or testing mineral deposits in that area ,

(a) an amount to which paragraph 12 would have applied if received or receivable in the base year of that year; or053e .FM Page 307 Thursday 6 April 2006 12:07 p.m.308 Malaysian Law ACT 53

(b) any amount on account or in respect of any amount treated as irrecoverable for which an adjustment has been made under paragraph 15, the amount so obtained shall be added in accordance with paragraph 43(1)(c) to determine the prospector's total income for the following year : provided that the amount (if any) added in determining the Prospector's aggregate income for a year under this paragraph, together with any amount added to determine his aggregate income for a year prior to the year in Reference to the same claim shall not exceed the total deductions permitted under the claim in any of the preceding paragraphs for the relevant year and each subsequent year of assessment.

17. In this Schedule, "defined aggregate income" in relation to the prospector and an assessment year means his aggregate income for that year less any deductions to be made for that year under subsection 44(2);

“Eligible Area” means a specific area in Malaysia which does not consist of or include an area for which a lease, license or certificate (other than a prospecting license or certificate) has been held at any time prior to the end of the base year for the relevant year , granted or issued under any written law regulating mining and granted, issued or conferred to the garimpeiro before the end of that base year.

ANHANG 4A

[§§ 43 and 44]

(Excluded by Law 644)

APPENDIX 4B

[§§ 43 and 44]

Qualified Pre-Operating Companies

despise

1. Qualifying pre-operational business expenses for the purposes of this Schedule are expenses, as defined in paragraph 2, incurred by a Malaysia resident company in connection with a proposal by that company to make investments in a company authorized by the Minister in a country outside Malaysia Malaysia .053e . FM Page 308 Thursday, April 6, 2006 00:07 am Income Tax309

2. Subject to paragraph 1, qualifying pre-operational business expenses for purposes of this Annex are:

(a) expenses directly attributable to the conduct of feasibility studies; (b) expenses directly attributable to conducting market research or obtaining marketing information, or

(c) travel expenses in connection with travel to a country outside Malaysia by a representative of the Company, travel necessarily undertaken for the purpose of conducting a feasibility study or market research and actual expenses, subject to a maximum of four hundred ringgit per day, for accommodation and Support throughout the period, starting with the departure of the Malaysian representative and ending with his return to Malaysia.

3. Subject to this Addendum, an amount equal to qualifying pre-operational business expenses incurred in the base period for the assessment year (referred to in this Addendum as "the relevant year" for that assessment year).

4. If, because there is no total or no sufficiently defined total for the year in question, a deduction that would otherwise be made in accordance with Section 44 (1) in accordance with this Annex cannot be made or can only be made in part, the deduction (or, if only part of the deduction can be made, as much of the deduction as cannot be made) for the first assessment year (which is an assessment year subsequent to the relevant year) for which there is a certain sum in the calculation of total income , and so on for the years of assessment following the first year until the full deduction has been made.

5. In this Schedule, “Total Defined Income” in relation to an assessment year means the total income for that year less any deduction in accordance with subsection 44(2) or Schedule 4 or 4A.

APPENDIX 4C

[§ 44]

(Excluded by Law 644)

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APPENDIX 5

[§ 102]

appeals

appeal hearing

1. (1) Each complaint is heard by three special representatives, at least one of whom must be a person with legal experience or other legal experience within the meaning of Section 98 (3).

(2) If a Chair of the Special Commissioners has been appointed and is present at the hearing of an appeal, he shall preside over the hearing. (3) If at the hearing of an appeal no Chairman of the Special Stewards has been appointed or if the Chairman is absent, the Special Stewards present shall elect one of them (who shall be a person of experience of the kind referred to in subparagraph (1)) to be the to lead the hearing.

2. The Special Commissioners will meet for the appeal hearing at--(a) Ipoh;

(b) Kota Kinabalu;

(d) Küching;

(e) Angels;

(f) Penang; e

(g) such other locations (if any) as they deem appropriate.

3. The special commissioners shall make a program for each semester in advance of the places and dates at which they intend to sit, and shall adhere to their program as far as possible, without prejudice to their right to vary the program according to the circumstances they appear to require.

4. The Registrar shall notify the Director-General of the program drawn up pursuant to paragraph 3 as soon as practicable after its establishment and shall, as far as possible, keep him informed of any changes.

Forwarding of objections etc.

5. If the Director-General files an appeal under Section 102, he will send the Registrar a copy of the notice of appeal at 053e.FM Page 310 Thursday, April 6, 2006 12:07 p.m. Income Tax 311

Section 99, along with a subpoena address and a request to hear the appeal.

6. The notice sent pursuant to paragraph 5 constitutes the notice of appeal and the address of the complainant contained therein shall be deemed to be the address for service of the complainant.

7. Each Complaining Party may change its address by written notice to the Registrar and to the other Party. Place and date of the hearing

8. Upon receipt of a request under paragraph 5 for an appeal to be held at the hearing, the Registrar shall determine such a place and date for the hearing as he thinks appropriate and shall give not less than twenty-eight days' prior notice to the Appellant and the Director-General of the date and Location set like this:

Provided that the Director-General, before making an appeal, may agree in writing with the appellant that one of the vacancies in a program prepared pursuant to paragraph 3 shall be designated as the place of appeal hearing and, if he does so:

(a) send a copy of the Agreement to the Registrar when submitting the Complaint; and

(b) The Registrar shall designate the place of the hearing as so agreed.

9. One of the Special Commissioners, at the request of either party of appeal, after giving the other party an opportunity to be heard, may alter any date or place specified in paragraph 8, and may do so in the case of a place fixed although the appeal has been partially heard there.

Appeals can be negotiated together

10. One of the Special Commissioners may order: (a) two or more appointments by the same person; or

(b) two or more complaints filed by different persons if they agree to be heard together.

11. Any of the Special Commissioners may, on its own initiative or at the request of any party, make an order under subparagraph 10(a) of any of the resources concerned, but such order shall not be made until the portions of those resources have been given an opportunity to be heard .

reach of the argument

12. When hearing a complaint, the complainant may invoke grounds for complaint other than those set out in the notice of appeal and amend the so-called grounds of complaint:

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Provided that if he does so without adequate notice to the Director-General, the Special Commissioners shall adjourn the hearing for a reasonable period of time if the Director-General so requests.

burden of proof

13. The burden of proving that a review which is the subject of a complaint is excessive or erroneous rests with the complainant. Representation and Attendance

14. For appeal purposes - (a) the Director-General may be represented by an authorized officer, counsel or solicitor;

(b) the Complainant may be represented by counsel or tax agent, or by counsel and tax agent; and

(c) if the complainant is the principal within the meaning of Section 67, he may be represented by the representative within the meaning of that Section.

15. In paragraph 14, “Legal Officer” means a legally qualified officer authorized under the applicable law in any part of Malaysia to represent the Government in civil actions by or against the Government.

16. The Director-General and the complainant may: (a) appear at the time and place appointed for the hearing of the complaint; and (b) do anything else or take any other action in connection with the Objection, whether in person or through an agent of the type referred to in paragraph 14.16A. If either party agrees to an appeal either in person or through an agent of the type referred to in paragraph 14 appear at the time and place appointed for the hearing of the appeal, the Special Commissioners may, at the request of either or both parties, grant an adjournment of the hearing on such terms as they think fit, including terms as to the cost of the adjournment to the Special Commissioners and the Party not requesting an adjournment to the party or parties (as the case may be) requesting an adjournment.

17. (1) If a party to an appeal fails to appear in person or through a representative of the kind referred to in paragraph 14 at the time and place appointed for the hearing of the appeal, the Special Commissioners - (a ) shall, if they are satisfied that the defaulting party is unable to appear because of illness or other valid reason, they must adjourn the hearing to such time as they deem appropriate, or they may hear the appeal and decide without the defaulting party if the defaulting party so chooses required.

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(b) if they are not satisfied, they may hear and decide the complaint in the defaulting party's absence, or they may adjourn the hearing for such time as they see fit.

(2) If both parties to an appeal fail to appear in person or through a representative of the kind referred to in paragraph 14 at the time and place fixed for the hearing of the appeal -

(a) if either party is unable to persuade the Special Commissioners that it is unable to attend because of illness or other just cause, they may, in the absence of both parties, decide the appeal or adjourn the hearing, which they consider a reasonable time, reasonable and, if the hearing is postponed, may require one or both parties to bear such costs as they deem reasonable;

(b) if the Special Commissioners are satisfied that either party is prevented from attending by illness or other just cause and are not satisfied that the other party is prevented, they shall adjourn the hearing for such time as they think fit Period. or they may rule on the complaint in the absence of the parties if the party prevented so requests;

(c) if the Special Commissioners are satisfied that both parties are prevented by sickness or other just cause, they shall adjourn the hearing until such time as they think fit, or they may rule on the appeal in absentia, if the parties ask her.

18. If, after a decision has been made under paragraph 17, because of a party's failure to appear at the appointed time and place for the appeal hearing, the Special Commissioners shall be satisfied with any request made within thirty days of the issuance of the order, If the defaulting party is unable to appear due to illness or other valid reasons, it can revoke the order and set a date and place for a new appeal hearing. Powers of the Special Commissioners

19. The Special Commissioners shall have (a) the authority to summon to the appeal hearing any person who, in their opinion, is or may be able to testify in relation to the appeal; (b) Power when a person is summoned to testify or not to be heard as a witness;

(c) authority, when a person is summonsed, to require him to produce any books, papers or documents in his custody or control which the Special Commissioners deem necessary for the purposes of the appeal;

(d) authority, when a person is summonsed, to reimburse him for all reasonable expenses incurred in connection with his presence;

(e) all powers of a lower court in relation to the obligatory appearance of witnesses, the hearing of affidavits and punishment for contempt;

(f) Subject to subsection 142(5), the power to admit or reject evidence presented, whether oral or documentary and admissible or inadmissible under the provisions of any then-current written law relating to the admissibility of evidence ; and (g) power to defer or defer the hearing of any appeal from time to time (including power to defer consideration of its decision). witnesses obliged to tell the truth, etc.

20. Any person who is examined by or before the Special Commissioners as a witness, under oath or otherwise, shall be bound by law to tell the truth and, if required by subparagraph 19(a), such books, papers or documents in his custody submitted or under their control as the Special Commissioners may require under subparagraph 19(c).

costs for witnesses

21. (1) The costs allowable under subparagraph 19(d) shall be assessed by Clerkon on the scale used in civil proceedings before a lower court and shall be paid by the complainant or the Government as directed by the Special Commissioners. (2) In a case where Section 67 applies, the Special Commissioners may order that the expenses specified in subparagraph (1) be borne by the Representative (as referred to in this Section); and, where they so provide, subsections (4) through (7) of this Section shall apply as if such expenses were taxes owed by the Agent. procedure

22. Subject to this Act and any regulations made pursuant to Section 154(1)(d), special commissioners may direct the procedure at the appeal hearing and their own procedure.

decide orders

23. As soon as practicable after the conclusion of the appeal hearing, the Special Commissioners shall make their decision on the appeal in the form of an order, known as an Order, which, subject to this Annex, shall be final.

24. A decision may be read or summarized by one of the Special Commissioners or by the Registrar, in the presence of the parties, if the Special Commissioners deem it appropriate; but the failure of an order to be read or summarized does not affect its validity, and the fact that an order is read or summarized does not relieve the Registrar of his obligation under paragraph 44 to cause a copy of the order to be served on the parties .

053 .FM Page 314 Thursday, April 6, 2006 12:07 AM Income Tax 315

25. If the Special Commissioners disagree as to the decision of an appeal -

(a) the majority opinion shall prevail; and (b) the Special Commissioner who disagrees with the majority opinion must sign the resolution pursuant to paragraph 44 (unless he is unable to do so under that paragraph) but in so doing shall indicate his fact of disagreement and may, if he deems it appropriate, add a justification for it.

26. Subject to paragraphs 25 and 31, a resolution shall confirm or reject the assessment to which the appeal relates, or direct the Director-General to correct the assessment; and if changes are envisaged, the order shall: (a) state the relevant changes;

(b) require that appropriate changes be determined by agreement between the parties or, if there is no agreement, by the Special Commissioners; or

27. If a decision is made under subsection 26(b) or (c) with respect to an appeal, section 101 shall apply as if references to the order had been replaced by references to the notice of appeal under subsection 99(1) (each agreement pursuant to the contemplated arrangement having the same effect as an agreement of the kind referred to in subsection 101(2)) and section 102 shall apply mutatis mutandis where such agreement does not materialise, such as -

(a) if special commissioners are required to bring a case in relation to the request under paragraph 34, section 102 shall not apply until all procedures relating to the case have been completed; and (b) if the Director-General has cause to refer the appeal to the Special Commissioners under Section 102, he must do so by providing the Registrar and Appellant with a written statement that a further hearing has become necessary because of the failure of the appellate parties to agree.

28. If a rehearing is appealed under paragraph 27, it is not necessary that the rehearing be held before the same special commissioners as those who heard the previous case. Annoying and frivolous appeals

29. (1) If the special commissioners on appeal fail to annul or change an estimate, if they consider the appeal to be frivolous or frivolous, they may require the appellant to pay the special commissioners expenses not exceeding five thousand ringgit.

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(2) To the extent that Section 67 applies, the special commissioners may charge the representative (within the meaning of this Section) for the costs pursuant to Paragraph 1; and if so, subsections (4) through (7) of this section will apply as if such expenses were taxes owed by the Agent.

30. Subject to any declaration made under paragraph 31, any amount ordered for payment under paragraph 29 shall become due and payable to the complainant or his representative (within the meaning of section 67) after a period of seven days from the date on which the order for payment was issued. , as the case may be, and are recoverable as government debt.

§ 31. (1) The special commissioners can fix costs according to § 29, even if the complainant is not present at the appeal hearing. (2) When Special Commissioners waive expenses under paragraph 29 -

(a) shall be included in the order of the decision made pursuant to paragraph 26; and (b) the complainant or representative (within the meaning of section 67) may, within twenty-one days after the request for a ruling has been served on him, make a plea to the Special Commissioners, orally or in writing, and state the reason that the costs should not have been claimed or why the ordered costs should be reduced and special commissioners, if satisfied with the representation, may reimburse all or part of the ordered costs.

costs and fees

32. Except as expressly provided in this Schedule, the Special Commissioners shall not make orders for the payment of the costs of an appeal.32A. (1) Except as provided in paragraph 30, all sums payable by the Special Commissioners as expenses shall be due and payable and recoverable with the order for payment -

(a) in the case of costs imposed as a liability on the appellant; and

(b) in the case of expenses ordered to be paid to the Special Commissioners or the Director-General, as a debt to the Government. (2) In any procedure for reimbursement of expenses ordered by the special representatives, the production of a certificate signed by one of the special representatives, stating the names and addresses of the persons to whom and by whom such costs are to be paid and the amount of the costs owed, shall be sufficient evidence for the amount owed and sufficient powers for the court to determine that amount.

33. (Deleted by Act A108).053e.FM Page 316 Thursday, April 6, 2006 12:07 p.m. Income Tax 317

additional resources

34. Any party to a proceeding before the Special Commissioners may appeal any order made in that proceeding (including an order made pursuant to subparagraph 26(b) or (c) requiring the Special Commissioner to declare a case for the opinion of the High Court and payment to the Registrar at the time of application of the fee which the Secretary may prescribe from time to time in relation to any decision which he wishes to appeal.

35. A request under paragraph 34 shall be made in writing and mailed or served on the Registrar within twenty-one days of the appellant being notified of the order which he intends to appeal.

36. The High Court may, at the request of an applicant, by summons to the Chamber, extend the twenty-one day period referred to in paragraph 35.

37. A case declared in paragraph 34-(a) must establish the facts found by the special commissioners, the order of decision and the reasons for their decision; and (b) must be signed by the Special Commissioners who dealt with the appeal (or, if any of them is unable to sign by reason of death, illness, absence or other reason, by those authorized to do so in able).37A . (1) The complainant shall pay the Registrar the costs of preparing the declared case at such rate as may be prescribed by the Minister from time to time. (2) The Special Commissioners may, at any time before the transmission of a declared case to the The High Court shall require the applicant to deposit with the Registrar an amount which in its opinion will cover the cost of making copies of what has been submitted to the High Court and the parties If covers, and if they do so, he may dismiss or prevent the charge being brought. The case declared will be referred to the High Court unless the required deposit is made.

(3) Any party to an appeal may obtain additional copies of the case indicated from the Registrar upon payment of a fee as prescribed from time to time by the Minister.

38. When a case has been declared and signed under paragraph 37, the Registrar will transmit it to the High Court and give a copy to the parties to the case in respect of which it has been declared.

39. The Superior Court shall hear and determine any point of law arising out of a case referred to in paragraph 34 and may, in accordance with its determination: (a) Order that the assessment to which the case relates be confirmed, set aside or varied will;

(b) refer the case to the Special Commissioners with the opinion of the Court; or

40. Before deciding any point of law arising out of a case referred to in paragraph 34, the High Court may at any time

(a) arrange for the case to be returned to the Special Board of Commissioners; or

(b) require the special commissioners to find additional facts and provide a supplementary case,

and may stay or stay the proceedings before it until the change is made or the request is complied with.

41. The same rights of appeal against decisions of the High Court in the cases referred to in paragraph 34 as there are in relation to decisions of the High Court in matters of law within its civil appellate jurisdiction.

42. Except as otherwise provided in the Rules of Court, the rules of the Court in respect of civil appeals by a court subordinate to the Supreme Court and the Supreme Court in its jurisdiction of appeal to the Court and the Federal Court shall apply subject to this table with the changes required for appeals under this table in the Superior Court, the Court of Justice or the Federal Court.

additional rules

42A. Where a matter of procedure or practice is not provided for in this Appendix, the procedures and practices of the lower court or the Supreme Court then in force or custom are adopted and followed with necessary modifications, as the case may be.

43. (1) Proceedings under this Annex before the Special Representatives or the Court shall be held in camera:

Provided that when the Director-General requests the Special Commissioners or, as the case may be, the Tribunal, that the proceedings, or that part thereof which he considers necessary, be heard by public hearing, the Special Commissioners or the Tribunal, as the case may be, shall order that the proceedings or part thereof, as the case may be, is heard, notwithstanding the objection of another party to the proceedings:

Provided that if, in the opinion of the Special Commissioners or the Tribunal, any trial or part thereof which has been heard in camera should be reported, the Special Commissioners or the Tribunal, as the case may be, make the facts public or the publication may approve the case, the arguments and the decision relating to the proceedings or part thereof in camera, but without naming the parties (other than the Director-General) if the entire proceedings have been heard in camera. (2) Any publication authorized under sub-paragraph (1) may be obtained from the Special Commissioners or the Tribunal on payment of a fee as may be prescribed from time to time by the Minister.

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44. If a decision order or other order is issued by the Special Commissioners or any of the Special Commissioners in or in connection with the proceedings under this Annex -

(a) the application must be dated and signed by the special commissioners or the special commissioner who issued it; and

(b) a copy of the decision is served by the Registrar on the parties to the proceedings:

Provided that if any of the special commissioners who have issued a crucial order are unable to sign by reason of death, illness, absence or any other reason, the order shall be signed by those who are able to do so.

45. Instructions for the resolution or settlement of any procedural issue arising out of any proceeding before the Special Commissioners, the Superior Court, the Court of Appeal or the Federal Court under this Schedule, except as otherwise provided in or under this Schedule by law or court rule governing settlement or resolution of the matter, regardless of whether they were given -

(a) in connection with proceedings before the Special Commissioners, by any of the Special Commissioners upon such request made in such manner as he deems appropriate; and

(b) in respect of any proceeding before the Superior Court, the Court of Justice or the Federal Court, by the Superior Court upon application by summons in Chambers.

46. Special Counsels shall enjoy the same judicial immunity in the exercise of their functions as the President of a lower court.

47. In Sections 193 and 228 of the Criminal Code, the words “trial” should be understood to include a legal remedy.

48. In this Schedule, except in paragraphs 34 to 42, “recourse” means an appeal to the Special Commissioners under Section 99;

“Decision Order” means a decision order issued pursuant to paragraph 23; “lower court” means a court of hearings or the court of a first-class magistrate;

“Higher Court” in relation to an appeal being heard by the Special Commissioners means (unless the parties to the appeal otherwise agree in writing) the superior court having jurisdiction at the place where the appeal is being heard by the Special Commissioners will.

053e.FM Page 319 Thursday 6 April 2006 12:07 p.m.320 Malaysian Law ACT 53

ANNEXES 6

[§ 127]

tax exemptions

PART ONE

FREE INCOME

1. The official emoluments of a Ruler or Chief Ruler as defined in Section 76.1A. The official emoluments of the consort of a ruler of a state titled Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri:

If there are two or more wives of a ruler of a state with the above titles, the exemption is only granted to the official wives.

1B. The official income of a former ruler or ruling chief under Section 76 (other than a former governor or yang di-pertua negara of a state) or a consort of a former ruler of a state who previously held the title of Raja Perempuan, Sultanah, Tengku Ampuan, Raja Permaisuri, Tengku Permaisuri or Permaisuri. Where a person receives more than one pension, this paragraph applies to the highest or highest pension paid, as the case may be.

2. Remuneration received by a person in connection with the temporary or provisional performance of the duties of a government agency.

3. Any income received under the Diplomatic Privileges (Vienna Convention) Act 1966 [Act 24 of 1966] or under an order under Part III of the *Diplomatic and Consular Privileges Ordinance 1957 [Ord. 53 of 1957] or under the Foreign Representatives (Privileges and Immunities) Act 1967 [Act 541].

4. Official emoluments of consular officers and consular officers (as defined in the Diplomatic and Consular Privileges Ordinance 1957) in the service of a country to which Part IV of this Ordinance applies, to the extent provided for in a consular agreement between Malaysia and a country or, in the absence of a consular arrangement, to the extent that that country grants reciprocity to persons performing equivalent functions in the service of Malaysia.

5. Government or state government income.

6. Local authority income.*NOTE: This regulation is enforced by Act A1064 w.e.f. canceled. 3-9-1999.053e .FM Page 320 Thursday, April 6, 2006 12:07 p.m. Income Tax 321

7. Injury and disability pensions awarded to persons in connection with: (a) service in the armed forces of Malaysia or any Commonwealth country; (b) Service in the Armed Forces from Merdeka Day; (c) Service prior to Merdeka Day in the Malayan Regiment, Federation Regiment, Johore Military Forces, any Volunteer Forces or Local Defense Corps as defined in the Volunteer Forces and Local Defense Corps (Demobilization) Order 1946 [Order. 16 of 1946] or any force regulated by or under the Malay Auxiliary Air Order 1950 [Ord. 1 of 1950], the Ordinance of the Volunteer Forces 1951 [Ord. 5 of 1951], the Malayan Royal Naval Volunteer Reserve Ordinance 1952 [Ord. 3 of 1952] or the Military Order 1952 [Ord. 47 of 1952]; or

(d) Service in the Sarawak Volunteer Force or Sarawak Rangers and pensions awarded to spouses or dependent relatives of members of that force or local defense corps killed in action.

8. Disability pensions granted in connection with war service injuries to members of civil defense organizations in each area comprising Malaysia on January 1, 1968.

9. Amounts of money payable provided by Parliament as a reward for members of any of the following reserve forces, namely: (a) Royal Malaysian Naval Volunteer Reserve;

(b) malaysische Territorialarmee;

10. The emoluments of a person who is a member of the armed forces of a Commonwealth country or in the service of the government of a Commonwealth country, if

(a) he is in Malaysia to perform his duties as a member of that force or as a person in that service, as the case may be; and (b) such fees are paid from public funds in that country and are subject to foreign taxes in that country.

11. (Repressed by Law 328).

12. (1) The income of a cooperative – (a) in respect of a period of five years from the date of incorporation of such cooperative; and

(b) thereafter, if the assets of the members of such co-op on the first day of the base period for the assessment year are less than seven hundred and fifty thousand ringgit.

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(2) For the purposes of this paragraph, "membership monies" means the total paid-up capital (in relation to shares and subscriptions and excluding any amount in relation to bonus shares, as issued from the capital reserve resulting from the revaluation of fixed assets), statutory reserve, Reserves (excluding capital reserves created by the revaluation of fixed assets and provisions for depreciation, renewals or asset replacement and impairment), balances on the premium account (excluding any amounts credited in the event of bonus issue issues from capital reserves of revaluation of property, plant and equipment) and profit and loss account balance.12A. Any dividend paid, credited or distributed by a cooperative to a member.

13. (1) Income, other than dividend income, from (a) an institution or organization approved for the purposes of subsection 44(6), so long as the approval remains in force; or (b) a religious institution or organization which is not principally operated or operated for profit and which is incorporated in Malaysia solely for the purpose of religious worship or the promotion of religion.

14. Amounts received as death premiums or consolidated compensation for death or injury.

15. (1) A payment (other than a payment by a controlled company to a director of the company who is not a full-time service director) made by an employer to any of its employees in compensation for loss of job or in consideration of any arrangement by the employee, which restricts his right to take up further employment of the same or similar nature -

(a) when the Director General is satisfied that payment for loss of employment due to sickness has been made; or

(b) in the case of a payment made in connection with a period of employment with the same employer or with companies of the same group, in respect of payments not exceeding an amount obtained by multiplying the sum of six thousand ringgit by the number of full years of service with that employer or those companies. (2) For the purposes of this paragraph, the Director-General may determine the duration of employment in an enterprise with different employers, when the control and management of that enterprise remains substantially with the same person or persons, or when the employment is with different employers whose operations are carried out by or is operated through a central office, is equivalent to a period of employment with the same employer.

16. Annuity paid to a person under a written Widows' and Orphans' Pensions Act (or under an approved system within the meaning of such an Act) and pensions paid under an approved system for or on behalf of the widow, child or children from a deceased contributor.053e.FM page 322 Thursday, April 6, 2006 12:07 AM Income Tax 323

17. The income of a union registered under a written law relating to unions, provided that the income does not consist of income or profits from an enterprise operated by the union:

However, the tax exemption referred to in this paragraph does not apply to dividend income.

18. All income for the base period of any assessment year received by a person who was not a resident in the base year of that assessment year from trade in Malaysia by recipients in goods of the following types ie rubber, copra, pepper, tin, tin ore, gambier, Sago flour or cloves produced outside of Malaysia.

19. Interest paid or credited to a person in respect of savings certificates issued by the government.

20. Income from an Approved Scheme.

21. Subject to paragraph 22, the earnings of a person from employment held by him in Malaysia -

(a) for a period or periods collectively not exceeding sixty days in the base year for any assessment year; or

(b) for an uninterrupted period (not exceeding sixty days) overlapping the base years of two consecutive years of assessment; or (c) for a continuous period (not exceeding sixty days) overlapping the base years for two consecutive assessment years and for a period or periods which together with such continuous period does not exceed sixty days,

if he is not a resident in that base year or each of those base years.

22. Paragraph 21 shall not apply to a person's income from employment -

(a) if such person derives Malaysian income from such employment for one or more periods totaling more than sixty days in the base year referred to in this paragraph or the period made up of base years referred to; or

(b) where the earnings are earnings from employment performed by a public entertainer (i.e. a professional entertainer, entertainer, sportsman or other person working publicly or privately for profit on stage, radio or on television at a stadium or sports field or otherwise) and no part of such income is paid out of public funds of the government of any country outside of Malaysia.

23. Training allowances paid to officers-designate under the Overseas (North Borneo) Service Agreement 1961 or the Overseas (Sarawak) Service Agreement

1961.053e .FM Page 323 Thursday April 6, 2006 12:07 PM324 Malaysian Law ACT 53

24. All amounts paid as or in the nature of a stipend or other grant or similar benefit to any person, whether or not related to that person's employment.

25. (1) Termination Payments - (a) if the Director-General is satisfied that the termination was for health reasons; (b) when retiring at or after age 55, or the mandatory retirement age specified by written law, from employment, and in any event ten years' employment, with the same employer or companies of the same group; or

(c) if retirement occurs upon reaching the statutory or collectively agreed retirement age at the age of 50 but before the age of 55 and employment has lasted ten years with the same employer or in companies in the same group: provided that the a sum does not apply to an amount exceed, which is determined by multiplying the sum of six thousand ringgit by the number of full years of service in this employment.

(2) For the purposes of this paragraph, the Director-General may determine that a period of employment in an enterprise exists with different employers when the control and direction of that enterprise remains substantially with the same person or persons, or when the employment is with different employers whose operated by or through a central office are treated as periods of employment with the same employer.

25A Amount paid as a gratuity or payment in lieu of leave from public funds upon termination of employment under a written law.25B. Amounts received as a bonus paid out of public funds upon termination of the employment contract (less the employer's contribution to the employee provident fund, if any, and the corresponding interest).

26. The income of --(a) each national amateur sport organization certified by the President and Secretary of the Olympic Council of Malaysia as a member of that Council during the base year for each assessment year; and (b) any state amateur sports organization certified by the President (or an equivalent officer) and Secretary of an organization to which paragraph (a) applies is affiliated with that organization for a rating year during the base year,

each being income for that assessment year, unless the exemption provided for in this paragraph applies to income consisting of dividends.

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27. Non-Malaysian resident income for the base year of an assessment year in respect of Malaysian-originated interest on an approved loan.

28. (1) Notwithstanding the provisions of Section 130, income of a person other than a resident corporation engaged in banking, insurance or shipping or air transport for the base year of a valuation year that is from sources outside Malaysia and is in Malaysia is captured.

(2) Paragraphs 5 and 6 of Schedule 7A shall apply, mutatis mutandis, to the amount of income earned and received by a resident company exempt under subparagraph (1).

29. Notwithstanding the provisions of subsection 44(6), a person's total income remaining after reductions under paragraph 44(1)(a), (b) and (c) equal to the value of a contribution during the base period of one year of Appraisal to the National Monument Restoration Fund established for the purpose of restoring the national monument in Kuala Lumpur.

30. Malaysian-originated pensions paid to a person when they have reached the age of 55, or when the retirement age specified in a written law has been reached, or when the Director-General is satisfied that the retirement was due to health problems -

(a) in connection with services rendered in pursuit of previous employment in Malaysia; and

(b) if the annuity is paid under any law, pension or provident fund, plan or partnership other than a written statute that is an approved plan. paid, as applicable.30A. Bonus or annuity originating in Malaysia and paid to a resident for the base year of an assessment year under a written law enacted for the President or Vice President of the Senate, the President or Vice President of the House of Representatives, the President of the State Legislative Assembly, Member of the Senate, Member of the House of Representatives or Member of the Legislative Assembly of the State:

Provided that--

(a) The exemption from retirement pension shall apply only if the person has reached the age of fifty-five or if the Director-General is satisfied that such person is no longer President, Vice-President, President, Vice-President or titular member due to health problems; and

(b) if that person is entitled to an exemption from pension under this paragraph and also paragraph 30 of this Schedule, the exemption shall only apply to the highest or highest payable pension, as the case may be.

31. (Removed by Act 323).053e .FM Page 325 Thursday 6 April 2006 12:07 p.m.326 Malaysian Laws ACT 53

32. Income of ten thousand ringgit for the base year for an assessment year, received by an individual resident in Malaysia for that base year from royalties or payments in connection with the publication or use or the right to use works of art (other than original paintings ) come. and royalties relating to records or tapes.32A. Income of twelve thousand ringgit for the base year of an assessment year earned by a Malaysian resident in which year payments for translation of books or literary works are received at the specific request of an agency of the Ministry of Education or the Attorney General's Office: Unless the exemption applies, when the payment is due to the individual as part of their emoluments in the performance of their duties.32B. Income of Ringgit 20,000 for the base year of an assessment year earned by a Malaysian resident for that year on the basis of royalties (other than disc or tape royalties) or payments for publication, use or the right to use any literary work or any original painting.

32C. Income of a person resident in Malaysia in this base year in relation to his or her performances at cultural performances approved by the Minister: Provided that the exemption does not apply where payment is made to the person as part of their remuneration in the performance of their official Duties done .32D. Income of Ringgit 20,000 for the base year of an assessment year earned by a Malaysia resident, where the payment is made in respect of any musical composition:

Provided that the exemption does not apply where the payment is made to the person as part of their salary in the performance of their official duties.32E. A person's base year earnings for an assessment year paid by a fee or honoraria related to services provided for the purpose of validating, facilitating or accrediting franchise educational programs in colleges and services will be accounted for by Lembaga Akreditasi Negara checked:

Unless the exemption applies where payment is made to the individual as part of his or her salary in the course of his or her official duties.

33. Income of a non-Malaysia resident in the base year of any assessment year in respect of interest originating in Malaysia (other than interest accrued in respect of a Malaysian branch of that person) paid or credited by a person (whether or not the same person) engaged in banking or financial activities in Malaysia and licensed under the Banking and Financial Institutions Act 1989:

Provided that the exemption provided for in this paragraph does not apply to interest paid or credited on monies required for the purpose of maintaining liquid working capital as required by the Reserve Bank of Malaysia under Section 37 of the Banking and Financial Institutions Act 1989 .

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33A. Interest paid or credited to a non-Malaysia resident company, other than interest accruing at a Malaysian place of business of that company – (a) in respect of government-issued securities; or (b) in relation to Islamic securities or debentures issued in Ringgit Malaysia other than convertible loan shares approved by the Securities and Exchange Commission.

34. (1) Earnings of an individual from employment on board a Malaysian vessel.

(2) For the purposes of subparagraph (1), "Malaysia ship" has the same meaning as in subsection 54A(6).

34A. Interest paid or credited to a person in respect of Merdeka Bonds issued by the Central Bank of Malaysia.

35. Interest or Rebates Paid or Credited to Listed Individuals, Mutual Funds and Closed-End Funds--

(a) in connection with securities or bonds issued or guaranteed by the government; or

(b) in relation to any debt securities other than convertible loans approved by the Securities and Exchange Commission; or

(d) in relation to the Simpanan Malaysia Bon issued by the Central Bank of Malaysia.

35A. Return of a trust in respect of interest originating in Malaysia paid or credited by a bank or financial institution licensed under the Banking and Financial Institutions Act 1989 or the Islamic Banking Act 1983.

36. Amounts received in respect of annuities granted under annuity contracts issued by Malaysian life insurers.

For the purposes of this paragraph, “Malaysia life insurers” means life insurers and takaful operators majority-owned or affiliated with Malaysian nationals.

Part II

(Excluded by Law 328)

053e.FM Page 327 Thursday 6 April 2006 12:07 p.m.328 Malaysian Law ACT 53

ANNEX 7

[§§ 132 and 133]

Exemption from double taxation

bilateral credit

1. Subject to this Schedule, the amount of Malaysian tax payable in respect of a year of assessment will be reduced by the amount of any bilateral credit.

2. Bilateral credits against Malaysian tax are not permitted in respect of any year of assessment unless the person subject to Malaysian tax is a resident of the base year of that year of assessment.

3. If foreign income subject to foreign taxation is income for a period overlapping the base period of an assessment year, such income shall be apportioned in accordance with paragraph 4 of subsection 25, and for that assessment year the bilateral credit may be granted only in Reference to as much of that income as is allocated to that portion of the Overlap Period that overlaps with the Base Period.

4. Where foreign income (which is income of a specified period) is subject to Malaysian tax for more than one year of assessment or is subject to foreign tax more than once, a bilateral credit may be allowed for one year of assessment for the total amount of foreign tax thereon foreign income collected: provided that--

(a) the credit so granted shall not exceed the aggregate amount of Malaysian tax levied on such foreign income; and

(b) if a foreign tax is creditable for one year of assessment, the same tax is not creditable for any other year of assessment.

5. The bilateral foreign income credit granted to a person in any year of assessment shall not exceed an amount equal to the amount of Malaysian tax payable by him for that year (prior to any credit being granted under this Schedule), as for the sum of such Malaysian tax Tax fixed, the same proportion that foreign income takes on your total income for that year.

6. Notwithstanding paragraph 5, the total bilateral credit granted to a person in respect of a year of assessment shall not include the total Malaysian tax payable by that person on his taxable income for that year prior to the granting of a credit under this Schedule exceed.

7. A bilateral credit against Malaysian tax owed by a person for a year of assessment will not be allowed if it decides not to allow the credit in that year.

8. (Excluded by Act 591).053e .FM Page 328 Thursday, April 6, 2006 12:07 AM Income Tax 329

9. Any request for bilateral credit for a year of assessment must be made in writing to the Director General no later than two years after the end of the year; and if the applicant is disadvantaged by the Director-General's decision on the application, subsection 131(5) (with necessary amendments) applies if an applicant is disadvantaged by the Director-General's decision on an application under Subsection 131(1).

10. If the amount of any bilateral credit granted is found to be excessive or insufficient as a result of an adjustment to the amount of any Malaysian tax or foreign tax, nothing in this Act shall limit the time for making assessments, requests for exemptions or for the filing of an appeal shall apply to any assessment, request for relief, or appeal of which the adjustment gives rise, provided that such assessment, request, or notice is made no later than two years from the date of any such assessment, adjustment, or other determination ( in Malaysia or elsewhere) relevant to the decision as to whether and, if so, which bilateral credits should be granted.

Special Provisions for Trust Funds

11. If the trustee of a trust is a resident in the base year of an assessment year and the trustee's aggregate income includes foreign taxable income, account will be taken of each beneficiary of the trust who is a resident of that base year Appendix --(a) have an interest in such foreign income, which is proportionate to the portion of the Trustee's total income to which it is entitled; and (b) have paid on that portion of that foreign income a portion of that foreign tax proportionate to that portion of the Trustee's total income.

12. Where a trust is not a resident in the base year of a year of assessment, any beneficiary of the trust (including a pensioner) who is a resident in that base year must, on providing evidence to the General Manager, that - (a) it has its income from its other source (within the meaning of sub-section 61(5)) has paid or imposed tax on a non-resident in respect of the trustee or the greater part of the annuity which is derived from outside Malaysia; or (b) such additional source income or annuity so derived has been paid by the income trust that is subject to foreign taxation, bilateral credit against such foreign taxation is permitted under this Schedule.

unilateral credit

13. Subject to paragraphs 14 and 15, unilateral crediting is permitted in the same way as bilateral crediting, and paragraphs 1 to 12 apply mutatis mutandis.

14. The allowable unilateral credit of foreign income for a year of assessment may not exceed half of the foreign tax due on that income for that year.

15. Where an employee pays Malaysian tax and foreign tax in respect of income from employment outside of Malaysia, unilateral credit may be granted regardless of whether or not the employee was a resident in the base year for the year of assessment for which Malaysian tax was paid are for foreign taxes. Interpretation

16. As used in this Schedule, “bilateral credit” means a foreign tax credit that is required to be allowed as a Malaysian tax credit under applicable arrangements in accordance with Section 132;

“Foreign Income” means income outside of Malaysia; “Malaysia Tax” means the tax imposed by this Act;

“Unilateral Credit” means a credit in respect of foreign taxes payable under the laws of any territory outside of Malaysia with respect to which no Section 132 treaty is in force.

ANEXO 7A

[Section 133A]

reinvestment grant

1. Subject to this Schedule, if a Malaysia resident company --(a) has been operating for at least 12 months; and(b) has completed the one-year base period investment in a factory, plant or machine used in Malaysia for the purposes of a qualifying project under subparagraph 8(a) or (b);(c) (Excluded by Law 591) ,

the Company shall be allowed a reinvestment deduction equal to sixty per cent of such expenses for that year of assessment provided such expenses do not include any investment in plant or machinery made available in whole or in part for the use of a director or any person who is a member of management or the administrative or office staff.

1A Subject to this Annex, if a company that has been in operation for at least twelve months and is resident in Malaysia in the base year of a assessment year has made investments in respect of an agricultural project in Malaysia for the purposes of a qualifying project under subparagraph 8( c) the company will receive a reinvestment fee of sixty percent of these costs for that assessment year.

1B. (1) Subject to subparagraph (2), when an entity (referred to in this paragraph as “the acquirer”) has made an investment in an asset for the purposes of a qualifying project and that asset is acquired by another entity (referred to in this paragraph as “ the transferor”) and at the time of acquisition – (a) the transferee of the asset is a person over which the transferor of the asset controls;

(b) the seller of the asset is a person controlled by the buyer of the asset;

(d) the acquisition is part of a corporate reorganization or proposed merger;

The acquirer is deemed to have made investments in the asset equal to the residual expenditure determined in accordance with paragraph (3) on the first day of the last period of the transferor. (2) If the transferor made investments on or after the first day of the transferor's last term of office, the transferee shall be deemed to have made an investment expenditure in respect of the asset referred to in sub-paragraph (1) on the date on which the has made capital expenditures made investments in the asset equal to the capital expenditures made by that transferor.

(3) For the purposes of subparagraph (1), residual expenditures in respect of an asset are the capital expenditures incurred by the transferor less the amount of the accruals for that asset in accordance with Schedule 3 that were made or would have been made by the transferor on a time basis or periods before the first day of the seller's last period.

(4) In this paragraph--

“asset” means any plant, facility or machine as referred to in paragraph 1, or any facility, machine or building as defined in paragraph 9 of “investment”;

“Control” in relation to a company means the power of a person to exercise control through the holding of shares or voting rights in or in relation to that or any other company or by virtue of any power conferred by the articles of incorporation or any other relevant document to ensure that or any other company that the business of the former company is conducted in accordance with the wishes of that person;

053e.FM Page 331 Thursday April 6, 2006 12:07 PM332 Malaysian Law ACT 53

"Transferor End Period" in relation to disposal and acquisition of an Asset means the base period (appropriate to the transferor's transaction for the purposes of which expenses relating to the Asset have been incurred) for the assessment year coinciding with the first assessment year, for which the acquirer may accrue a provision in accordance with Schedule 3 in respect of the asset when used for the purposes of a business operated by the acquirer or as an industrial building.1C. If a person carrying on a business and carrying on this business for at least twelve months and that person is resident in Malaysia for a assessment year in the base year, has made capital expenditures in the base period for that assessment year in relation to an agricultural project in Malaysia for the purposes of a in For the qualifying project referred to in subparagraph 8(d), that person will receive a reinvestment reimbursement of six cents of these costs for that assessment year:

So long as this paragraph applies to an individual, that individual must be a citizen in the base year for that assessment year.

2. An allowance under paragraph 1, 1A or 1C shall be granted for capital expenditures incurred in the base periods of fifteen consecutive assessment years beginning with the assessment year of the base period in which such grant was first requested for the repayment of its income in connection with this capital expenditure.

2A If an asset is disposed of at any time within two years from the date of acquisition of that asset, any benefit granted under paragraph 1, 1A or 1C in respect of that asset will be deemed to be the person to whom it was awarded, not who would be entitled.

3. If a subsidy is granted to a person under paragraph 1, 1A or 1C for any assessment year, that person's proportion of the statutory income for that person's enterprise for that assessment year shall be equal to the amount of the subsidy (or the aggregate amount of such allowances, as applicable ), but not more than seventy percent of statutory income, are exempt from tax for that year of assessment: Provided if the qualifying project is located in the states of Sabah, Sarawak, Labuan Federal Territory, Eastern Corridor of Peninsular Malaysia and other areas covered by the The Minister may determine from time to time that the qualifying project has achieved the level of productivity prescribed by the Minister, the amount to be exempted will be the subsidy (or the aggregate value of such exemptions, as applicable), but not in excess of the statutory income for that assessment year .

4. If, due to the limitation of the subsidy to seventy percent of the legal income or due to insufficient or no legal income from a person's business for the assessment period of an assessment year, the effect cannot occur or cannot occur in full on any subsidy or subsidies to which the person pursuant of this table for that assessment year in relation to the source existing in that business, as much of the subsidy or subsidies as is not possible 6, 2006 12:07 PM Tax 333

person awarded for that year under this Schedule for the first subsequent assessment year for the base period for which there is statutory income from that enterprise and for subsequent assessment years until such person has received the full subsidy or subsidies to which you are so entitled.

5. (1) In the case of a company, once an amount of income is exempt under paragraph 3, that amount shall be credited to an account maintained by that company for the purposes of this paragraph (such account and company referred to in this paragraph and paragraph 6 as denotes the Exempt Account or relevant entity).

(2) If the tax-exempt account has balances on the date the relevant company pays dividends from tax-exempt income under paragraph 3, an amount equal to such dividends or balance, whichever is less, shall be charged to the free account .

(3) Both the amount of dividends charged to the exempt account under subsection (2) and the amount received from a shareholder of the company concerned when the general director is satisfied with the entries in the exempt account are in hands this shareholder.

(4) Any dividends debited to the account exempted pursuant to sub-paragraph (2) shall be treated as having been paid to the Shareholders (or a specified class of Shareholders) of the relevant Company in the same proportion as the relevant Shareholders are entitled thereupon had payment of the dividends which gave rise to the debt.

(5) Until the general manager is satisfied that there is no longer any need to maintain the exempt account, the company concerned shall, upon request, supply the general manager with a copy of the exempt account drawn up by a date so determined by him. by a written notice sent by the General Manager to the registered office of the Company.

(6) Wo--

(a) a shareholder receives an amount as a dividend from that company;

(b) such amount is exempt from tax in accordance with subparagraph (3); and (c) that shareholder is a company,

any dividends paid by that holding company to its shareholders will be exempt from tax in the hands of such shareholders provided the general director is satisfied that the dividends paid have been paid in that amount. (7) Section 108 shall not apply to any dividend or portion thereof charged to the tax-exempt account or to any dividend or portion thereof that is exempt from tax under subparagraph (6).

6. Without prejudice to any other provision of this Schedule, if paragraph 2A applies or the Director-General considers that income from the relevant

If an exempt corporation under paragraph 3 or an exempt dividend in the hands of a shareholder has not been exempted under paragraph 5, it may at any time within six years after the end of the accounting year for which the exemption was granted such or an additional assessment make an assessment of any person who deems it necessary to neutralize any benefit of the exemption or to direct the relevant entity to debit the exempt account with such amount as the circumstances require.

6A In the case of a sole proprietorship, where the base periods for two assessment years overlap, the period common to those periods is considered to be the earlier of those periods and not the later of those periods for the purposes of this table.

7. This Annex does not apply to a company--(a) during the period in which the company--

(i) Pioneer status has been granted under the Investment Promotion Act 1986 in relation to a promoted activity or product and is applying or intends to apply for the issue of a Pioneer Certificate; or

(ii) have obtained a Pioneer certification under the Investment Promotion Act 1986 in relation to a promoted activity or product and whose tax exemption period has not yet expired or has expired; (b) for the period prescribed in subsection 29(2), 29A(3), 29B(2), 29C(2) or 29G(2) of the Investment Promotion Act 1986 in relation to any activity or product promoted for the which entity has received a permit under Section 27, 27A, 27B or 27F of this Act; (c) (Exempt by Act 578);

(d) for any period in which notwithstanding the repeal of the Investment Incentives Act 1968 -

(i) have received an approval under Section 5, 12A or 12B of this Act and whose tax exemption period has not yet expired; or

(ii) has received an approval under Section 26 of this Act and makes capital expenditures that qualify for an investment tax credit; (e) for the period required by Section 31E(2)(b) of the Investment Promotion Act 1986 in respect of any manufacturing activity or manufactured product for which the Company has obtained a permit under Section 31C of that Act; or

(f) in respect of qualifying expenditure on an approved agricultural project deducted in accordance with Schedule 4A.

8. In this Schedule, "qualifying project" means (a) a project undertaken by a company in the expansion, modernization, or automation of its existing manufacturing or processing business Thursday, April 6, 2006 12:07 PM Income Tax 335

of a product or a related product within the same industry or the diversification of its existing business into a related product within the same industry;

(b) a project undertaken by a company participating in industrial adaptation authorized under Section 31A of the Investment Promotion Act 1986 to expand its existing business or modernize its production techniques or processes;

(c) an agricultural project undertaken by an enterprise to expand, modernize or diversify its agriculture and farm operations, excluding chicken and duck farming operations; or

(d) a project undertaken by an individual to convert their chicken and duck farm from an open system to a closed system, as approved by the Minister of Agriculture and Agro-Industry.

9. In this Schedule, “capital expenditures” in relation to an agricultural project referred to in paragraphs 1A and 1C means capital expenditures related to – (a) land clearing and preparation;

(b) planting crops;

(e) construction of access roads, including bridges; (f) the construction or purchase of buildings (including those intended for the welfare of persons or for the dwelling of persons) and structural improvements to land or other structures; or

(g) construction of chicken coops and chicken coops,

for the purpose of any of the following activities: (aa) growing rice and corn;

(bb) growing vegetables, tubers and roots;

(cc) Obstanbau;

(dd) livestock;

(ee) spawning, reproducing or cultivating aquatic products; (ff) any other activities authorized by the Minister; e(gg) chicken and duck farming;

"Disposed" means sold, transferred, transferred, assigned or otherwise disposed of with or without consideration;

053e.FM Page 335 Thursday April 6, 2006 12:07 PM336 Malaysian Law ACT 53

“Eastern Corridor of Peninsular Malaysia” means the States of Kelantan, Terengganu and Pahang and the District of Mersing in the State of Johor; “occurred” has the same meaning as in paragraphs 46 and 55 of Schedule 3;

"Operation" means an activity consisting in carrying on a business as referred to in paragraph 8.

10. Except as provided in paragraphs 1 and 5, this Schedule also applies to an agricultural cooperative (within the meaning of the Farmers' Organization Act 1973 [Act 109]), an Area Farmers' Association, a National Farmers' Association, a State Farmers' Association (in the as defined by the Farmers' Organization Act 1973), Area Fishermen's Association, National Fishermen's Association and State Fishermen's Association (as defined by the Fishermen's). Association Act 1971 [Act 44]).

11. For the purposes of paragraph 1C, when (a) a corporation or partnership (hereinafter referred to as the “new partnership” in this subparagraph) begins conducting a chicken and duck raising business; and

(b) such business is a continuation of a business carried on by a sole proprietorship or partnership (hereinafter referred to as “former partnership” in this sub-paragraph) for a period of at least twelve months prior to such commencement,

such period shall be taken into account in relation to that company and the new partnership when determining the minimum twelve month period referred to in this paragraph:

Provided that the sole owner or one of the members of the old company holds an interest in that company or, as the case may be, is a member of the new company.

12. If a person has a source within the meaning of Sections 55 to 58, the rules prescribed in Appendix 3 Number 74 shall apply mutatis mutandis to the determination of the allowance to be granted to this person for an assessment year in accordance with this Appendix.

053 .FM Page 336 Thursday, April 6, 2006 12:07 AM Income Tax 337

ANEXO 7B

[Section 133A]

Investment grant for the service sector

1. If a Malaysia resident company in the base year of an appraisal year has invested in an approved service project during the base period of that appraisal year, the company shall receive an investment subsidy for that appraisal year .. of an amount approved by the Minister, such subsidy not being less than six cents dollars of this output is.

2. The Minister may grant a written application for an investment subsidy under this Annex under such conditions as he deems appropriate.

3. For the expenditure referred to in paragraph 1, a subsidy shall be granted for expenditure incurred within a period of five years from the date on which the authorization must take effect.

4. Where a grant is awarded to an entity under paragraph 1 for a year of assessment, a portion of the entity's statutory operating income in respect of an approved service project for that year of assessment shall be equal to the amount of the subsidy (or up to the full amount of any such subsidy) are from the Tax exempt and the amount so exempted shall not exceed seventy per cent (or such other rate as the Minister may determine) of that entity's statutory income for the year of assessment.

5. If, owing to a company's lack of or insufficient statutory income from a company for the base period of any assessment year, any subsidy or subsidies to which the company is entitled cannot be enacted or awarded under this Schedule in that year in respect to the source consisting of that transaction, then notwithstanding the preceding paragraphs, as much of the relevant subsidy or subsidies as cannot be granted for that year shall be deemed to be a subsidy to be granted to the entity under this Schedule for the first subsequent assessment year for the base period for which there is statutory income from that business, and so on for subsequent assessment years until the entity has received the full subsidy(s) to which it is entitled.

6. Paragraphs 5 and 6 of Schedule 7A shall be treated as if any reference in those paragraphs to exempt or tax-exempt income under paragraph 3 of this Schedule were a reference to income credited to the exempt account under paragraph 4.

7. This Addendum does not apply to a company during the period that the company has obtained the exemption under Section 127.053e .FM Thursday, April 6, 2006 12:07 PM338 Malaysian Laws ACT 53

8. For purposes of this Schedule, all expenses incurred in connection with an approved service project prior to commencing operations shall be deemed to have been incurred on the date of commencing operations.

9. For the purposes of this Annex, “approved service project” means a project in the service sector relating to transport, communications, utilities or any other sub-sector approved by the Minister;

"Investments" in relation to the Approved Services Project means investments in plant, machinery, equipment, facilities, buildings, structures or works of a permanent nature and do not include investments in any building, plant or machinery which are intended in whole or in part for the use of any Director or any Person who is a member of management, administrative or clerical staff.

APPENDIX 8

[§ 155]

revokes

Number and year Short title Scope of revocation

29 of 1956 Income Tax Regulations 1956

from Saba

The whole

13, 1960 Inland Revenue Ordinance

1960 in Sarawak

The whole

MU 48 of 1947 Income Tax Ordinance 1947 All F.M. 62 of the Housing Trust Ordinance of 1950

1950

The words “and income

tax" and "or income tax"

in subsection 35(1) and

the words "income tax"

in the footnote to

Section 35

053 .FM Page 338 Thursday, April 6, 2006 12:07 AM Income Tax 339

APPENDIX 9

[§ 156]

Transitional and Savings Provisions

PART ONE

In general

Interpretation

1. (1) In this appendix, "pre-base period" in relation to a pre-assessment year means the period that would have been the base period for that year if that year had been in relation to an assessment year to which this Act pursuant to Paragraph 1 No. 3 applies ; FM 36, 1954 Petaling Jaya Ordinance 1954 The words "and income tax" and "or income tax"

in Section 29 and in

words "and income tax"

in the footnote to

this section

FM 20 of the Building Regulations Order 1956

1956

The words “and income

tax" and "or income tax"

in § 63 Abs. 1

FM 61, 1958 Central Bank of Malaysia

Ordinance 1958

The words "There

provisions of any law

in terms of income tax

or taxation of the company and"

in Section 50 and in

Words "taxation and" in

a side note for

this section

FM 10 from 1961 Racing (summary table)

Lei from 1961

§ 19 Abs. 2

FM 25 von 1962 Sarawak Electricity Supply

Gesellschaft 1962

Section 32

Number and year Short title Scope of revocation

053e.FM Page 339 Thursday April 6, 2006 12:07 PM340 Malaysian Law ACT 53

"Previous Base Year" in relation to a year prior to the Assessment, the calendar year immediately prior to the year prior to the Assessment; “prior tax” any tax imposed by a repealed statute; "prior assessment year" a calendar year prior to the 1968 assessment year;

“Repealed Law” means the Sabah Regulations, the Sarawak Regulations and the West Malaysia Regulations and “Repealed Law” means each of these Regulations; "Sabah Decree" means the Sabah Income Tax Ordinance 1956; , from Sarawak; “West Malaysia Regulations” means the West Malaysia Income Tax Regulations 1947.

(2) In the footnote to any paragraph of this Schedule – (a) a reference to a specific part, section or schedule is a reference to the part or section of this Act or Schedule to this Act to which that paragraph relates; and

(b) a reference to a specific Annex followed by a colon and one or more numbers is a reference to the paragraph or paragraphs of this Annex containing that number or numbers.

(3) This part of this Annex is subject to the application of Parts II, III and IV thereof.

Power to make other transitional or austerity provisions

2. (1) The Minister may at any time, by statutory order, make such transitional or rescue provisions as he deems necessary or expedient (including provisions amending any paragraph of this Schedule other than this paragraph). (2) Any order under paragraph (1) must be placed before the DewanRakyat.

Repealed laws are stored for specific purposes

3. (1) Subject to subparagraph (2) and the other provisions of this Schedule, each repealed Act shall remain in effect for all purposes for the 1967 assessment year under the relevant Act and prior assessment years under that Act.

(2) Any official activity pursuant to a repealed law may be exercised within the meaning of subsection (1) by any official designated in Section 134 whose office essentially corresponds to that of an official under whom this law was exercised or by a so-called official who is Name of the Director General is appointed.

053 .FM Page 340 Thursday, April 6, 2006 12:07 AM Income Tax 341

(3) §§ 136 paragraphs 2 to 5 do not apply to the performance of the duties of the Director General pursuant to paragraph 2.

References to Repealed Law

4. Unless the context otherwise requires, a reference in written statute to a provision of a repealed statute relating to the 1968 assessment year and subsequent assessment years shall be construed as a reference to the corresponding provision (if any) of that statute.

References to Malaysia before 1968

5. Subject to an express provision of this Act, references in this Act to Malaysia in respect of any time prior to January 1, 1968 shall be construed as referring to the territories then comprising Malaysia, or to one or more of them areas . . . Section 7

6. References in Section 7 to years of assessment prior to a particular year of assessment and to base years for prior years include references to prior years of assessment and prior base years, respectively. section 8

7. If a corporation or entity is treated as a resident of Sabah, Sarawak or Peninsular Malaysia under the relevant repealed Act for a year of assessment under this Act coinciding with calendar year 1966 or 1967, then for the purposes of subsection 8 ( 2) --

(a) where the calendar year in question is 1966, unless proven otherwise, the company or entity shall be presumed to have been resident in Malaysia for the purposes of this Act for the base years of the 1968 assessment year and all subsequent assessment years;

(b) if the relevant calendar year is 1967, the Director-General and the company or entity shall be deemed to have been resident in Malaysia in the base year for the assessment year 1968.

Section 10

8. References in Section 10 to years of assessment prior to a particular year of assessment and base years for prior years, including references to prior years of assessment and base years, respectively. Section 13

9. In subsections 13(2) and (3), "period" includes a period ending on January 1, 1968 or beginning before January 1, 1968.

053e.FM Page 341 Thursday April 6, 2006 12:07 PM342 Malaysian Law ACT 53

Section 21

Article 10. (1) In Article 21, paragraphs 2 and 3, “financial year” and “accounting period” in relation to the 1968 assessment year include one before January 1, 1967. (2) Where pursuant to subsection 28(2) of the Sabah Regulations, An instruction has been (or allegedly has been) given under Subsection 25(2) of the Sarawak Regulations or Subsection 31(2) of the West Malaysia Regulations. given) in relation to the 1967 and 1968 assessment years pursuant to the relevant regulation, the period which the Management indicates (or intends to indicate) in relation to the 1968 assessment year pursuant to this regulation shall be deemed to be the base period for the 1968 assessment year pursuant to this regulation of this Act, es unless the Director-General, having regard to the circumstances of a particular case, determines that another period shall apply as the base period for that year of assessment under this Act. (3) If the annual accounts of a company or bus accounts for a period of twelve months ending on a date in calendar year 1966 other than 31 calendar year 1967, the director general may act under this Act in accordance with subsection 21(3) in respect of the 1968 and 1969 assessment years and, where applicable, act in accordance with the provisions of the repealed statutes referred to in paragraph 2 in respect of the 1967 repealed year of assessment. Section 23

11. (1) In paragraph 23(c), "all taxes" includes past taxes deducted in the payment, credit or distribution of gross income -

(a) whether that prior tax was deducted in calendar year 1967; or (b) if any portion of the base period for the 1968 assessment year expired before January 1, 1967 and such prior tax was deducted on that portion of that base period's gross income which is gross income for that base period.(2) In paragraph 23( d) “Tax” in relation to a dividend includes past tax – (a) if the dividend was paid or credited in calendar year 1967; or (b) if any part of the base period for the 1968 year of assessment elapsed before January 1, 1967 and the dividend was paid or credited as gross income for that base period during that part of that base period. (3) Where a dividend was paid, credited or distributed in the 1966 or 1967 assessment year pursuant to the Sarawak Regulations by a Sarawak resident company pursuant to these Regulations for the assessment year in which the dividend was paid, credited or distributed, in kind, Section 23 shall apply in respect of the dividend such that it shall be deemed to have been paid, credited or distributed for the purposes of Sections 24 to 28 after deduction of tax at the rate applicable to corporate profits tax in Sarawak for the year of assessment in question and as such would the Gross amount after tax at this rate will be equal to -- 053e .FM Page 342 Thursday, April 6, 2006 12:07 PM Income Tax 343

(a) the amount of dividends so paid or credited; or (b) if the dividend consists of property other than cash, the market value of that property at the time the dividend was paid. Section 24

12. (1) An amount treated as income from a source other than a source consisting of an enterprise under a repealed statute shall not be treated as gross income under that statute if it is a liability which arose in the manner described in paragraph 24(1) ) )(c) ).(2) In subsection 24(4), “dividend” does not include dividends recognized under a repealed statute as income from a source other than a source made up of a corporation are treated, and in subsection 24(5) “Interest” does not include interest so treated under a repealed statute.

PART III

13. If, in applying Chapters 3 and 4 of Part III to an individual and its source, a specific period beginning before the base period for an assessment year needs to be taken into account, that specific period may nevertheless be considered beginning before the base period for the assessment year

1968. Sections 30 and 34

14. If - (a) a person is subject or would have been subject to prior tax in respect of chargeable income or gains from a business of his but for an insufficiency of such income or gains; and (b) this Act applies to them in respect of gross receipts from that business for the base period for the 1968 assessment year or any subsequent assessment year,

any provision of this Act necessary for the proper application of subsections 30(1) and (4) and 34(2) of that business and each assessment year may be deemed applicable to it and that business for the prior basis period in respect this business for each year before the assessment. Section 33

15. When a specific portion of the subject of a specific deduction, which, except for this paragraph, would fall within subsection 33(1), is formed in the calculation of a person's adjusted income from a source for the base period of an assessment year, all or the subject of a deduction under a relevant provision of a repealed statute, if the amount from which it was deducted is not gross income for the base period of that assessment year, that particular deduction will be reduced in accordance with subsection 33 (1) to that assessment year, to the extent that specific portion is concerned .

Section 34

16. If a specific part of the subject matter of a specific deduction which, except for this paragraph, would fall under subsection 34(1), is adjusted under subsection (4), (6) or (7) of this section in the calculation of income from a Person of a company for the base period of a valuation year is subject, in whole or in part, to a deduction under a relevant provision of a repealed statute, that particular deduction, if the amount from which it is deducted is not gross income at the base period for that valuation year, shall, in application of § 34(1) and subsections for that assessment year reduced by the amount relating to that particular portion. Section 35

17. If the relevant period for the purposes of Section 35 is a base period for the 1968 valuation year, paragraph (3)(b) of this section is amended so that the value of a particular inventory item at the beginning of the relevant period (except where the transaction is from of the person concerned during the relevant period) --

(a) an amount equal to the amount that would result if paragraph (3)(a) were applied at the beginning rather than at the end of the relevant period; or

(b) if an amount in respect of that item is deemed to be an amount equal to that amount for the purposes of any repealed statute at the end of an accounting period ending immediately before the relevant period: Provided that if the value of any item falls to the subparagraph (b) shall apply, for the purposes of two or more repealed statutes as referred to in this paragraph, it shall apply for the purposes of this paragraph as one of the statutes which the person concerned may elect by giving notice in writing to the Director-General within three months after the start of the 1968 assessment year (or such other period as the Director General may permit) or, if the person concerned fails to do so, as determined by the Director General. Section 43

18. (1) If a person has suffered material damage with respect to its source that is deductible under a repealed statute, the amount that may not be allowed under the application of that statute to all years of repeal shall be determined . Evaluation according to the law for which this law was in force:

Provided that in the application of this sub-paragraph to a person and a loss in respect of a source, a value is determined in accordance with the Sabah Regulations and if such loss arises anywhere pursuant to these Regulations, this sub-paragraph shall not apply to any part of that loss in respect to any repealed statute other than this Ordinance. (2) If an amount pursuant to subsection 1 has been determined in its application to a person and a source, then, in application of section 43 to that person, that amount (referred to in subsection 3 as the determined amount) shall be 053e .FM page 344 Thursday, April 6, 2006 12:07 PM income tax345

treated as the amount determined in subsection 44(4) for the year prior to the 1967 assessment treated as a specific assessment year prior to the relevant year for the purposes of subsection 43(2) paragraph 1 applies to a person and that person has his or her habitual residence in the base year for the relevant year to which paragraph 43 applies, paragraph 5 of paragraph 43 shall be applied in determining how much of the assessed amount to take Amount of Malaysia Loss for the purposes of paragraph 43( 5)(a) and that portion thereof which is to be replaced for the purposes of paragraph 43(5)(b). Section 44

19. (1) Where a loss has been deducted in the calculation of taxable income or taxable gain (as the case may be) for the 1967 assessment year under a repealed Act, no part of that loss shall be taken into account for the purposes of the Act Section

44. (2) If a body of a public character has been granted a license for the purposes of any of the repealed statutes, the license shall be valid if issued on 31 that date) in section 44.

Section 54

Section 20. (1) If a person has suffered a loss in connection with a source of his business of the kind to which subsection 54, paragraph 2 applies, which is deductible under a repealed law, the amount of the loss shall be determined. may not be permitted after the application of this Act to any year of assessment under this Act for which this Act was in force.

(2) Paragraph 1 applies to a provision for depreciation within the meaning of the repealed law as to a loss. a person and a source, then, in application of section 54(4)(a), that amount (or, if an amount was determined under one or both subparagraphs in respect of more than one repealed statute, the aggregate amount of the so amounts determined) is treated as the value determined in accordance with paragraph 54(4)(b) for the year prior to the 1967 valuation used for the purposes of paragraph 54(4)(a).

(4) Paragraph 18 shall not apply to any loss to which this paragraph applies. Section 60

21. In applying subsection 60(5)(a)(v) and (6)(a)(v) to an insurer's general affairs for the base period of the 1968 rating year, subsection 60(9) shall not apply and for the The amount of his reserve fund for unexpired exposures should take into account the amount assumed by him as a reserve for unexpired exposures in ACT 53

At the end of the base period for the 1967 assessment year under a repealed statute or, if two or more repealed statutes are in effect, the sum of the amounts it regards as provisions for ongoing risks at the end of the base period for the 1967 assessment year in each of those statutes.

Section 68

22. If a person has been removed under any statute to represent another person for any of the purposes of that statute, the appointment, if still in force on December 31, 1967, shall be deemed to have been made under section 68 for all purposes of that statute , which are similar to the first mentioned purposes.

Section 74

23. In subsection 74(5) and (6), “tax” includes past taxes. Section 75

24. In subsection 75(2) references to taxes, this Act and Section 107 include references to previous taxes, any repealed statute and any provision of a repealed statute that corresponds to Section 107; and subsection 75(3) shall be construed accordingly. PART VII

25. Part VII (other than Sections 108, 109 and 110) applies with necessary modifications for reclaiming and otherwise in respect of prior taxes assessed under any statute repealed on or after January 1st. 1968 and all amounts due in respect of prior taxes. Section 104

26. In Article 104, references to taxes, amounts and debts include references to previous taxes and amounts and debts of a similar nature under the repealed laws. Article 107.º

27. As guidelines for the 1968 tax year under the West Malaysia Income (Employment) Tax Deduction Rules 1948 [G.N. 3305/1948] the instruction is deemed to be pursuant to the Income Tax (Deduction from Salary: West Malaysia) Regulations 1967 [P.U. 636/1967] Article 108.

28. (1) If subsection 108(4) applies to an entity for the 1968 assessment year -

(a) any tax which the Company is entitled to deduct (or deemed to have been deducted by the Company) under the Sabah Regulations or the West Malaysia Regulations from any dividend paid or distributed in calendar year 1967 and any tax which shall be deemed to have been deducted by the Company in accordance with paragraph 29 from any dividend paid, credited or distributed under that calendar

year, are disregarded in determining the settlement amount for the purposes of paragraph 4 of subsection 108; and

(b) the reference in subsection 108(4) to "balance (if any)" should be interpreted as -

(i) as a reference to the balance (if any) that would have been carried forward under sub-section 40(5) of the West Malaysia Regulations or sub-section 37(5) of the Sabah Regulations had section 40 or section 37 been called, as the case may be applicable to the Company for the 1967 assessment year under the West Malaysia Regulations or the Sabah Regulations and would have been equally applicable for the 1968 assessment year under the West Malaysia Regulations or the Sabah Regulations but for the repeal of the relevant Regulations; or

(ii) if the entity was resident in Sarawak under the Sarawak Regulations in the 1967 assessment year, by reference to the balance (if any) as provided in paragraph 29. (2) In applying subsection 108(8) to any circumstance to which subparagraph (1) applies, references in paragraph 108(8) to an assessment year, each assessment and each tax refund shall be construed as references to an assessment year, each assessment and each Tax refund under a repealed law. (3) For the avoidance of doubt, it is noted that -(a) any reference in Section 108 to an entity entitled to deduct tax from dividends shall include an entity entitled to exercise its right to exercise tax under paragraph 3 of Article VII of the Double to Declare a Malaysian Resident Tax Relief Order (Singapore) 1968 [P.U.(A) 518/68]; and

(b) any reference in subsection 108(8) to tax refund includes payment of the Sabah Balance, Sarawak Balance or West Malaysia Balance, such payment being deemed to have been made in the assessment year in which the entity holds the claim has become. (4) Where--

(a) a company entitled to a Sabah Loan, Sarawak Loan or West Malaysia Loan is a non-resident company, the payment of a Sabah Loan, Sarawak Loan or West Malaysia Loan, as the case may be , to the company; or

(b) any of the provisions of subparagraphs 69(1), 85(1) and 109(1) applies to a non-resident entity making payment to an assignee of the entity of Sabahcredit, Sarawak credit or West Malaysian credit, as the case may be , to which the non-resident company would be entitled, but due to this condition

does not qualify as a tax refund under subsection 108(8).053e. FM Page 347 Thursday, April 6, 2006 12:07 PM348 Malaysian Law ACT 53

(5) For the purposes of subsection (4), non-resident company means a company that is not resident in the base year of assessment year 1967 but does not include a company that has the right to establish itself as a resident of Malaysia pursuant to Article VII(3) of the Double Taxation Reduction Regulation (Singapore)

1968. Section 108

29. (1) If subparagraph 28(1)(b)(ii) applies to a corporation - (a) all dividends paid, credited or distributed by the corporation in any of the fiscal years 1964 through 1967 inclusive, in respect of which the corporation was a resident of Sarawak in accordance with Sarawak Regulations (each year of residence being referred to in this paragraph as years of residence) shall be deemed to have been paid, credited or distributed after deducting Sarawak tax at the applicable rate for the relevant year and one Gross amount after deducting Sarawak tax at that rate would mean:

(i) the amount of dividends so paid or credited; or (ii) if the dividend consists of property other than cash, the market value of such property at the time the dividend was paid,

and an amount equal to the difference between that gross amount and the amount of dividend so paid, credited or distributed shall be deemed to be the amount of Sarawak tax deducted from that dividend; (b) for the first of the years of residence, the excess, if any, of federal tax payable by the corporation in that first year (this amount being calculated after the corporation has been taxed in that first year under Section 59 or 61 of the Sarawak Ordinance or the equivalent provisions of the Sabah Regulations or the West Malaysia Regulations) the aggregate of all amounts deemed to be deducted from dividends paid, credited or distributed by the Company in that first year;

(c) for each year of residence subsequent to such first year, the excess, if any, of total federal tax owed by the Company for the following year and the excess, if any, for the last of the years of residence in the subsequent year (as provided for in this subparagraph or, if this subparagraph does not apply to the prior year is applicable, sub-paragraph (b)) to the aggregate of all amounts deemed to have been deducted from dividends paid by the Company in that year following year; and

(d) the surplus determined in accordance with subparagraph (c) (or if subparagraph (c) is not applicable, subparagraph (b)) for the 1967 assessment year in respect of the enterprise shall be deemed the balance. (2) If this paragraph has been applied to a dividend credited, it shall not apply to that dividend when paid.

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Section 108

30. In paragraph 29, “Federal Tax” means one or more of the following, namely, income tax imposed by the Sabah Ordinance, corporate income tax imposed by the Sarawak Ordinance, and income tax imposed by the Sarawak Ordinance is imposed on West Malaysia but does not include a tin profits tax or development tax imposed under a repealed Act;

“Sarawak Tax” means the tax on corporate profits imposed by the Sarawak Regulations, but excludes the development tax imposed by these Regulations; “Fiscal Year” in relation to Sarawak Tax means an assessment year for the purposes of the Sarawak Regulations and in relation to federal tax means an assessment year for the purposes of one or more of the Repealed Acts. Art. 110

31. (1) Subject to subparagraph (2), in applying section 110, in addition to subsections (8), (9), (10) and (12), any reference to taxes shall include a reference:

(a) any input tax deducted from dividends or interest paid in calendar year 1967; or

(b) if any part of the base period for the 1968 assessment year expired before 1 January 1967, any prior tax deducted in that part of that base period from dividends or interest representing gross income for that base period.

(2) Sub-paragraph (1) shall not apply to taxes levied under the West Malaysia Regulations or the Sabah Regulations and deducted from dividends or interest where such dividends or interest are not included as gross income in accordance with sub-paragraph 12(2). for the reference period of an assessment year. (3) If an input tax amount is deemed to be deducted from a dividend pursuant to Section 11 (3) and the dividend is included in the gross income of a person from a source for the base period for the assessment year, this amount shall be deemed tax-deductible for the purposes of Section 110 according to § 108.

§ 115

32. In subsection 115(1), references to taxes, amounts and liabilities include references to prior taxes and amounts and liabilities of a similar nature under the repealed statutes. Section 127

33. Any exemption from a prior tax or from a provision of a repealed statute if made under a repealed statute and effective December 31, 1967 shall be deemed to have been given by an order in section 127 with respect to taxes by that actor charged in relation to the relevant provision of this law, as the case may be:

053e.FM Page 349 Thursday April 6, 2006 12:07 PM350 Malaysian Law ACT 53

Provided that this paragraph does not apply with respect to - (a) any exception provided, with or without amendment, in this Act; or

(b) Subsection 44(3) of the Sarawak Act.

§ 131

34. In paragraph 3 of subsection 131, references to taxes, years of assessment and assessments include references to past taxes and years of assessment and assessments under a repealed statute.

§ 134

35. (1) Effective January 1, 1968—(a) the person who held the position of director general of the Internal Revenue Service on December 31, 1967 becomes director general of federal tax for purposes of subsection 134(1);

(b) all other persons holding a federal public office in the Department of Internal Revenue on December 31, 1967 shall become federal officers within the meaning of subsection 134(2); and

(c) the Director-General, with the consent of the Director of Facilities (if any), may make such changes in the designation of the offices held by such other persons as he deems necessary and appropriate to implement and comply with Subsection 134 ( 2 ) : Provided that nothing in this paragraph should be construed as a change in an officer's terms of service.

(2) Subsection 136(2) through (5) shall not apply to the performance of the director-general's duties under subparagraph (1)(c). (3) Insofar as this is necessary for the proper application of this law in relation to the assessment year 1968, paragraph (1) shall apply as if references to January 1, 1968 and December 31, 1967 were references to September 28, 1967 and September 27, 1967. § 138

36. If a person, for the purposes of a repealed statute, makes a statement of a kind equivalent to a statement under subsection 138(1), the statement made shall be treated as a statement which they shall consider and treat as classified material and confidential and as Declaration made and signed by him within the meaning of Article 138.

§ 142

37. If a section 106 civil proceeding is instituted pursuant to section 25 to recover prior taxes or other amounts due under a repealed statute, Section 053e .FM Income Tax 351

142 applies in relation to this procedure and to this tax or amount applicable in relation to procedures for the recovery of taxes due under this law. Section 149

38. Section 149 shall not apply to an order which is deemed to have been given pursuant to Section 33.

Section 150

39. If authorization has been granted for the purposes of any of the statutes repealing an annuity plan or a pension or provident fund or corporation, the authorization is deemed to have been granted if still in effect on December 31, 1967. subject to the conditions then in force) under Section 150. Section 154

40. (1) In section 154(1)(e) references to tax include a reference to prior tax and references to amounts due include references to amounts of a similar kind due under the repealed statutes.

(2) Regulations pursuant to Section 154 may contain transitional and security provisions that are appropriate under the circumstances. Appendix 2:6

41. For the purposes of Schedule 2, if the operator owned an asset at the beginning of the base period for assessment year 1968 and made capital expenditures within the meaning of the Malaysian Income Tax (Mining Holdings) Regulations 1949 Western [F.L.N.534/49 ] on or related to the asset mine work--

(a) the asset is deemed to fall within the definition of a “mining asset” in paragraph 6 of this Annex; and

(b) that capital expenditures to the extent permitted or required under the West Malaysia Income Tax (Mining Operations) Rules 1949 to be classified as capital expenditures will be treated as qualifying mining expenditures. Appendix 2:15

42. Paragraph 15 of Schedule 2 shall not apply if the operator (as defined in this Schedule) permanently ceases operation of a mine during the base period of the 1968 assessment year; and if he ceases permanently to work in a mine in the base period for any of the years of assessment 1969 to 1972 inclusive, (a) the reference to previous years of assessment in subparagraph (a) of this paragraph shall contain a reference to the years of assessment under the West Malaysian Regulations ; and

(b) References to tax refunds and assessments in sub-paragraph (b) of this paragraph shall contain references to previous tax refunds and assessments under the West Malaysian Regulations.

053e.FM Page 351 Thursday April 6, 2006 12:07 PM352 Malaysian Law ACT 53

Addendum 2:22

43. Where capital expenditures referred to in paragraph 41 are included in the total mining expenditures as defined in paragraph 22 of Schedule 2 for “residual expenditures”, such total shall be plus any other deductions made for the purposes of that definition shall be reduced by the amount – (a) by which the capital expenditures made prior to the beginning of the base period for the 1948 assessment year exceed the remaining investments for that assessment year, as calculated under Rule 2(vii)(a) the Income Tax (Mining Operations) Rules, 1949; (b) any deductions made pursuant to Section 14(1)(h) of the West Malaysian Regulations in respect of such capital expenditure in calculating the relevant operator's income from the relevant company for any period in determining the company's statutory income for each Year of assessment under this regulation ending before January 1, 1968; and (c) any recovery of such capital expenditures in respect of the relevant mine received by the operator prior to that date which have been taken into account in the calculation of any subsidy under this Regulation.

Appendix 3:5

44. For the purposes of paragraph 5 of Schedule 3 in relation to a building, in any event where expenditure on the construction of that building occurred prior to 1 January 1968, references in that paragraph to “Assessment Year” and “Base Period " includes references to a pre-assessment year or pre-base period. Appendix 3: 10, 11 and 22

45. (1) If, in a case to which paragraph 10 or 11 of Schedule 3 or subparagraph (2) of this paragraph applies, the base period for the 1967 assessment year under a repealed statute overlaps with the base period for the 1968 assessment year, then will for the purposes of paragraphs 10, 11 or 22 of Schedule 3, expenditure incurred in the period common to those two base periods shall not be treated as having been incurred in the base period for the 1968 year of assessment. (2) If someone for the purposes of his trade before the assessment period for the assessment year 1968 incurred planting costs in the construction of a building that can be taken into account, he is, if not to repeal the repealed laws, for a specific assessment year according to one of the repealed laws from 31 .December 1967 would be entitled to an allowance for such expenses, an allowance shall be made to him pursuant to paragraph 22 of Schedule 3 in respect of the source consisting of business for the year of Av membership under this Act falling in that particular year of the allowance or allowances to which he would be entitled in that particular year.053e .FM Thursday April 6, 2006 12:07 PM 353

Addendum 3:23

46.(1) For the purposes of paragraph 23 of Schedule 3, if a person is in the base period for the 1967 assessment year under a repealed statute, he has qualifying planting costs for purposes of his business other than costs of establishment of a building, for the 1968 assessment year, he shall be awarded compensation equal to half of these costs for the source of that business:

Provided this sub-paragraph does not apply to expenses incurred in Sarawak.

(2) If a person for the purposes of his business has made (before December 31, 1964) capital expenditures as defined in Section 14 of the Sabah Decree on a plantation or (before December 31, 1961) capital expenditures as defined in Section 18A of the West Malaysia Regulations, if, save for the repeal of those Regulations, he was entitled to an allowance in respect of those expenses for a particular year of assessment (under the relevant provisions of these Regulations) beginning after 31 December 1967, you pursuant to paragraph 23 of Schedule 3, in respect of the source consisting of that transaction, for the assessment year that coincides with that particular year, an adjustment equal to the value of the subsidy that you refer to as it would be for that particular year justified.

(3) If, in a case to which subparagraph (1) or (2) applies, the reference period for the 1967 assessment year under a repealed Act overlaps the reference period for the 1968 assessment year, then for the purposes of paragraph 23 of Schedule 3 expenditure incurred in the period common to these two base periods shall not be treated as having been incurred in the base period of the 1968 assessment year

47. For the purposes of paragraph 26 of Schedule 3, where an amount referred to therein is charged in respect of taxes imposed by the West Malaysia Regulations or the Sabah Regulations for the year of assessment 1967, this paragraph shall not apply to that amount. Table 3:27

48. (1) Paragraph 27 of Schedule 3 shall not apply in respect of any person, property or entity thereof where pursuant to sub-section 18A(3) of the West Malaysia Regulations or sub-section 14(3) of the Sabah Regulations , applies any cash or consideration as income of that person for the assessment year 1967 in accordance with the relevant regulation and relating in whole or in part to that asset.

(2) In relation to a person, an asset and a business thereof, the reference in paragraph 27 of Schedule 3 to qualifying agricultural expenditure includes, where appropriate, capital expenditure (as defined in Section 18A of the West Malaysia Regulations and Section 14 of the Sabah Regulations ) incurred for that asset; and, if such inclusion exists, then if the provisional conditions of this paragraph are met, the references in subparagraph (b) of this paragraph to 053e .FM

"Agricultural Subsidy", "Assessment Year" and "Subsidies" each include:

(a) any grant made to that person under Section 18A or 14 that relates directly or indirectly to capital expenditures made on that asset;

(b) each year of assessment under any of these Regulations; and (c) all subsidies,

and the reference in the clause of this paragraph to "year of assessment" includes any year of assessment under any of these Regulations. Appendix 3:35

49. Paragraph 35 of Schedule 3 does not apply to an asset disposed of by a person if, by virtue of a repealed statute, an indemnity charge in respect of that asset was imposed on that person.

Time 3:36

50. In applying paragraph 36 of Schedule 3 to a person and an asset, if the asset is disposed of by him in the base period of the 1968 assessment year, reference in this paragraph to an initial or annual grant shall be deemed to refer to an initial or annual subsidy: which is permitted under repealed law. Addendum 3:37

51. In applying paragraph 37 of Schedule 3 to a person and an asset, the total therein shall include any subsidies of a similar nature to the subsidies under this Schedule granted to him by laws applying to that asset were lifted.

Programming 3:39 and 40

52. Paragraphs 39 and 40 of Schedule 3 do not apply to a disposed asset if a provision or equalization charge in respect of that asset has been made to a person (who is the disposalor in relation to that asset for the purposes of paragraphs 38 and 39 ). of this Annex) under a repealed law.

Program 3:40 and 41

53. Regulations made pursuant to paragraph 40 or 41 of Annex 3 may be applied to any repealed law and to any matter to which that law was applicable for transitional purposes.

Program 3:42

54. Paragraph 42 of Schedule 3 does not apply to buildings constructed before the base period for the 1968 year of assessment.

053 .FM Page 354 Thursday, April 6, 2006 12:07 AM Income Tax 355

Time 3:57

55. If, in respect of a person's property and business, the period of non-use for the purposes of paragraph 57 of Schedule 3 is a period beginning prior to the base period for the 1968 assessment year, all such assessments shall be set aside under any laws made, to the extent necessary to offset the benefit of any benefit made to that person for a year of assessment under this Act in relation to that asset.

Addendum 3:68

56. (1) Subject to this paragraph, in applying paragraph 68 of Schedule 3 in relation to an asset and a person, as noted, all capital expenditures incurred by it in respect of the asset shall be treated as qualifying expenditures incurred by it for the purposes of this paragraph and, if the total qualifying expenses have been determined in accordance with this paragraph as construed with this sub-paragraph, that total shall be reduced in accordance with the provisions of this paragraph (if any) and for any provision made therefor in respect of that asset.

(2) Subject to subparagraph (3) in subparagraph (1) – “Subsidy” means any subsidy granted under any provision of a repealed Act pursuant to any provision of Schedule 3, or any amount granted under any repealed Act for any year of assessment for which no initial or annual deduction is payable in respect of an industrial building or an amount required under a repealed statute in connection with the calculation of the value of an asset acquired prior to the base period for the first year of from was deducted from capital expenditure assessment in a repealed law;

“Capital Expenditure” means Capital Expenditure as defined in a Repealed Act for purposes of any provision corresponding to the provisions of Schedule 3. (3) In applying subparagraphs (1) and (2) in respect of a person and an asset, if absent that subparagraph the same amount would be accounted for in respect of capital expenditures or subsidies by reference to more than one repealed statute, such amount only taken into account by reference to the relevant repealed law, d. H.:

a) The repealed law under which you reside in the territory to which the law applies; or

(b) if there are two or more such statutes, one of the statutes elected by it when it first applied for a subsidy under Schedule 3 in respect of the asset, or, if no such election was made, of the Director General has been appointed. Addendum 3:69

57. Where, for the purposes of this Schedule and Schedule 3, it is necessary to take account of a subsidy granted under a repealed statute, paragraph 69 of Schedule 3 (with the necessary amendments) shall be found by reference to the repealed statute in relation to such subsidy Application.

053e.FM Page 355 Thursday April 6, 2006 12:07 PM356 Malaysian Law ACT 53

Time 3:75

58. (1) In relation to a person, an asset and a business of him, if a benefit or benefits of the kind defined in subparagraph 56(2) to which paragraph 57 applies cannot or cannot fully take effect, these shall apply Allowances or allowances (or the amount thereof for which they have not been awarded) as an allowance payable to him within the meaning of paragraph 75 of Schedule 3, the reference therein to the first subsequent year of assessment shall be treated as a reference to the year of assessment 1968 if it there is adjusted income from that transaction for the base period for that year, or, if such adjusted income does not exist, by reference to the first assessment year after the 1968 assessment year for the base period for which such adjusted income exists:

If this paragraph applies to any subsidy or subsidy or part thereof in relation to any business, this paragraph does not apply to that subsidy, subsidy or part in relation to any other business of yours.

(2) Section 56 (3) applies to benefits affected by this paragraph in the same way as for benefits within the meaning of Section 56 (1). Appendix 3: General

59. Unless the context otherwise requires and subject to this Appendix, any reference in Appendix 3 to expenditure includes a reference to expenditure incurred prior to the base period for the year of assessment 1968 and any reference in this Appendix to anything done: or to any event, a reference to a thing or event of the kind in question that took place or took place before that base period. Annex 4

60. (1) Subject to this paragraph, if in any event a person makes a claim under Schedule 4 for a deduction for a tax year in respect of qualifying prospecting expenses, then for the purposes of applying this Schedule to that case any expenses incurred ( and All Occurring Events) are claimed no later than ten years before the end of the base year for that assessment year, notwithstanding that such ten-year period has elapsed in whole or in part prior to the effective date of that assessment year; and, where required, a reference in Clause 11 of this Schedule to a transaction to which Section 140 applies shall be construed as including a transaction to which that Section would have applied if it were in effect on the date of that transaction would.

(2) Subparagraph (1) shall not apply to expenses incurred in Sabah or Sarawak prior to the base year for the assessment year 1968 or to expenses for which a deduction has been made under section 14 of the West Malaysian Regulations.

053 .FM Page 356 Thursday, April 6, 2006 12:07 AM Income Tax 357

Annex 5

61. If an assessment is appealed under the Sabah Ordinance or the West Malaysia Ordinance, or appealed against an assessment under the Sarawak Ordinance, then –

(a) If the notice was served before January 1, 1968, and hearing of the appeal has not commenced before that date, the person on whom the notice was served must transmit it to the Registrar for the Special Commissioners as soon as practicable thereafter this date.

(b) notwithstanding anything else in this Schedule, if the notice is given after that date, it will be served on the Clerk of the Special Commissioners and not on the person who otherwise would have received it.

and if notice regarding a review is forwarded or served to the Registrar of the Special Commissioners under this paragraph, a complaint against the review shall be deemed forwarded to the Special Commissioners and shall be resolved as soon as practicable in accordance with Schedule 5. Application of this Act to the Assessment under the Repealed Law61A. (1) If an assessment is made of a person under a repealed statute on or after January 1, 1972, the provisions of Section 97 and Chapter 2 of Part VI of this Act shall apply to such assessment as if the assessment was made under Section would have been 90 or 91, as the case may be, of this law.

(2) When paragraph 1 is applied, the contrary provisions on appeal or appeal against a decision contained in a repealed statute shall not apply.

62. Where - (a) pursuant to the application of this Act, all income of a person from own sources shall be treated as income for a period prior to the base period for the 1968 assessment year; and

(b) such revenue would have been gross revenue for the pre-base period for one year prior to the assessment if this Act had been in effect at the relevant time;

such income, if not subject to input tax, shall be treated as income for the year of assessment under the repealed statute corresponding to the year prior to assessment or, if there is no corresponding year of assessment, as income for the year of assessment in which we have it Law that includes July 1 of the previous assessment year.

053e.FM Page 357 Thursday April 6, 2006 12:07 PM358 Malaysian Law ACT 53

PART II

SPECIAL PROVISIONS FOR SABAH

application and transmission power

63. (1) This part applies only to Sabah. (2) All taxes paid or due under this Part may be withheld by the Director-General at unreasonable hardship; and Section 129 shall apply in respect of any tax so remitted, to the extent applicable in respect of tax remitted under that section.

Interpretation

64. In this Part, “reasonable date” in relation to an individual means the date on which the reasonable event referred to in paragraphs 71 to 74 occurs that entitles him or her to payment of the Sabah balance of an entity assigned to him; “legacy tax” means income tax (excluding any tax that qualifies as income tax under the Sabah Regulations) levied under the Sabah Regulations; “relevant date” in relation to an entity, the date on which the relevant event pursuant to paragraph 69 occurs that entitles you to the Sabahcredit payment;

"Sabah Credit" means the amount determined pursuant to paragraph 68; "Statutory Income" in relation to a person, source and year of assessment under the Sabah Regulations means the amount of his/her income from that source for the base period under these Regulations for that year of assessment plus any countervailing chargeable in respect of that source for that assessment year and reduced by a correction to be made for this year in accordance with §§ 14 to 21 of this regulation in relation to this source;

“1966/67 Year of Assessment” means the year of assessment beginning 1 July 1966 under the Sabah Decree;

“1967 Assessment Year” means the 1967 assessment year under the Sabah Regulations;

"Fiscal Year 1967/68" means the fiscal year beginning 1 July 1967 under the Sabah Decree.

In certain cases, no creditable income

65. For the purposes of applying subparagraph 3(1) of this Schedule, a person in the 1967/68 tax year shall be deemed to have no taxable income under the Sabah Decree.

053 .FM Page 358 Thursday, April 6, 2006 12:07 AM Income Tax 359

Provisions for statutory income for certain valuation years

66. (1) In the case of a person who is not a corporation, the sum of --(a) both of their statutory earnings for the 1967/68 assessment year from any source other than a source consisting of a corporation (or, if Paragraph (b) applies, from any source thereof) to that legal income is in the same proportion as the number of days in the Gap Period to the number of days in the Base Period in respect of that source under the Sabah Decree of that assessment year; and (b) if the accounts of any enterprise of that person were established for a period of twelve months ending on a day in the second half of the 1965 calendar year and the officer has issued an instruction under subsection 28(2) of the Sabah Ordinance on Treating that period as a base period under this regulation for the 1966/67 assessment year, much of what would have been the statutory income from any source therein except one source consisting of one corporation for the assessment year beginning 1 July 1968, under the Sabah Regulations, but for its repeal as it bears the same proportion to that statutory income as the number of days in the gap period to the number of days in the base period in respect of that source under that Regulation for the year of assessment beginning 1 July 1968 according to this regulation,

is considered his legal income for the 1966/67 assessment year from your source.

(2) The amount of the legal income of a person for the year of assessment 1966/67 from their source according to paragraph 1 is credited with the effective tax rate on the old tax of this year; and Parts XI through XIII of the Sabah Regulations apply to that amount as if that amount were additional income payable by that person for that year.

(3) If subparagraph (1) applies to a person and there is no effective tax rate in his or her case, then if none of that person's sources of income were owned by that person throughout the Base Period, with respect to each source, pursuant to the Sabah -Regulations for the year of assessment 1966/67, and the amount of his or her legal income assessed under sub-paragraph (1) exceeds the sum of that person's legal income from each source for that year - (a) the effective tax rate is determined by taking that value is used for this unit; and

(b) the sum of that amount and the taxable income for the year of assessment 1966/67 (or, if there is no taxable income for that year, the sum of that amount and the total statutory income, if any, from any source thereof person for that year, less the amount of any loss to be deducted under Section 32 of the Sabah Regulations in determining that person's taxable income for that year), the old tax for that year shall be calculated at the effective tax rate so determined; and Parts XI to XIII of the Sabah Regulations shall apply as if that total (or the total so reduced, as the case may be) had been that person's taxable income for that year and that effective tax rate had been 053e .FM Page 359 Fifth April 6th 2006 12:07 p.m.360 Malaysian Law ACT 53

the rate set out in Part I of the Third Schedule to this Regulation in relation to that person in that year.

(4) If subparagraph (1) applies to a person, and if so, the amount of any losses or the total amount of any losses deducted under Section 32 of the Sabah Regulations in determining that person's taxable income for the years 1966-67 if any year of assessment exceeds that person's total legal income from any source for that year, the excess shall be deducted from the amount of his or her legal income under paragraph 1; and in applying paragraph 18 in respect of that person, only the balance (if any) of such loss or losses after the application of this subparagraph shall be taken into account.

(5) If, pursuant to paragraph 62, a person's income from a source is treated as income for the 1967/68 assessment year, such income shall be (a) added to his statutory income from that source for the 1967/68 assessment year; or

(b) if he has no lawful income from that source for that year - (i) if there is an amount of loss in respect of that source (a loss which would be deductible under Section 32 of the Sabah Regulation except for its cancellation at calculating taxable income for that year) the amount of that loss reduced by the value of that income or, if that income exceeds that loss, the excess will be treated as legal income from that source for that year;

(ii) if there is no such loss, the amount of that income will be treated as your legal income from that source for that year and this paragraph will apply to that reduced loss or, as the case may be, to that legal income.

(6) For the purposes of this paragraph, except where the context otherwise requires in subparagraphs (3) and (4):

“Base Period” where a non-corporate person has a source for a portion or portions but not all of the Base Period shall be construed as meaning that portion or portions of the period – the relevant Base; "Effective Tax Rate" in relation to an individual is the tax rate obtained by dividing the amount of past tax payable on that individual's taxable income (excluding any additional taxable income referred to in paragraph (2)) for the 1966/67 tax year in the amount of that person's taxable income for that year;

"Interval Period" means, with respect to the 1967-68 assessment year or the Sabah Regulations assessment year beginning July 1, 1968, that portion of the base period for that year which elapsed before January 1, 1967.053e .FM Page 360 Thursday , Apr 6, 2006 12:07 p.m. Income Tax 361

Calculation of the old tax to be paid by the company

67. For the purposes of this part, in the case of a company the accounts of which have been maintained for a period of twelve months, which on a day in calendar year 1966 other than the 31 Commissioner has not given an instruction under subsection 28(2) of the Sabah Regulations to treat this period as a base period under this Regulation for the 1967 assessment year) will be reviewed -

(a) the total amount of all past tax payable by that company, whether assessed in one or more assessments for that year of assessment, such total amount being after the grant of any relief from tax to which that company is entitled for that year or before the relevant date calculated in accordance with Section 41 or 43 of the Sabah Ordinance; and

(b) the amount of such amount paid by the Company on or before the relevant date and not refunded or not refunded to it on or before the relevant date. Sabah credit check

68. (1) In respect of past taxes paid by an entity pursuant to paragraph 67, the Sabah balance shall be determined in accordance with the following subparagraphs.

(2) In the case of a company to which paragraph 67 applies, the Sabah credit will be equal to either the old tax paid for the 1967 tax year or an equal proportion of that old tax as the total statutory income from each source for the overlap period applies to the company's taxable income for that year. (3) In this paragraph:

“Overlap Period” means that portion of the base period under the Sabah Regulations in respect of a source for an assessment year under this Regulation which overlaps with the base period in respect of that source for an assessment year under this Act;

“Total statutory income from each source for the Overlap Period” means, in relation to an entity, a majority of that entity's total statutory income from each source for an assessment year under the Sabah Regulations, less any lesser amount, is deducted in accordance with Section 32 of these Regulations deducted to determine the entity's taxable income under this Regulation for that year, as for that total the same proportion is reduced as for the total of the number of days of the overlap period in relation to each source has for the total number of days in the base period in relation to any source provided for in this regulation for that year.

Events where the Sabah Credit is due to the Company

69. (1) Subject to paragraph 76, a corporation's Sabah Loan shall be payable on the date of the occurrence of either of the following events, whichever occurs first in relation to the corporation, ie, upon winding up of the corporation after December 31, 1967, or by convincing the Director General that you have not received 053e .FM Page 361 Thursday April 6, 2006 12:07 PM362 Malaysian Laws ACT 53

Dissolving before 1 January 1988, or in the case of a company which ceases to derive income (other than dividends) from Malaysia for a year of assessment in the base year, by assuring to the Chief Executive Officer that it was not a resident of Malaysia for a year thereafter following year and who are not expected to have any Malaysian source of income (other than dividends) in any two years after the base year or, where applicable, in the following year, provided that this paragraph does not apply to the dissolution of a particular corporation after December 31, 1967 if at the or about the time of dissolution assets of that particular body available for distribution to its members are transferred -

(a) to a company which is a member of the same group as that particular company;

(b) to a company in which more than fifty percent of the shares are owned by members of that particular company; or

(c) the stockholders of that particular company or any person or persons controlling that particular company within the meaning of Section 139. (2) If the clause in sub-paragraph (1) applies to the transfer of assets of a company, the Sabah Claims to which the company would be entitled but for this clause shall be paid in accordance with the following sub-paragraphs. (3) Subject to subparagraph (4)--

(a) If all the assets of a company are transferred to the shareholders of the company or to persons controlling the company within the meaning of Section 139, the Sabah credit of the company shall be distributed among them in proportion to their interest in the beneficial owners of the share capital of the common owners of the company at the time of its dissolution ("share capital" has the same meaning as in the definition of "director" in paragraph 2(1)) or, in the case of persons having such control, in the portion in which they control the shares held and will be paid to each of them at the appropriate time; (b) If all the assets of a company are transferred to a single person having such control, the company's Sabah entitlement will be deemed to be its own and will be paid to it on the due date.

(4) If a member or person to whom any Sabah balance (or part thereof) is payable under subparagraph (3) is a corporation, the amount payable shall be treated as a Sabah balance of the corporation and subparagraph ( 1 ) applies to the payment of this credit.

(5) If subparagraph (3) does not apply, an entity's Sabah loan will be treated as a transferee's Sabah loan and subparagraph (1) will apply in respect of the payment of that loan.

Sub-paragraph (5) shall be applied by apportioning the Sabah Credit among the assignees as the Director-General reasonably deems necessary to adequately implement sub-paragraph (5) in the circumstances. Credit payable to the Company in certain cases prior to dissolution

70. If the director general is satisfied that the winding up of a company is imminent and that the company will be entitled to the Sabah loan on its winding up, he may make the value of the Sabah loan available to the liquidator of the company; and if the Company is not wound up within three months (or such longer period as the Director-General shall think fit in the circumstances) of the making available to the Liquidator of such sum, it shall be the duty of the Liquidator to repay such sum to the Director-General, when asked to do so.

Cases where the creditworthiness of the company is required pro rata for the individual

71. Subject to paragraph 76, the portion of a body's Sabah entitlement paid under paragraph 69(3) to an individual who was a member of that body at the time of its dissolution shall be paid on the day of the event of either of the following events becoming the first in relation to him: (a) in declaring to the Director General that he reached the age of fifty-five before 1 January 1968;

(b) upon your death at any time after December 31, 1967; (c) upon receipt at any time after December 31, 1967 at the age of fifty-five;

(d) on his departure from Malaysia if he is not a citizen and satisfies the Director General in relation to the matters set out in paragraph 72; (e) if in the base year (i.e. the year in which the company was wound up or any subsequent year) he was non-resident for a year of assessment and is not a citizen by convincing the General Manager that in that base year or before he had no income (other than dividends) from Malaysia and is unlikely to have income (other than dividends) from Malaysia in any of the two years after the base year;

(f) to satisfy the Director-General that he was not entitled to payment of the amount of the Sabah Loan allocated to him prior to January 1, 1988;

(g) by demonstrating to the Director-General that he was prevented from gainful employment by a serious disability for a period of at least twelve months and had no source of income during that period; or

(h) to convince the Director General that he is receiving a Malaysian pension and that he has no other source of income and is unlikely to have:

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Provided that sub-paragraph (d) does not apply to a person who, at the time of departure from Malaysia, has a source (i.e. a source of which all or part of his income is derived from Malaysia) other than - (i) a source of which dividends develop;

(ii) a source from which the interest is derived;

(iii) a source consisting of a Malaysian derived annuity; or (iv) a source consisting of employment ending at the end of a holiday period commencing on your departure or at the end of a travel period commencing on your departure.

Matters on which the Director-General must be consulted for the purposes of paragraph 71

72. For the purposes of subparagraph 71(d), a person must satisfy the Director-General that the person -

(a) you have not received a permit to enter or re-enter Malaysia or a similar document on the day of your departure from Malaysia;

(b) has no right of entry or re-entry into Malaysia under any written law at that time; and

(c) you are unlikely to be resident in any of the base years for the five assessment years beginning in the assessment year following the assessment year in the base year for which the departure occurred. trustee and executor

73. Subject to paragraph 76, whether a corporation's Sabah claim is distributed under subparagraph 69(3) to trustees of a trust or executor of a deceased person (which trustees or executors, as the case may be, members of the corporation at the time of its dissolution ) payable - (a) upon termination of the trust or, as the case may be, in settlement of the balance of the deceased person's estate; (b) after the Director-General has been satisfied that the Fund was not closed (or the remainder established as the case may be) before 1 January 1988; or

(c) if the Trustee ceases or the Executors cease to receive income (other than dividends) from Malaysia for any assessment year in the base year (i.e. the year in which the Company was wound up or any year thereafter), if satisfies the Director-General that the Trustees or the executors were not resident in that base year and that the trustee or executors are unlikely to have any income (other than dividends) from Malaysia in any of the countries for the two years after that base year.

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Applicable provisions when paragraphs 71 to 73 do not apply

74. Subject to paragraph 76, whether a corporation's Sabah claim is distributed under subparagraph 69(3) to a person (who was a member of the corporation at the time of its winding up) to whom none of paragraphs 71 to 73 apply must be paid --

(a) upon application to the Director-General in the 1988 assessment year; or (b) upon application to the general manager prior to that year, if the general manager is satisfied that there are circumstances similar to those in which a company would be entitled to payment of a Sabah credit prior to that year.

75. If a corporation's Sabah balance is distributed under subsection 69(3) to a woman who was a partner in the corporation at the time of its dissolution, as much of that balance as was distributed to her if she is married, whether at that time or later and before the date on which she would be entitled to payment to her husband on the due date in respect of him, as if that credit had been distributed to him: provided that -

(a) If the husband is entitled to payment of the shared credit balance under subparagraph 71(d), this paragraph is amended to require the husband to satisfy the director-general on the matters listed in paragraph 72, not just in relation to himself , but also in relation to his wife or, if paragraph 72 does not apply to her, in relation to the matters listed in subparagraph 71(e) in relation to his wife; , this paragraph is amended to require the husband to satisfy the Director-General in respect of the matters set out therein not only in relation to himself but also in relation to his wife or, where subparagraph 71(e) is not applicable them in relation to the matters listed in paragraph 72 relating to his wife.

Competence to offset the credit against the tax to be paid

76. Notwithstanding the preceding paragraphs of this part, if in any calendar year a corporation is entitled to payment of a Sabah credit or a person is entitled to payment of a corporation's Sabah credit allotted to him, the chief executive may withhold payment thereof for Purposes of incorporation less the amount of any taxes or past taxes owed by that entity or individual, if any.

Creation of references to specific evaluation years

77. In any event, in accordance with this Annex, the assessment year 1966 or 1967 under the Sabah Decree or an assessment year under the Sabah Decree coinciding with the calendar year 1966 or 1967 and, where applicable, the corresponding assessment year of this Order is the year of assessment 053e .FM Page 365 Thursday April 6, 2006 12:07 PM366 Malaysian Law ACT 53

from July 1, 1965 or the calculation year 1966/67, the calculation year from July 1, 1965 or the calculation year 1966/67 and their reference period in relation to a source is taken into account, and not the valuation year 1966 or 1967 or the valuation year that coincides with the 1966 or 1967 calendar year or the base period thereof. PART III

SPECIAL PROVISIONS FOR SARAWAK

application and transmission power

78. (1) This part applies only to Sarawak. (2) All taxes paid or due under this Part may be withheld by the Director-General at unreasonable hardship; and Section 129 shall apply in respect of any tax so remitted, to the extent applicable in respect of tax remitted under that section.

Interpretation

79. In this Part, “old tax” means the profits tax imposed by the Sarawak Regulations (excluding any tax deemed to be profits tax under the Sarawak Regulations); "Relevant Date" means, in relation to any person, the date on which the relevant event referred to in paragraphs 83 to 88 entitles you to payment of the Sarawak Balance;

“Sarawak Claim” means the amount determined pursuant to paragraph 82; “1967 Assessment Year” means the 1967 assessment year under the Sarawak Regulations.

In certain cases, no creditable income

80. Subject to paragraph 93, in applying subparagraph 3(1) of this Schedule, a person subject to payroll tax under the Sarawak Regulations shall have no taxable income under these Regulations for the 1967 year of assessment. Calculation of old tax owed by a person

81. In the case of a person whose annual accounts of a company have been kept to a date other than 31 December 1966 in calendar year 1966, such company being a company in respect of which the Commissioner is not instructing under subsection 25 has determined ( 1 ) the Sarawak Regulations to treat this period as a reference period for which the taxable profit or loss of the enterprise is to be calculated for the purposes of this part –

(a) the aggregate amount of all income taxes due by that person, whether assessed in one or more assessments for the 1967 tax year, that aggregate amount

calculated after having been granted an exemption under Section 59 or 61 of the Sarawak Law in that year or before the relevant date; and

(b) the amount of that amount paid by him on or before the relevant date and not refunded or not refunded to him on or before the relevant date. Sarawak Credit Check

Article 82. (1) With respect to the full amount of previous tax paid by a person determined in Article 81, the credit of Sarawak shall be determined in accordance with the following subparagraphs.

(2) In any case to which paragraph 81 applies, a person's Sarawak balance shall be equal to the amount of profit tax paid by him for the 1967 assessment year which has the same proportion of such profit tax as the taxable profit for the superimposed period on the aggregate of the taxable gains from each of its sources for the relevant year, less the amount of any losses suffered, which would be offset against the taxable gains under Section 28 of the Sarawak Regulations for the 1967 tax year.

(3) In applying subparagraph (2) to trustees of a trust, reference therein to profits tax paid for the 1967 assessment year shall be construed as reference to profits tax paid by the trustees in that year and shall be the same proportion of such profits tax as the sum of the taxable gains from any source of the Trustees in that year, reduced first by the amount of losses incurred by the Trustees which would be offset against such taxable gains in accordance with Section 28 of the Sarawak Regulations for the 1967 assessment year and thereafter in so far as they constitute taxable gains for that year year of a beneficiary or beneficiary of the trust are reduced by the value of any loss for that year to that total.

(4) In this paragraph--

"Taxable Income for the Overlapping Period" in relation to a person, a portion of the sum of that person's taxable income from each source under the Sarawak Regulations for a year of assessment under this Regulation, less the amount of any loss suffered by him which corresponds to the taxable income under Section 28 Profits assessable under the Sarawak Regulation would be set off as having an equal share of that total, i.e. reduced as the total number of days of the overlap period in relation to each source relates to the total number of base period days for each source under this regulation for that assessment year ;

“Overlap Period” means that portion of the Base Period under the Sarawak Regulations in respect of a source for the 1967 Assessment Year which overlaps with the Base Period in respect of that source for an assessment year under that Act. Events where the Sarawak Loan is payable to an individual

83. Subject to paragraph 92, an individual's Sarawak claim accrues.

on the date of occurrence of any of the following events, whichever occurs first in relation thereto:

a) by proving to the Director-General that he was at least fifty-five years of age before January 1, 1968;

(b) upon your death at any time after December 31, 1967; (c) if you are fifty-five years of age after December 31, 1967; (d) on his departure from Malaysia if he is not a citizen and satisfies the Director General in relation to the matters set out in paragraph 84; (e) if he was not a resident for any assessment year in the base year (i.e. the year in which he has no income other than dividends from Malaysia or a year thereafter) and is not a citizen by proving to the Director General that he was in the two years after such base year is not expected to receive any income (other than dividends) from Malaysia;

(f) to convince the Director-General that he was not entitled to payment of the Sarawak Claim prior to January 1, 1988;

(h) to convince the Director General that he is receiving a Malaysian pension and that he has no other source of income and is unlikely to have:

(ii) a source from which the interest is derived;

84. For the purposes of subparagraph 83(d), a person must satisfy the Director-General that the person -

(a) you have not received a permit to enter or re-enter Malaysia or a similar document on the day of your departure from Malaysia;

(b) does not have the right to enter or re-enter Malaysia on that date; and

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(c) not expected to be a resident in any of the base years for the five assessment years beginning with the assessment year following the assessment year in the base year for which the exit occurred. Events where a Sarawak loan is payable to a company

85. (1) Subject to paragraph 92, a company's Sarawak claim is payable on the date of the occurrence of one of the following events, whichever occurs first in relation to the company, namely, on the company being wound up after December 31, 1967: or by the Director General's confirmation that the winding up did not take place before 1 January 1988 or, in the case of a company which ceases to receive income (other than dividends) from Malaysia in the base year for a year of assessment, to its Director General thereof satisfy that he was not a resident in that base year or the year thereafter and that he is not likely to receive any income (other than dividends) from Malaysia in any of the two years after that base year or, as the case may be, in that subsequent year: provided that this Paragraph does not apply to the dissolution of a particular company after December 31, 1967 if assets are on or about the date of the dissolution assets of that particular company are available for distribution Your members will transfer--

(a) to a company belonging together with that particular company to the same group;

(b) to a company in which more than fifty percent of the shares are owned by members of that particular company; or

(c) the shareholders of that particular company or any person or persons controlling that particular company within the meaning of section 139. (2) Where sub-paragraph (1) applies to a transfer of the assets of a company, the Sarawak balances which, but by virtue of this exception, would be due to the company shall be paid in accordance with the following paragraphs.

(3) Subject to subparagraph (4)--

(a) If all the assets of a company are transferred to the shareholders of the company or to persons controlling the company within the meaning of Section 139, the Sarawak loan of the company shall be distributed among them in proportion to their beneficial interest in the share capital of the common owners of the company at the time of its dissolution ("share capital" has the same meaning as in the definition of "director" in paragraph 2(1)) or in the case of persons having such control, in relation to which they held their shareholding control, and must be paid to each of them on the relevant date as if the amount distributed to each of them was a Sarawak claim on him: and (b) where all the assets of a corporation are transferred to a single person having such control, the Company's Sarawak Receivable shall be deemed its property and shall be owed to it on the relevant date spaid.

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(4) If a shareholder or person to whom a Sarawak claim (or part thereof) is payable under subparagraph (3) is a corporation, the amount payable shall be treated as a Sarawak claim of the corporation and subparagraph ( 1 ) applies to the payment of this credit.

(5) If sub-paragraph (3) does not apply, a company's Sarawak claim shall be treated as a transferee's Sarawak claim and sub-paragraph (1) shall apply in respect of the payment of such claim.

(6) In the event that there are two or more transfers (other than transfers to members of the company or to a person or persons controlling the company within the meaning of Section 139) to which the provision of subparagraph (1) applies, sub-paragraph (5) shall be applied by apportioning the Sarawak claim among the assignees as the Director General deems reasonably necessary to properly implement sub-paragraph (5) in the circumstances. Sarawak loan to be paid to the company before liquidation in certain cases

86. If the Director General is satisfied that a company's liquidation is imminent and the company is entitled to liquidation of the Sarawak Loan, he may make the value of the Sarawak Loan available to the company's liquidator; and if the Company is not wound up within three months (or such longer period as the Chief Executive Officer thinks fit in the circumstances) after making such amount available to the liquidator, it shall be the liquidator's duty to repay such amount to the chief Executive Officer when asked to do so.

curators and performers

87. Subject to paragraph 92, the Sarawak Claim shall be payable by the trustee of a trust or the executor of the estate of a deceased person - (a) upon termination of the trust or upon discharge of the remainder of the estate, the deceased person, as the case may be; (b) by demonstrating to the General Manager that the Trust was not terminated (or the result ascertained) before 1 January 1988; or

(c) if the Trustee or the Executors cease to receive income (other than dividends) from Malaysia in the base year for any assessment year after the Director General is satisfied that the Trustee did not or the Executors did not do so in that base year or any following year and that the trustee or executor is unlikely to have any Malaysian income (other than dividends) in any two years after such base year or , if any, in the subsequent year.

Applicable provisions when paragraphs 83 to 87 do not apply

88. Subject to paragraph 92, the Sarawak claim of a person to whom none of paragraphs 83 to 87 applies shall be paid:

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(a) upon application to the Director-General in the 1988 assessment year; or (b) upon request of the General Manager prior to that year, if the General Manager is satisfied that there are circumstances similar to those in which a company would be entitled to payment of the Sarawak Loan prior to that year.

Married: general

89. If section 47A of the Sarawak Regulations for the year of assessment 1967 applies to a married woman and her husband, then, by application of the preceding paragraphs of that part to the husband -

(a) a source thereof shall be deemed a source thereof; (b) any reference to a gain or loss that can be assessed in relation thereto shall be deemed to be a reference to a gain or loss that can be assessed by it from a source deemed to be its source;

Married: alienation of wife's credit

90. Where - (a) a marriage took place before 31 December 1967 but Section 47A of the Sarawak Regulations did not apply to the wife of that marriage and her husband for any tax year under the Sarawak Regulations; or (b) a marriage is contracted after December 31, 1967, the wife of that marriage shall not be entitled to any Sarawak credit to which she would otherwise be entitled, and any credit shall be paid to the husband of that marriage as if he were would be an accrued claim in relation thereto in paragraphs 81 and 82 or in paragraph 85.

Married persons: amendment of paragraphs 89 and 90

91. In each case where paragraph 89 or 90 applies to the husband and wife of the marriage -

(a) Subparagraph 83(d) is amended to require the husband to satisfy the Director-General on the matters referred to in paragraph 84 not only in relation to himself but also in relation to that wife or, if paragraph 84 is so not applicable to her in relation to the matters set out in sub-paragraph 83(e) in relation to that spouse;

(b) Subparagraph 83(e) should be amended to require the husband to satisfy the Director-General on the matters set out therein not only in relation to himself but also in relation to that wife, or, if subparagraph 83(e ) on them in relation to the information referred to in para. 84 does not apply to the facts set out in relation to this wife.

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Power to offset Sarawak loans against payable taxes

92. Notwithstanding the preceding paragraphs of this Part, if a person is entitled to a Sarawak credit in any calendar year, the Director-General may withhold payment thereof for the purpose of offsetting any tax owed or past tax by that person.

Certain incomes are negligible

93. (1) If a person ceased to have a source the income of which is subject to profit tax under the Sarawak Regulations in the 1967 calendar year, if a Sarawak assessment has been made by reference to the income from that source up to that date of termination Act for the Year of Assessment 1968 was made pursuant to this Regulation, income from that source included in this assessment will not be taken into account for the purposes of this Act unless such assessment is made for any reason on or after 1 January 1968.

(2) If in calendar year 1967 a person ceased to have a source whose income is chargeable to payroll tax under the Sarawak Regulations for that year of assessment, then if

(a) that person has no income from other sources for the base period compared to any other source for the 1968 assessment year; and

(b) subparagraph (1) does not apply to him,

Section 80 does not apply to that person and income from that source; where this subparagraph applies to a person, that person's income from that source which is subject to payroll tax under this regulation for the 1967 year of assessment shall be disregarded for the purposes of this Act.

(3) Where paragraph 80 applies to a person and by application of paragraph 62, any income of a person from a source subject to payroll tax under the Sarawak Ordinance should be treated as gross income for the prior period basis for a year prior to the assessment paragraph 62 may be amended in its application to that person and that income so that that income is treated as income for the assessment year under the Sarawak Regulations which coincides with the period prior to the assessment base. Provisions for industrial construction under the Sarawak Ordinance continue

94. In the case of a building which is an industrial building within the meaning of the Sarawak Regulations, the rates at which annual subsidies were granted for that industrial building within the meaning of the Sarawak Regulations and the allowances for which a person entitled under Paragraph 6 of Schedule Fifth of the Sarawak Decree shall be granted for the remainder of the years for which such allowance would have been granted, but by revocation of that Decree, in lieu of any allowance to which that person might be entitled under this Act justified.

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TEIL IV

SPECIAL PROVISIONS FOR THE MALAYSIA PENINSULA

application and transmission power

95. (1) This Part applies only to Peninsular Malaysia. (2) All taxes paid or payable under this Part may be remitted by the Director-General at unreasonable hardship; and Section 129 applies in respect of all taxes remitted under this Section.

Interpretation

96. In this part, “legacy tax” means income tax (other than any tax that qualifies as income tax under the West Malaysia Regulations) imposed by the West Malaysia Regulations; “Relevant Date” in relation to a person, the date on which the relevant event under paragraphs 107 to 113 occurs that entitles you to payment of the West Malaysia Claim;

“Legal Income” in relation to a source and a West Malaysia Regulations Assessment Year means the amount of income from that source for the West Malaysia Regulations Base Period in relation to that source for a assessment year under these Regulations plus each the equalization fee to be levied in respect of that source for that year reduced by an adjustment payable for that year in accordance with Sections 16 to 22A of these Regulations in respect of that source;

“West Malaysia Credit” means the amount determined in accordance with paragraph 102; “Assessment Year 1967” means the assessment year 1967 under the West Malaysian Regulations.

No legal requirement in certain cases

97. If in calendar year 1967 a person started a business or took up employment or began to receive income from a source other than business or employment (which is a source of a kind referred to in subsection 31(6) of the West Malaysia Regulations, but for the 1967 year of assessment this paragraph would have applied), no statutory income from that source would apply for the 1967 year of assessment the West Malaysia Regulations would have been applicable

98. (1) Subject to paragraph 99, if a person began or began to conduct a business or engage in employment in calendar year 1965 or 1966, Malaysian Act ACT 53

began receiving income from a source of the kind referred to in paragraph 97, the following subparagraphs shall apply where subsection 31(5) or (7) of the West Malaysian Regulations, save for their repeal, has been applied in respect of that source for the year of assessment 1968 after of this ordinance and the year of assessment 1967.

(2) With respect to the 1967 assessment year, the 1967 calendar year shall be deemed to be the base period in respect of any source in that assessment year if the earnings for that base period are greater than they would be without this paragraph Base Period under the West Malaysian Ordinance for that assessment year in respect of this source.

(3) With respect to the 1968 assessment year, the 1968 calendar year shall be the base period for that assessment year in relation to that source.

(4) For the 1969 assessment year, the person concerned shall be presumed to have no lawful income from any source of the type concerned. Paragraph 98 is not applicable in certain cases

99. Paragraph 98 does not apply in relation to a person and a source where (a) there is an acquisition (as defined in paragraph 105) of that source; or (b) that source is a source whose income falls within a particular paragraph of Section 4, an acquisition of a new source (whose income falls within that paragraph of Section 4) occurs before January 1, 1970, and the Director The General shall not, having regard to all the circumstances of the case, decide that this paragraph is not applicable and any further assessments or assessments or refunds of tax will be made as required in accordance with this paragraph. Tax burden for the 1969 assessment year

100. (1) Notwithstanding subsection 98(4), for purposes of this paragraph, a person's legal income from a source for the year of assessment 1968 (being a source for which calendar year 1968 is the period for that year of assessment must be taken into account in determining that person's taxable income for the 1969 tax year as if that legal income were his legal income from that source for the 1969 tax year and tax liability on the taxable income so calculated for the 1969 tax year fixed .

(2) In the case of a person to whom paragraph 1 applies, the tax owed for the year of assessment 1969 shall apply to the taxable income (without consideration of paragraph 1) for that year in the amount of the tax to be levied in accordance with paragraph 1 shall be the tax so determined shall be levied in the same proportion as that person's total income for that year, as assessed without regard to paragraph 1, to that person's total income for that year as determined at the outset shall take into account that subparagraph. 053 .FM Page 374 Thursday, April 6, 2006 12:07 AM Income Tax 375

Calculation of old tax owed by a person

101. (1) For the purposes of this part, determine: (a) the aggregate amount of all taxes owed by a person in the past, whether assessed in one or more assessments, for the 1967 assessment year, calculated as a whole upon being granted any relief due to him for that year on or before the relevant date under Section 44 or 46 of the West Malaysian Ordinance; and

(b) the amount of that amount paid by him on or before the relevant date and not refunded or not refunded to him on or before the relevant date. of the assessment year 1967 and the amount paid for it, the old tax owed for this year pursuant to Section 98 (2) and the old tax paid for it are not taken into account. West Malaysia Credit Check

102. (1) Subject to paragraphs 103 and 104 in relation to the amount of previous tax paid by a person under paragraph 101, there is a fixed amount (hereinafter referred to as the West Malaysia credit) equal to the proportion since the amount paid relates as the full amount of his legal income to that person's taxable income for the 1967 assessment year, the year of assessment shall be taken as a reference both for that prior tax and for the aggregate of the trust's legal income from all sources for that year, minus the amount deducted in accordance with Subsection 33(2) of the West Malaysian Regulations in determining liability to tax on the trustee's income for that year and thereafter by so much from the sum (therefore reduced) as legal income for that year from a benefit to be treated is trustee or beneficiary, refers to the taxable income of the trustee for this year. (3) In this paragraph, “total of your statutory earnings” means the total of your statutory earnings for the 1967 assessment year from any source of income of a kind to which subsection 31(5) or (7) of the Assessment Act Regulations West Malaysia would have at any time after claimed (if not waived) that year, less an amount deducted in accordance with subsection 33(2) of these Regulations in determining taxable income for that year. Exclusion and inclusion of certain income for the purposes of paragraph 102

103. For the purposes of paragraph 102, in determining the total amount of his legal income referred to herein in respect of a person - (a) excludes -

(i) that person's legal income from a source to which paragraph 97 or 98 applies;

053e.FM Page 375 Thursday April 6, 2006 12:07 PM376 Malaysian Law ACT 53

(ii) his income derived in West Malaysia from outside West Malaysia for which there is statutory income for the year of assessment 1967 if he is not habitually resident in the base year for the year of assessment 1968; and (b) if paragraph 104 applies to him, state the amount of his legal income from each source mentioned therein for the 1967 assessment year.

Provisions from the acquisition of the source

104. When the circumstances are such that a person has lawful income from a source (referred to in this paragraph as an ancient source) of a kind to which sub-section 31(5) or (7) of the West Malaysia Regulations applied ( or , although this paragraph would not apply) for both the 1967 assessment year and the preceding assessment year under the West Malaysia Regulations, if - (a) there is an acquisition of the old source on or after 15 June 1967; or (b) the old source is a source the income of which falls within a paragraph of subsection 10(1) of the West Malaysian Regulations, there is an acquisition by him of a new source (whose income falls or would fall under this). paragraph of the West Malaysia Regulations but for its repeal) before 1 January 1969 and the Director-General, having regard to all the circumstances of the case, does not find that this paragraph does not apply,

Sub-section 31(1) or (2), as the case may be, of the West Malaysian Regulations applies to him in respect of the old source for both years and all such assessments or further assessments or refunds of old taxes under these Regulations (or, if sub-section 31( 5) or (7) has been applied to it in respect of the old source, any such assessments or additional assessments or refunds of old taxes under this Regulation) shall be made as required pursuant to this sub-paragraph. Meaning of "acquisition"

105. In subparagraph 99(a) and subparagraph 104(a), “acquisition” means acquisition of a source –

(a) in the case of a specific entity –

(i) by a company within the same group;

(ii) by any company, the shareholders of which own or have owned more than fifty percent of the stock of that particular company; or (iii) by a person in control of that particular entity; (b) in the case of a natural person – –

(i) by a relative of yours (“Relative” here and in sub-paragraph (c)(iii) with the same meaning as in Section 65);

(ii) by a partnership over which he or he and his partners have control (“partner” and “control” have the same meanings as in paragraph 139 and paragraph 38 of Schedule 3 respectively);

(iii) by a company under its control; or

(iv) by any of your affiliates in another business, except for valuable and reasonable consideration;

(i) by an affiliate of the Company;

(ii) by another company of which some or all of the members of the first company are members; or

(iii) by a company, the members of which are relatives of the members of the first-named company, save for an encumbering and reasonable title; and

(d) in any other case where circumstances are similar to those in which an acquisition would occur if the acquirer were a partnership.

Additional Provisions If Subsection 104(a) Applies

106. If subparagraph 104(a) applies to an individual and an ancient source, then if that source is their only source in 1967 or if all of their sources expired in 1967, West Malaysia's entitlement to payment of any claims otherwise due to it that portion goes to the person who acquired that ancient writing on the relevant date in respect of that latter person, and if an ancient writing was acquired by more than one person, or two or more ancient writings were acquired by different persons, this The credit shall be apportioned between the acquirers in such proportion as the Director-General shall find fair and reasonable having regard to the circumstances, and shall be paid to each of them on the relevant date as if the amount apportioned to each of them had settled any West Malaysian claim against him. Events where West Malaysia Credit is payable to an individual

107. Subject to paragraph 117, a person's claim to West Malaysia is payable on the date of the occurrence of any of the following events, whichever occurs first in relation to him:

a) by proving to the Director-General that he was at least fifty-five years of age before January 1, 1968;

(b) upon your death at any time after December 31, 1967; (c) if you are fifty-five years of age after December 31, 1967; (d) on his departure from Malaysia if he is not a citizen and if he satisfies the Director-General in relation to the matters set out in Section 108;053e.FM ACT 53

(e) if he was not a resident and a citizen for any assessment year in the base year (i.e. a year in which he has no income other than dividends from Malaysia or any subsequent year) by noting the Managing Director that he is in is unlikely to receive any income (other than dividends) from Malaysia for two years after such base year;

(f) to persuade the General Manager that he was not entitled to payment of the West Malaysia Claim prior to 1 January 1988; (g) to convince the Director-General that he was prevented from employment by a serious disability for a period of at least twelve months and had no source of income during that period; or

(h) to convince the Director General that he is receiving a Malaysian pension and that he has no other source of income and is unlikely to have:

(ii) a source from which the interest is derived;

Matters in respect of which the Director General must be satisfied for the purposes of subparagraph 107(d).

108. For the purposes of subparagraph 107(d), a person must satisfy the Director-General that the person -

(a) you have not received a permit to enter or re-enter Malaysia or a similar document on the day of your departure from Malaysia;

(b) does not have the right to enter or re-enter Malaysia on that date; and.

(c) unlikely to be a resident of any of the base years for the five assessment years beginning in the assessment year following the assessment year in the base year for which the departure occurred. Events where the West Malaysian loan is payable to the company

109. (1) Subject to paragraph 117, a company's West Malaysia claim will be paid on the date on which either of the following events first occurs

occurs in relation to the company, i.e. if the company is dissolved after 12/31/1967 or if the declaration to the general director that it was not dissolved before 01/01/1988 or in the case of a company that no longer generates any sales (except dividends). Malaysia in the base year for a rating year, by satisfying the Director-General that he was not a resident in that base year or the following year and is unlikely to have any income (other than dividends) originating from Malaysia in any other year of the two years preceding the base year or the succeeding year, if any: provided that this paragraph shall not apply to the winding up of a particular company after December 31, 1967 if at about the time of the winding up any of the company's assets certain of which are available for distribution to its members are transferred -

(a) to a company which is a member of the same group as that particular company;

(b) to a company in which more than fifty percent of the shares are owned by members of that particular company; or

(c) the shareholders of that particular company or any person or persons controlling that particular company within the meaning of the Section

139.(2) If clause in sub-paragraph (1) applies to the transfer of the assets of a company, the claim to West Malaysia to which the company would be entitled but for this clause shall be paid in accordance with the following sub-paragraphs.

(3) Subject to subparagraph (4)--

(a) Where all the assets of a company are transferred to the members of the company or to persons controlling the company within the meaning of Section 139, the West Malaysian company's claim shall be divided among them in proportion to their ownership as beneficial owners of the common shares of the company at the time of its dissolution ("common stock" has the same meaning herein as the definition of "director" in subsection 2(1)) or, in the case of persons holding such control, in the proportion in which they control their Share Interest Control held and must be paid to each of them on the relevant date as if the amount distributed to each was a claim against him in West Malaysia; (b) If all the assets of a company are transferred to a single person having such control, West Malaysia, the company's claim will be deemed to be its property and payable to it on the relevant date. (4) Where a member or person to whom any West Malaysian claim (or any part thereof) is payable under sub-paragraph (3) is a corporation, the amount payable shall be treated as a West Malaysian corporation claim and subparagraph (1) shall apply in relation to the payment of that claim. 12:07 PM380 Malaysian Laws ACT 53

(5) If sub-paragraph (3) is not applicable, the Company's West Malaysian claim will be treated as a West Malaysian claim of the assignee and sub-paragraph (1) will apply in respect of the payment of that claim. (6) In the event that there are two or more transfers (other than transfers to shareholders in the company or to a person or persons controlling the company within the meaning of Section 139) to which the provisions of subparagraph (1) Sub-paragraph (5) shall apply in the apportionment of the West Malaysian claim among the assignees as the Director-General reasonably deems necessary to give proper effect to sub-paragraph (5) in the circumstances.

West Malaysian loan payable to the company in certain cases prior to dissolution

110. Subject to paragraph 117, if the Director General is satisfied that the winding up of a company is imminent and that the company will be entitled to the West Malaysia Claim upon its winding up, the amount of the West Malaysia Claim may be reduced by the provide insolvency administrator of the company; and if the Company is not wound up within three months (or such longer period as the Director-General shall think fit in the circumstances) after making such sum available to the liquidator, it shall be the duty of the liquidator to repay such sum to the Director-General, after being called to do so. trustee and executor

111. Subject to paragraph 117, the West Malaysia claim of the trustee of a trust or the executor of the estate of a deceased person is payable - (a) upon termination of the trust or upon discharge of the remainder of the estate of the deceased person, if any; (b) by demonstrating to the General Manager that the Trust was not terminated (or the balance discharged, as the case may be) before January 1, 1988; or

(c) if the Trustee or the Executors cease to receive income (other than dividends) from Malaysia in the base year for any assessment year after the Director-General has been satisfied that the Trustee was not or the Executors were not, in that base year or any subsequent year and the trustee is not resident in any of the two years after the base year or the executors are not likely to be receiving any income (other than dividends) from Malaysia, or in the subsequent year as the case may be.

hindu joint families

112. Subparagraphs 107(a), (b), (c), (e) and (f) shall apply with respect to a Hindu joint family as if those subparagraphs referred to the family manager or karta.053e .FM page 380 Thursday, April 6, 2006 12:07 p.m. Income Tax 381

Applicable provisions when paragraphs 107 to 112 do not apply

113. Subject to paragraph 117, the West Malaysian claim is payable to a person to whom none of paragraphs 107 to 112 applies (a) on application to the Director General in the 1988 assessment year; or (b) upon application to the General Manager prior to that year, where the General Manager is satisfied that there are circumstances similar to those in which a company would be entitled to payment of the West Malaysia Loan prior to that year.

Married: general

114. Where section 47 of the West Malaysia Regulations for the year of assessment 1967 applies to a married woman and her husband, account must be taken in applying the preceding paragraphs of this part to the husband -(a) any reference to a source a reference to a Include source of it as if it were a source of it;

(b) any reference to legal income in relation to him shall be construed as a reference to all legal income from him from a source listed as his source;

(d) any past taxes paid by him in respect of the 1967 year of assessment shall be treated as having been paid by him.

Married: wife misappropriation

115. If a marriage is contracted after December 31, 1967, the wife of that marriage shall not be entitled to any West Malaysia credit to which she would otherwise be entitled and any such credit shall be paid to the husband of that marriage as if it were such would be a claim which affects him in paragraphs 101 to 105 or in paragraph 109 has been established.

Married persons: amendment of paragraphs 107 and 108

116. In each case where paragraph 107 or 108 applies to the husband and wife of the marriage -

(a) Subparagraph 107(d) is amended to require the husband to satisfy the Director-General on the matters referred to in paragraph 108 not only in relation to himself but also in relation to that wife, or, if paragraph 108 so shall not apply to her in relation to the matters set out in sub-paragraph 107(e) in relation to that wife;

(b) Subparagraph 107(e) is amended to require the husband to satisfy the Director-General on the matters set out therein, not just ACT 53

in relation to themselves but also in relation to that wife or, if subsection 107(e) does not apply to them, in matters listed in paragraph 108 in relation to that wife.

Power to offset West Malaysian balance against tax payable

117. Notwithstanding the preceding paragraphs of this Part, if a person is entitled to a West Malaysia Loan in any calendar year, the Director General may withhold payment of that loan in order to set off the amount against any tax or back tax owed by that person. be reckless

118. Subject to paragraph 104, if a person no longer possesses a source (a source to which subsection 31(5) or (7) of the West Malaysia Regulations for Assessment Year 1967 applies) in calendar year 1967. and the previous year of assessment under this Regulation), such person's income from that source shall be disregarded for the purposes of this Act

MALAYSIAN LAWS

Leu 53

INCOME TAX ACT 1967

LIST OF CHANGES

Amending Act Short title Valid from

Law 77/1967 Income Tax Code (Amendment) 1967 14.12.1967P.U. 144/1968 Income Tax (Transitional Provisions) Regulations 1968

14.12.1967

Income Tax Act A13 (Amendment) 1969 Act 1. 1968 assessment year and

in the coming years

2. §§ 8 - Evaluation

Year of construction 1969 and

in the coming years

Resolution P.U.(B) 146/1969 at s. 127(2) 04-07-1969P.U.(A) 510/1969 Income Tax (Amendment to Schedule 6) Regulations 1969

12.12.1969

P.U.(A) 256/1970 Emergency (essential powers)

Regulation No. 38 of 1970

(various dates

according to the schedule

to the regulation)

A32 Income Tax Act (Amendment) Act 1971 Assessment Year 1971 and

in the coming years

Income Tax Act A60 (amendment) (No. 2)

1971

(Various dates like

from time to

The act)

Income Tax Act A98 (Amendment) 1972 Law 01.01.1972 Income Tax Act A108 (Amendment) (No. 2)

1972

04.04.1972

053e.FM Page 383 Thursday April 6, 2006 12:07 PM384 Malaysian Law ACT 53

Income Tax Act A158 (Amendment) Act 1973 Assessment Year 1973 and

in the coming years

except expressly

provided

P.U.(A) 266/1974 amendment of Annex 6 Part II assessment year 1973 and

in the coming years

P.U.(A) 267/1974 amendment of Annex 6 Part II assessment year 1968 and

in the coming years

P.U.(A) 328/1974 amendment of Annex 6 Part II assessment year 1963 and

in the coming years

Income Tax Act A225 (Amendment) Act 1974 1. Sections 2 and 3--

01.01.1974

2. Other Provisions--

29.02.1974

Income Tax Act A226 (Amendment) (No. 2) Act

1974

assessment year

1974 z

in the coming years

except expressly

provided

Income Tax Act A227 (Amendment) (No. 3)

1974

assessment year

1974 z

in the coming years

Income Tax Act A273 (Amendment) Act 1975 Assessment Year 1975 and

subsequently

years except

§ 6 that

will work

for the year from

Rückblick 1974

Amending Act Short title Valid from

053 .FM Page 384 Thursday, April 6, 2006 12:07 AM Income Tax 385

Law 160 Malaysian Currency Law (Ringgit)

1975

29.08.1975

Income Tax Act A344 (Amendment) Act 1976 Assessment Year 1976 and

in the coming years

P.U.(B) 50/1976 amendment of Annex 6 Part I assessment year 1976 and

in the coming years

P.U.(B) 303/1976 amendment of Annex 6 Part II assessment year 1976 and

in the coming years

P.U.(B) 186/1977 amendment of Annex 6 Part II assessment year 1973 and

in the coming years

P.U.(B) 18719/77 Amendment of Appendix 6 Part II assessment year 1968 and

in the coming years

P.U.(B) 363/1977 Amendment of Annex 6 Part II 01.12.1974P.U.(B) 364/1977 Amendment of Annex 6 Part II Evaluation year 1973

P.U.(B) 365/1977 amendment of Annex 6 Part II assessment year 1977

Act A380 Income Tax Act (Amendment) 1977 1. Section 2(b) and

Section 8--

01.01.1977

2. Other Provisions--

assessment year

1977 e

in the coming years

Income Tax Act A429 (Amendment) Act 1978 1st 1978 assessment year and

in the coming years

Amending Act Short title Valid from

053e.FM Page 385 Thursday April 6, 2006 12:07 PM386 Malaysian Law ACT 53

2. Section 2--01/01/1977

3. Paragraph 12(b)--

assessment year

1977 e

in the coming years

Law A434 Subordinate Courts Amendment Act

1978

01.07.1978

Income Tax Act A451 (Amendment) Act 1979 1st 1979 assessment year and

in the coming years

2. Sections 2 and 4 - Evaluation

Year of construction 1973 and

in the coming years

3. Sections 10, 11, 12 and 14--

01.01.1979

4. §§ 15 and

18--

assessment year

1980 e

in the coming years

PU (B) 421/1979 amendment of Annex 6 Part I assessment year 1977 and

in the coming years

PU (B) 422/1979 amendment of Annex 6 Part II assessment year 1977 and

in the coming years

PU (B) 423/1979 amendment of Annex 6 Part II assessment year 1980

A471 Income Tax Act (Amendment) Act 1980 1. Section 3 – Year of Assessment

1978 e

in the coming years

Amending Act Short title Valid from

053 .FM Page 386 Thursday, April 6, 2006 12:07 AM Income Tax 387

2. § 16 - Year of assessment

1968 e

in the coming years

3. § 14 - Year of assessment

1980 e

in the coming years

4. Other Provisions--

assessment year

1980 e

in the coming years

Law 241 Finance Act 1981 1st Section 8,

paragraph 10(b),

§§ 11, 12,

16 e

Section 18(a)

assessment year

1980 e

in the coming years

2. Other Provisions--

assessment year

1981 e

in the coming years

PU (A) 161/1981 Revision of the Laws (Income Tax Law of 1967) Decree of 1981

05.06.1981

Act 264 Finance Act 1982 1st Section 10--

01.01.1982

2. Other Provisions--

assessment year

1982 e

in the coming years

Amending Act Short title Valid from

053e.FM Page 387 Thursday April 6, 2006 12:07 PM388 Malaysian Law ACT 53

Finance Act 274 (No. 2) Act of 1982 1. Sections 4, 5, 6 und 14--

assessment year

1984 e

in the coming years

2. Sections 7, 8, 9, 10, 11 and

12--

01.01.1983

3. Paragraph 15(a)--

22.10.1982

4. Other Provisions--

assessment year

1983 z

in the coming years

Law 293 Finance Act 1983 1. Sections 4, 5,

6, 9, 10, 11, 15,

16, 17, 18, 19, 20,

21 and 22--

21.10.1983

2. Section 7--01-01-1984

3. Sections 12, 13 and 14--

assessment year

1984 e

in the coming years

4. Other Provisions--

assessment year

1984 e

in the coming years

Act 309 Finance Act 1984 1. Sections 16

e 18--

19.10.1984

Amending Act Short title Valid from

053 .FM Page 388 Thursday, April 6, 2006 12:07 AM Income Tax 389

2. Sections 5, 8 and 14--

21.10.1983

3. paragraph 4(b), clause 13,

paragraph 15(b)

e 19(g)--

assessment year

1984 e

in the coming years

4. Section 7 – 10/19/1984

5. Other Provisions--

assessment year

1985 e

in the coming years

Act 315 Finance Act 1985 assessment year

1985 e

in the coming years

Finance Law 323 (No. 2) Law of 1985 1st paragraph

4(d)--

assessment year

1984 e

in the coming years

2. § 23 year of assessment

1985 e

in the coming years

3. Paragraphs 6(a), 6(b), 7(c)

and Section 22--

assessment year

1987 e

in the coming years

Amending Act Short title Valid from

053e.FM Page 389 Thursday April 6, 2006 12:07 PM390 Malaysian Law ACT 53

4. Paragraphs 4(a), 4(b),

Sections 8, 17

e 19--

25.10.1985

5. Paragraph 24(b)--

25.10.1986

6. Other Provisions--

assessment year

1986 e

in the coming years

Income Tax Act A643 (Amendment) Act 1986 Section 1 7--01-01-1986

2. Other Provisions--

assessment year

1987 e

in the coming years

Act 328 Finance Act 1986 1. Sections 5, 7

e 12--

21.10.1983

2. §§ 4, 6, 10, 11, 13, 15 and

18--

24.10.1986

3. Section 8--01-01-1986

4. § 16 - Year of assessment

1984

5. Paragraph 19(h)--

assessment year

1988 e

in the coming years

Amending Act Short title Valid from

053 .FM Page 390 Thursday, April 6, 2006 12:07 AM Income Tax 391

6. Other Provisions--

assessment year

1987 e

in the coming years:

Provided that

paragraph 9(c)

and (and) must

stop having

it is made of--

(e) year from

Rückblick 1988

where the cattle

Prices

to get by

insurer during

the base period

for the year from

Rückblick 1986

on behalf of everyone

Malaysian life

guidelines in place

at the end of it

period, amount

to fifty million

ringgit or more;

Amending Act Short title Valid from

053e.FM Page 391 Thursday April 6, 2006 12:07 PM392 Malaysian Law ACT 53

(ii) a kind of de

Rückblick 1990

where the cattle

Prices

to get by

insurer during

the base period

for the year from

Rückblick 1986

on behalf of everyone

Malaysian life

guidelines in place

at the end of it

period, amount

to ten million

Ringgit or more

but less than fifty

million ringgit;

(iii) somehow

Rückblick 1992

where the cattle

Prices

to get by

hold during the

period per year

the evaluation

1986 on account

of all Malays

life politics in

power at the end

it is from that time

less than ten

million ringgit

Act 337 Finance Act 1987 1st Section 10--

24.10.1986

2. Section 13--01-01-1989

Amending Act Short title Valid from

053 .FM Page 392 Thursday, April 6, 2006 12:07 AM Income Tax 393

3. Other Provisions--

assessment year

1988 e

in the coming years

Law 364 Finance Act 1988 1st paragraphs

14(b) and (e)--

assessment year

1990 e

in the coming years

2. Other Provisions--

assessment year

1989 e

in the coming years

PU (A) 212/1989 Income Tax (Transitional Provisions) Regulations 1989

assessment year

1968

Act 420 Finance Act 1990 1. Sections 7, 8

e 15--

assessment year

1989 e

in the coming years

2. Section 13--01-01-1989

3. § 16 - Year of assessment

1991 e

in the coming years

4. Other Provisions--

assessment year

1990 e

in the coming years

P.U.(A) 266/1990 Income Tax (Transitional Provisions) Regulations 1990

assessment year

1968

Amending Act Short title Valid from

053e.FM Page 393 Thursday April 6, 2006 12:07 PM394 Malaysian Law ACT 53

Finance Act 421 (No.2) Act of 1990 1. Sections 5

e 6--

assessment year

1990 e

in the coming years

2. Sections 4, 7 and 8--

assessment year

1991 e

in the coming years

Income Tax Act A774 (Amendment) Act 1990 Assessment Year 1991 and

in the coming years

Law 451 Finance Act 1991 1. Chapter II

except for

§§ 7, 8, 10,

heels

11(a), 11(b),

§ 19,

paragraph 20(b),

§§ 21, 23,

26, 27,

heels

28(d) and (e)--

assessment year

1991 e

in the coming years

2. § 19, paragraph 20(b),

§§ 23 u

27--

14.12.1990

3. §§ 7, 8, 10 paragraphs

11(a), 11(b) e

Section 26--

assessment year

1992 e

in the coming years

Amending Act Short title Valid from

053 .FM Page 394 Thursday, April 6, 2006 12:07 AM Income Tax 395

4. Section 21, paragraphs 28(d)

and 28(e)--

01.10.1989

P.U.(A) 406/1991 Revision of the Laws (Correction) Ordinance of 1991

11.01.1971

Law 476 Finance Act 1992 1. Chapter II

except for

§§ 6, 7, 11,

12 e

heels

18(a)--

assessment year

1992 e

in the coming years

2. §§ 6, 11, 12 and

heels

18(a)--

assessment year

1991 e

in the coming years

3. Section 7--01-01-1990

Law 497 Finance Act 1993 1. Chapter II

except the section

4, paragraphs

6(b) and section

7--Rating

Year of construction 1993 and

in the coming years

2. Section 4 - Assessment Year

1994 e

in the coming years

3. Paragraph 6(b)--

assessment year

1989

Amending Act Short title Valid from

053e.FM Page 395 Thursday April 6, 2006 12:07 PM396 Malaysian Law ACT 53

4. Section 7-30.10.1992

Law 513 Finance Act 1994 1. Chapter II

except for

sections 4, 7,

paragraphs 8(d),

10(a), Sections

11, 12, 13, 14,

17, 18, 19, 20,

21, 22, 23, 24,

25, paragraph

28(d) e

Section 29--

assessment year

1994 e

in the coming years

2. Section 4, paragraph 10(a)

and Section 11--

01.06.1991

3. Section 7, paragraph 8(d),

Sections 12, 14

e 29--

01.01.1994

4. Section 13--01-01-1993

5. Paragraph 28(d)--

16.02.1993

6. §§ 17, 18, 19, 20, 21,

22, 23, 24 e

25--

25.02.1994

Amending Act Short title Valid from

053 .FM Page 396 Thursday, April 6, 2006 12:07 AM Income Tax 397

Law 531 Finance Act 1995 1. Chapter II

except for

section 6,

paragraph 19(c)

and 19(e)--

assessment year

1995 e

in the coming years

2. § 6 (except

Unit volume

6(a)(i))--

assessment year

1994 e

in the coming years

3. Unterabsatz 6(a)(i)--

assessment year

1991

4. Paragraphs 19(c) and

19(e)--

28.10.1994

Law 544 Finance Act 1996 1. Chapter II

except for

heels

10(a), 10(b),

11(a), 16(c) and

Section 17--

assessment year

1996 e

in the coming years

2. Paragraphs 10(a), 10(b),

11(a), 11(b) e

16(c)--

assessment year

1995 e

in the coming years

Amending Act Short title Valid from

053e.FM Page 397 Thursday April 6, 2006 12:07 PM398 Malaysian Law ACT 53

3. § 17 - Year of assessment

1997 e

in the coming years

Act A955 Income Tax (Amendment) Act 1996 8/2/1996 Act 557 Finance Act 1997 1. Kapitel II

except for

paragraph 4(a),

4(b), 19(a),

19(b), Sections

5, 7, 15, 16, 17,

18, 20 and 21--

assessment year

1997 e

in the coming years

2. Paragraphs 4(a) 19(b),

Sections 16, 17

e 18--

25.10.1996

3. Paragraphs 4(b) and 19(a),

Sections 5, 7, 15

e 21--

01.01.1997

4. Section 20--08-02-1996.

Law A998 Income Tax (Amendment) Law 1997 01.08.1997 Law 578 Finance Law 1998 Chapter 1 II

except for

§§ 7, 8, 10,

14, 15, 18,

paragraphs 21(d)

e 21(g)--

assessment year

1998 e

in the coming years

Amending Act Short title Valid from

053 .FM Page 398 Thursday, April 6, 2006 12:07 AM Income Tax 399

2. §§ 7, 8, 14, 15 and

Unit volume

21(g)--

01.01.1999

3. Section 10--10/17/1997

4. Section 18--20.03.1998

5. Paragraph 21(d)--

assessment year

1999 e

in the coming years

Act A1028 Tax Laws (Amendment) Act 1998 1. Chapter I, except Section 6

02.07.1998

2. Section 6 - Assessment Year

1998 e

in the coming years

Finance Act 591 (No. 2) Act of 1998 1. Chapter II

except sections

4, 6, 10 and 13

assessment year

1999 e

in the coming years

the evaluation

2. Section 4--10/24/1998

3. Sections 6 and 10--

assessment year

2000 e

in the coming years

the evaluation

Amending Act Short title Valid from

053e.FM Page 399 Thursday 6 April 2006 12:07 PM400 Malaysian Law ACT 53

4. Section 13 - Assessment Year

1998 e

in the coming years

the evaluation

Income Tax Act A1055 (Amendment) Act 1999 1. Sections 2, 3, 5 and 6--

01.01.2000

2. §§ 20, 21, 77 and 92

assessment year

2000 ca

from the base

Period ends in

the year 2000 and

in the coming years

the evaluation

3. Section 4 - Assessment Year

1999 e

in the coming years

the evaluation

4. Sections 7 through 16--

assessment year

2000 in comparison

the base period

end the year

1999

5. Section 17 --01-01-2000

Income Tax Act A1069 (Amendment) (No. 2)

1999

01.01.2000

1. Subsection 107C(3) of

Section 12 --

assessment year

2002 e

in the coming years

the evaluation

Amending Act Short title Valid from

053 .FM Page 400 Thursday, April 6, 2006 12:07 p.m. Income Tax 401

2. §§ 13, 14, 15 and 16--

01.01.2000

3. Section 17 – Year of Assessment

2001

4. Other Provisions--

assessment year

2001 e

in the coming years

the evaluation

Law 600 Finance Act 2000 1. §§ 5, 6,

7, 8, 11, 12 z

fifteen--

assessment year

2000 ca

from the base

Period ends in

the year 2000

(present year

base) and

in the coming years

the evaluation

2. Sections 4, 9, 10 and 14--

16.06.2000

3. § 13 - Year of assessment

2000 ca

from the base

Period ends in

the year 1999

(previous year

base) and

in the coming years

the evaluation

Amending Act Short title Valid from

053e.FM Page 401 Thursday 6 Apr 2006 12:07pm402 Malaysian Law ACT 53

Income Tax Act A1093 (Amendment) Act 2000 1. Sections 211, 1318 and 21

assessment year

2001 e

in the coming years

the evaluation

2. § 12 year of assessment

2000 ca

from the base

Period ends in

the year 2000 and

in the coming years

the evaluation

3. Section 16 – For Only

assessment year

2000 ca

from the base

Period ends in

the year 2000

4. §§ 19, 20 and 2228--

01.01.2001

Finance Act 608 (No. 2) Act of 2000 1. Sections 414 and 1627--

assessment year

2001 e

in the coming years

the evaluation

2. § 15 - Year of assessment

1986 e

in the coming years

the evaluation

Amending Act Short title Valid from

053 .FM Page 402 Thursday, April 6, 2006 12:07 AM Income Tax 403

Law 619 Finance Act 2002 1. Sections 4, 5,

7, paragraphs

8(a), 8(b), 8(d),

8(e), 8(f), 8(g),

8(h), 8(i), 8(j),

8(l) and 8(m),

Section 9 and

paragraph 10(a),

10(b) and 10(c)

assessment year

2002 e

in the coming years

the evaluation

2. Paragraph 8(c)--

01.01.2000--

assessment year

2000 e

following year

the evaluation

3. Item 37F of Annex 3 as

inserted by

Paragraph 8(k)--

assessment year

2002 e

in the coming years

the evaluation

4. Paragraphs 37G and 37H of

Appendix 3 acc

Inserted by

Paragraph 8(k)--

assessment year

2001 e

in the coming years

Amending Act Short title Valid from

053e.FM Page 403 Thursday 6 Apr 2006 12:07pm404 Malaysian Law ACT 53

5. Paragraph 10(d)--

assessment year

1998 e

in the coming years

the evaluation

Income Tax Act A1151 (Amendment) Act of 2002 1. Sections 2, 34, 5, 6, 7, 8, 9,

10, 11, 12, 13,

14, 15, 16, 17,

18, 19, paragraph

20(a),

Unit volume

21(b)(i),

heels

21(c)(i) bis (ii),

§§ 22 u

23, paragraphs

24(b) and 25(a)

and paragraph

25(b)(ii)--

assessment year

2004 e

in the coming years

the evaluation

2. Paragraphs 20(b) and (c),

paragraph 21(a),

Unit volume

21(b)(ii) e

paragraph 21(d)

assessment year

2001 e

in the coming years

the evaluation

Amending Act Short title Valid from

053 .FM Page 404 Thursday, April 6, 2006 12:07 AM Income Tax 405

3. Paragraph 24(a) and

Unit volume

25(b)(i)--

assessment year

2002 e

in the coming years

the evaluation

4. § 26 - Year of assessment

2004

5. Article 27 - Year of Assessment

2002

6. §§ 28, 29, 30 and 31--

assessment year

2003

PU(A) 338/2002 Legislative Revision (Correction of the Income Tax Act 1967) Regulations of 2002

23.08.2002

Finance Act 624 (No. 2) Act of 2002 1. Sections 4, 6, 8, 9, 10, 11, 12,

13, 16, 17,

paragraph 19(a),

§§ 20, 21,

22, 23, 28 e

29--

assessment year

2003 e

in the coming years

the evaluation

2. Section 5 - Evaluation Year

2002 e

in the coming years

the evaluation

3. §§ 7, 18 and 24 --

21.09.2002

Amending Act Short title Valid from

053e.FM Page 405 Thursday 6 Apr 2006 12:07pm406 Malaysian Law ACT 53

4. §§ 14, 15 and 27 must

have effect on

the entry into

operation of the law

624 [27.12.2002]

5. Paragraph 19(b)--

assessment year

2001 e

in the coming years

the evaluation

6. §§ 25 and 26--

assessment year

2000 (current

year) and

in the coming years

the evaluation

Law 631 Finance Act 2003 1. §§ 4, 6,

8 and 16 and

paragraph 19(b)

assessment year

2003 e

in the coming years

the evaluation

2. Sections 12 and 15--

assessment year

2003

3. §§ 5, 7, 9, 11, 13, 14, 18

e 20 --

assessment year

2003 e

in the coming years

the evaluation

Amending Act Short title Valid from

053 .FM Page 406 Thursday, April 6, 2006 12:07 AM Income Tax 407

4. Section 10 - Assessment Years

2003, 2004 z

2005

5. Paragraph 17(b)--

01.01.2001

6. Unterabsatz 19(a)(i)--

13.09.2003

7. Subparagraph 19(a)(ii)--

assessment year

2000 (current

year) and

in the coming years

the evaluation

Law 639 Finance Act 2004 1. Sections 4, 5,

6, z

Unit volume

7(b)(ii) e

§§ 8, 9, 10,

11, 12, 13, 14,

15, 16, 17, 18,

19, 23, 27, 28,

29, 30, 31 e

32--

assessment year

2005 e

in the coming years

the evaluation

2. Paragraph 7(a)--

assessment year

2001 e

in the coming years

the evaluation

Amending Act Short title Valid from

053e.FM Page 407 Thursday 6 Apr 2006 12:07pm408 Malaysian Law ACT 53

3. subparagraph 7(b)(i) and

§§ 20 u

22--

assessment year

2001 e

in the coming years

the evaluation

4. §§ 24, 25 and 26--

01.01.2005

5. Paragraph 33(a)--

assessment year

2003 e

in the coming years

the evaluation

6. Paragraph 33(b)--

09.11.2004

Law 644 Finance Act 2005 1. Sections 4, 5,

6, 7, 8, 9, 10, 11,

12, 13, 14, 15,

16, 17, 18, 21,

22, 24, 32, 33,

34, 35, 36 e

37 work

for the year from

Evaluation 2006

and subsequently

years from

valuation

2. Sections 23 and 30 come into effect

operation in the 1

January 2006

Amending Act Short title Valid from

053 .FM Page 408 Thursday, April 6, 2006 12:07 AM Income Tax 409

3. Section 25 is deemed to have been fulfilled

in between

operation in the 1

October 2005

Amending Act Short title Valid from

053e .FM Page 409 Thursday, April 6, 2006 12:07 p.m.410

MALAYSIAN LAWS

Leu 53

INCOME TAX ACT 1967

LIST OF AMENDED SECTIONS

Section Amendment Authority Effective From

2 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 01.01.1970

Lei A60 01.01.1970

Lei A98 01.01.1972

Law A108 assessment year 1968 and

subsequent years of the evaluation

Law A158 assessment year 1973 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of evaluation;

Pro. 2(b) 01.01.1977

Lei A429 01.01.1977

Law A451 assessment year 1973 and

subsequent years of the evaluation

Lei 293 21.10.1983

053 .FM Page 410 Thursday, April 6, 2006 12:07 p.m. Income Tax 411

Law 323 Paragraph. 4(a), (b) 1985-10-25;

Per. 4(c) Assessment Year

1986 and following years

Valuation;

Per. 4(d) Year of Evaluation

1984 and the following years

valuation

Leu 328 24.10.1986

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 420 assessment year 1990 and

subsequent years of the evaluation

Law A774 assessment year 1991 and

subsequent years of the evaluation

Lei 513 01.06.1991

Lei A955 02.08.1996

Law 557 para. 4(a) 25.10.1996;

Pro. 4(b) 01.01.1997

Lei 600 16-06-2000

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

3 law A226 assessment year 1974 and

subsequent years of the evaluation

3A law A273 assessment year 1975 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 411 Thursday April 6, 2006 12:07 PM412 Malaysian Law ACT 53

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 309 par. 4(a) Year of Assessment

1985 and the following years

Valuation;

Per. 4(b) Year of Assessment

1984 and the following years

valuation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 420 assessment year 1990 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

3B Act A774 Assessment Year 1991 and

subsequent years of the evaluation

3C law 531 assessment year 1995 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

4A Lei 293 21.10.1983

Leu 309 21.10.1983

Leu 328 21.10.1983

Leu 557 01.01.1987

5 law A273 assessment year 1975 and

subsequent years of the evaluation

Law A471 assessment year 1978 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 412 Thursday, April 6, 2006 12:07 AM Income Tax 413

Law 241 assessment year 1981 and

subsequent years of the evaluation

Law 323 Paragraph. 6(a), (b) Year of Assessment

1987 and following years

Valuation;

Per. 6(c) Assessment Year

1986 and following years

valuation

Law 337 assessment year 1988 and

subsequent years of the evaluation

6 Leu 77/1967 14.12.1967

Lei A98 01.01.1972

Law A158 assessment year 1973 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Lei 293 21.10.1983

Law 323 Paragraph. 7(a) Assessment Year

1986 and following years

Valuation;

Per. 7(a), (b) Year of assessment

1987 and following years

valuation

Law 420 assessment year 1990 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 413 Thursday April 6, 2006 12:07 PM414 Malaysian Law ACT 53

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 624 assessment year 2003 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

6A law A380 assessment year 1977 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

6B law 241 assessment year 1981 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

6C law 578 assessment year 1998 and

subsequent years of the evaluation

7 Leu 77/1967 14.12.1967

Section Amendment Authority Effective From

053 .FM Page 414 Thursday, April 6, 2006 12:07 AM Income Tax 415

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 624 assessment year 2002 and

subsequent years of the evaluation

9 law A226 assessment year 1974 and

subsequent years of the evaluation

10 Leu 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

11 law 624 assessment year 2003 u

subsequent years of the evaluation

13 P.U.(A) 256/1970 assessment year 1968 and

subsequent years of the evaluation

Law A60 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Lei 293 01.01.1984

Act 309 For a passage beginning or

after 10/19/1984

Leu 323 25.10.1985

Law 557 assessment year 1997 and

subsequent years of the evaluation

Leu 591 24.10.1998

Section Amendment Authority Effective From

053e.FM Page 415 Thursday 6 Apr 2006 12:07pm416 Malaysian Law ACT 53

13A law 241 assessment year 1981 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

14 Law A1093 assessment year 2001 and

subsequent years of the evaluation

15 law A158 assessment year 1973 u

subsequent years of the evaluation

Law A451 assessment year 1973 and

subsequent years of the evaluation

Leu 328 24.10.1986

15A Lei 293 21.10.1983

Leu 309 21.10.1983

Leu 328 21.10.1983

Leu 557 01.01.1997

Lei 624 21.09.2002

17 Law A226 assessment year 1974 and

subsequent years of the evaluation

18 Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 241 assessment year 1980 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law A643 assessment year 1987 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 416 Thursday, April 6, 2006 12:07 AM Income Tax 417

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 624 assessment year 2003 and

subsequent years of the evaluation

19 Leu 77/1967 14.12.1967

Law 420 assessment year 1989 and

subsequent years of the evaluation

Law 451 assessment year 1992 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

20 Leu A1055 01.01.2000

21 Law A13 assessment year 1968 and

subsequent years of the evaluation

Lei A1055 01.01.2000

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

21A law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

22 Law A13 assessment year 1968 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 417 Thursday 6 Apr 2006 12:07pm418 Malaysian Law ACT 53

23 Law A226 assessment year 1974 and

subsequent years of the evaluation

24 Law A226 assessment year 1974 and

subsequent years of the evaluation

Lei 293 21.10.1983

25 Leu 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of the evaluation

Leu 578 01.01.1999

Law 644 assessment year 2006 and

subsequent years of the evaluation

26 Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

27 Leu 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

Leu 578 01.01.1999

29 Law A226 assessment year 1974 and

subsequent years of the evaluation

30 Lei 77/1967 14.12.1967

Section Amendment Authority Effective From

053 .FM Page 418 Thursday, April 6, 2006 12:07 AM Income Tax 419

Law A226 assessment year 1974 and

subsequent years of the evaluation

31 Leu 77/1967 14.12.1967

Law 624 assessment year 2003 and

subsequent years of the evaluation

32 Leu 77/1967 14.12.1967

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

33 Leu 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

P.U.(A )256/1970 assessment year 1968 and

subsequent years of the evaluation

Law A60 assessment year 1968 and

subsequent years of the evaluation

34 Law A226 assessment year 1974 and

subsequent years of the evaluation

Law 274 assessment year 1984 and

subsequent years of the evaluation

Law A643 assessment year 1987 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 497 assessment year 1994 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 419 Thursday 6 Apr 2006 12:07pm420 Malaysian Law ACT 53

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 591 assessment year 1999 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 619 assessment year 2002 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 639 par. 7(a) Assessment Year

2001 and the following years

Valuation;

save 7(b)(i) Year of Assessment

2004 and the following years

valuation

34A law 274 assessment year 1984 and

subsequent years of the evaluation

Law A643 assessment year 1987e

subsequent years of the evaluation

Law 421 assessment year 1991 and

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

34B law 451 assessment year 1992 and

subsequent years of the evaluation

Lei 513 01.01.1994

Section Amendment Authority Effective From

053 .FM Page 420 Thursday, April 6, 2006 12:07 p.m. Income Tax 421

Law 531 assessment year 1994 and

subsequent years of evaluation;

save 6(a)(i) for the year of

Rückblick 1991

35 Leu 77/1967 14.12.1967

Law A108 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law 274 assessment year 1984 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

36 Law 309 assessment year 1985 u

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

37 Leu 77/1967 14.12.1967

Law 624 assessment year 2003 and

subsequent years of the evaluation

38 Leu 77/1967 14.12.1967

Law 624 assessment year 2003 and

subsequent years of the evaluation

38A law 364 assessment year 1989 u

subsequent years of the evaluation

39 Law A13 assessment year 1969 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A344 assessment year 1976 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 421 Thursday 6 Apr 2006 12:07pm422 Malaysian Law ACT 53

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of evaluation;

Per. 10(b) Assessment Year

1980s and subsequent years

valuation

Lei 274 01.01.1983

Lei 293 21.10.1983

Law 309 assessment year 1985 and

subsequent years of the evaluation

Law A643 assessment year 1987 and

subsequent years of the evaluation

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 421 assessment year 1990 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Leu 578 17.10.1997

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 619 assessment year 2002 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 422 Thursday, April 6, 2006 12:07 p.m. Income Tax 423

Law 644 assessment year 2006 and

subsequent years of the evaluation

42 Law A643 assessment year 1987 and

subsequent years of the evaluation

Law A1055 assessment year 1999 and

subsequent years of the evaluation

43 Law A226 assessment year 1974 and

subsequent years of the evaluation

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 451 assessment year 1992 and

subsequent years of the evaluation

Law 476 assessment year 1991 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

44 Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Lei 328 01.01.1986

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 420 assessment year 1989 and

subsequent years of the evaluation

Law 421 assessment year 1990 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 423 Thursday 6 Apr 2006 12:07pm424 Malaysian Law ACT 53

Law 451 assessment year 1991 and

subsequent years of evaluation;

Sea. 11(a), (b) year from

1992 and subsequent evaluation

evaluation years

Leu 476 01.01.1990

Law 513 assessment year 1994 and

subsequent years of evaluation;

to. 8(d) 01.01.1994

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 591 assessment year 2000 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

44A law 644 assessment year 2006 and

subsequent years of the evaluation

45 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 assessment year 1970 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 424 Thursday, April 6, 2006 12:07 AM Income Tax 425

Law A60 assessment year 1970 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 315 assessment year 1985 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

45A law 608 assessment year 2001 u

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

46 law A273 assessment year 1975 u

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 425 Thursday 6 Apr 2006 12:07pm426 Malaysian Law ACT 53

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 600 regarding year of assessment 2000

of the base period ends in

Year 2000 and the following years from

valuation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

46A law 631 assessment years 2003, 2004

e 2005

47 P.U.(A) 256/1970 assessment year 1970 and

subsequent years of the evaluation

Law A60 assessment year 1970 and

subsequent years of the evaluation

Law A227 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 426 Thursday, April 6, 2006 12:07 AM Income Tax 427

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 241 assessment year 1980 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

48 Leu 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A227 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 427 Thursday 6 Apr 2006 12:07pm428 Malaysian Law ACT 53

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

49 Leu 77/1967 14.12.1967

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law 241 assessment year 1980 and

subsequent years of evaluation;

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 428 Thursday, April 6, 2006 12:07 AM Income Tax 429

Law 476 assessment year 1991 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of evaluation;

Pro. 10(a) 01.06.1991

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 600 regarding year of assessment 2000

of the base period ends in

Year 2000 and the following years from

valuation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

50 Lei 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A108 assessment year 1970 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1991 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 429 Thursday April 6, 2006 12:07 PM430 Malaysian Law ACT 53

Lei 513 01.06.1991

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 600 regarding year of assessment 2000

of the base period ends in

Year 2000 and the following years from

valuation

Law 608 assessment year 2001 and

subsequent years of the evaluation

51 Law A471 assessment year 1980 and

subsequent years of the evaluation

54 Leu 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

54A law A451 assessment year 1979 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

Law 309 assessment year 1984 and

subsequent years of the evaluation

Law 591 assessment year 1999 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 430 Thursday, April 6, 2006 12:07 AM Income Tax 431

54B law 264 assessment year 1982 u

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

55 Leu 77/1967 14.12.1967

56 Leu 77/1967 14.12.1967

59 Leu 77/1967 14.12.1967

60 Lei 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

Law 328 assessment year 1987 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 par. 10(a), (b) year from

1995 and subsequent evaluation

years of evaluation;

Paragraph 10(c) Year of Assessment

1996 and the following years

valuation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 431 Thursday April 6, 2006 12:07 PM432 Malaysian Law ACT 53

Law 591 assessment year 1999 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

60A law A227 assessment year 1974 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

60AA Act 323 Assessment Year 1986 and

subsequent years of the evaluation

Law 608 year of assessment 1986 and

subsequent years of the evaluation

60AB Act 531 Assessment Year 1995 and

subsequent years of the evaluation

60B law A471 assessment year 1980 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

60C law 264 assessment year 1982 and

subsequent years of the evaluation

Law 624 assessment year 2003 and

subsequent years of the evaluation

60D law 420 assessment year 1990 u

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Lei 513 01.01.1994

Section Amendment Authority Effective From

053 .FM Page 432 Thursday, April 6, 2006 12:07 AM Income Tax 433

Law 600 regarding year of assessment 2000

of the base period ends in

Year 2000 and the following years from

valuation

60E law 420 assessment year 1990 u

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Lei 513 01.01.1993

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 assessment year 1995 and

subsequent years of the evaluation

Leu 578 01.01.1999

Law 624 assessment year 2003 and

subsequent years of the evaluation

60F law 497 assessment year 1993 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

60FA law 644 assessment year 2006 and

subsequent years of the evaluation

60G law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

60H Act 557 Year of Assessment 1995 and

subsequent years of the evaluation

61 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 assessment year 1968 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 433 Thursday April 6, 2006 12:07 PM434 Malaysian Law ACT 53

Law A60 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law 420 assessment year 1990 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

61A law 639 assessment year 2005 and

subsequent years of the evaluation

62 Law A226 assessment year 1974 and

subsequent years of the evaluation

63A Act 420 Assessment Year 1990 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

63B law 420 assessment year 1990 u

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

63C law 639 assessment year 2005 and

subsequent years of the evaluation

63D law 639 assessment year 2005 and

subsequent years of the evaluation

64 Leu 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

65 Law A226 assessment year 1974 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 434 Thursday, April 6, 2006 12:07 AM Income Tax 435

65A Act A380 Rating Year 1977 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

67 Law A226 assessment year 1974 and

subsequent years of the evaluation

Lei 274 01.01.1983

Lei 293 21.10.1983

68 Leu 77/1967 14.12.1967

69 Leu 77/1967 14.12.1967

70 Lei 77/1967 14.12.1967

72 Leu 77/1967 14.12.1967

74 Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

75 Law 619 assessment year 2002 and

subsequent years of the evaluation

Leu 624 27.12.2002

75A Leu 624 27.12.2002

Leu 644 01.01.2006

76 Law 513 assessment year 1994 and

subsequent years of the evaluation

77 Leu A1055 01.01.2000

Section Amendment Authority Effective From

053e.FM Page 435 Thursday April 6, 2006 12:07 PM436 Malaysian Law ACT 53

Lei A1069 01.01.2000

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

Law 639 assessment year 2004 and

subsequent years of the evaluation

77A law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

78 Lei 451 14.12.1990

80 Lei 77/1967 14.12.1967

PU(A) 256/1970 01.01.1968

Lei A60 01.01.1968

Lei A1069 01.01.2000

81 Law A13 assessment year 1968 and

subsequent years of the evaluation

P.U.(A) 256/1970 assessment year 1968 and

subsequent years of the evaluation

Law A60 assessment year 1968 and

subsequent years of the evaluation

82 Leu 337 24.10.1986

Lei 451 14.12.1990

Law A1093 assessment year 2001 and

subsequent years of the evaluation

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Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 624 assessment year 2003 and

subsequent years of the evaluation

82A law 624 assessment year 2003 and

subsequent years of the evaluation

83 Law A158 assessment year 1973 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

Leu 557 01.01.1997

84 Leu 77/1967 14.12.1967

86 Leu 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2004 and

subsequent years of the evaluation

89 Leu 77/1967 14.12.1967

90 Lei A1069 01.01.2000

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

91 Lei 578 01.01.1999

Leu 644 01.01.2006

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92 Leu 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A108 assessment year 1972 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Lei A1055 01.01.2000

Law A1093 assessment year 2001 and

subsequent years of the evaluation

93 Leu A1069 01.01.2000

Law A1151 assessment year 2004 and

subsequent years of the evaluation

95 law 476 assessment year 1992 u

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

96 Leu A1069 01.01.2000

Law A1151 assessment year 2004 and

subsequent years of the evaluation

96A PU(A) 256/1970 01.01.1970

Lei A60 01.01.1970

Lei A1069 01.01.2000

Law A1151 assessment year 2004 and

subsequent years of the evaluation

97 Law A108 Regarding an Appeal or

after 01/01/1972

98 Lei 77/1967 14.12.1967

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99 Lei 77/1967 14.12.1967

Law A1093 For the year of assessment 2000

100 Lei A108 01.01.1972

101 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 01.01.1970

Lei A60 01.01.1970

102 Leo A108 01.01.1972

Lei 600 16-06-2000

103 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 01.01.1970

Lei A60 01.01.1970

Lei A451 01.01.1979

Lei 264 01.01.1982

Lei 274 01.01.1983

Lei 293 21.10.1983

Leu 557 25.10.1996

Lei A1069 01.01.2000

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2004 and

subsequent years of the evaluation

103A Leu A1069 01.01.2000

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Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

104 Leu A451 01.01.1979

Lei 274 01.01.1983

Lei 293 21.10.1983

Law A1151 assessment year 2004 and

subsequent years of the evaluation

106 Leu A451 01.01.1979

Lei A1069 01.01.2000

Law A1151 assessment year 2004 and

subsequent years of the evaluation

107 Leu 77/1967 14.12.1967

Law A158 assessment year 1973 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

107A Lei 274 01.01.1983

Lei 293 21.10.1983

Leu 328 24.10.1986

Leu 557 25.10.1996

Leu 624 21.09.2000

107B Leu 337 01.01.1989

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Lei A1069 01.01.2000

Law 600 For the year of assessment 2000 in

for the end of the base period

in 2000 and beyond

evaluation years

Law A1151 assessment year 2004 and

subsequent years of the evaluation

107C Law A1069 Year of Assessment 2000 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2003 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

108 Leu 77/1967 14.12.1967

P.U.(A) 256/1970 assessment year 1968 and

subsequent years of the evaluation

Law A60 assessment year 1968 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of the evaluation

Law 337 assessment year 1988 and

subsequent years of the evaluation

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Law 364 assessment year 1989 and

subsequent years of the evaluation

Law A774 assessment year 1991 and

subsequent years of the evaluation

Law 497 assessment year 1993 and

subsequent years of evaluation;

paragraph 6(b) for the year

Rückblick 1989

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2001 and

subsequent years of the evaluation

Law 631 par. 17(a) Year of Assessment

2003 and the following years

Valuation;

Pro. 17(b) 01.01.2001

109 Leu 77/1967 14.12.1967

Lei A98 01.01.1972

Law A158 assessment year 1973 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Lei A380 01.01.1977

Lei A451 01.01.1979

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Law 241 assessment year 1981 and

subsequent years of the evaluation

Leu 323 25.10.1985

Leu 328 24.10.1986

Leu 497 30.10.1992

Leu 557 25.10.1996

109A law A158 assessment year 1973 and

subsequent years of the evaluation

109B Leu 293 21.10.1983

Leu 309 21.10.1983

Leu 328 21.10.1983

Law 557 para. 19(a) 01.01.1997;

to 19(b) 10/25/1996

109C Leo 323 01.01.1986

Lei A643 01.01.1986

109D law 639 assessment year 2005 and

subsequent years of the evaluation

110 Lei 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A158 assessment year 1973 and

subsequent years of the evaluation

Lei 293 21.10.1983

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 420 assessment year 1990 and

subsequent years of the evaluation

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Law 497 assessment year 1993 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

110A Act A774 Assessment Year 1991 and

subsequent years of the evaluation

111 Leu 77/1967 14.12.1967

Law A158 01/01/1973

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A1093 assessment year 2001 and

subsequent years of the evaluation

111A Act A774 Assessment Year 1991 and

subsequent years of the evaluation

111B Leu 639 01.01.2005

Leu 644 01.01.2006

111C Leu 639 01.01.2005

112 Leu 77/1967 14.12.1967

Lei 513 25.02.1994

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Lei A1069 01.01.2000

Law A1151 assessment year 2004 and

subsequent years of the evaluation

113 Leu 77/1967 14.12.1967

Lei 513 25.02.1994

114 Leu 513 25.02.1994

Lei A1069 01.01.2000

115 Leu 513 25.02.1994

116 Lei 77/1967 14.12.1967

Lei 513 25.02.1994

Lei A1069 01.01.2000

117 Leu 513 25.02.1994

118 Leu 513 25.02.1994

119 Leu 513 25.02.1994

119A Leu A1093 01.01.2000

120 PU(A) 256/1970 01.05.1970

Lei A60 01.05.1970

Law A158 assessment year 1973 and

subsequent years of the evaluation

Leu 328 24.10.1986

Lei 513 25.02.1994

Leu 578 01.01.2000

Lei A1069 01.01.2000

Lei A1093 01.01.2001

123 Leu A1028 07/02/1998

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124 Leu 77/1967 14.12.1967

125 Lei 77/1967 14.12.1967

Law 644 assessment year 2006 and

subsequent years of the evaluation

127 Leu 77/1967 14.12.1967

Lei 274 01.01.1983

Lei 293 21.10.1983

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Leu 644 01.10.2005

127A law 608 assessment year 2001 and

subsequent years of the evaluation

128 Law 241 assessment year 1981 u

subsequent years of the evaluation

Law 274 assessment year 1983 and

subsequent years of the evaluation

Law 328 assessment year 1987 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

129A law 608 assessment year 2001 and

subsequent years of the evaluation

130 Lei 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

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Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 591 assessment year 1999 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

133A law A451 assessment year 1980 and

subsequent years of the evaluation

Law 544 assessment year 1996 and

subsequent years of the evaluation

134 Leu 77/1967 14.12.1967

Lei A998 01.08.1997

Leu 644 01.01.2006

136 Leu 323 25.10.1985

Lei A955 02.08.1996

Leu 557 02.08.1996

Lei A1028 02.07.1998

Leu 644 01.01.2006

137 Leu A955 02.08.1996

138 Leu 77/1967 14.12.1967

Lei A225 01-01-1974

Lei A955 02.08.1996

140 Law A1151 assessment year 2004 and

subsequent years of the evaluation

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141 Leu 77/1967 14.12.1967

142 lei A225 01-01-1974

143 Leu 77/1967 14.12.1967

144 Leu A955 02.08.1996

145 Lei 293 21.10.1983

Leu 420 01.01.1989

146 Lei 644 01.01.2006

147 Law A158 of 01/01/1973

Leu 644 01.01.2006

148 Leu 77/1967 14.12.1967

151 Leu 639 01.01.2005

152A law A1093 assessment year 2001 and

subsequent years of the evaluation

153 Leu 77/1967 14.12.1967

Leu 328 24.10.1986

Lei 451 14.12.1990

Leu 644 01.01.2006

154 Leu 77/1967 14.12.1967

Law 531 assessment year 1995 and

subsequent years of the evaluation

154A law A158 assessment year 1968 and

subsequent years of the evaluation

156 law 608 assessment year 2001 u

subsequent years of the evaluation

Appendix 1 Law A32 assessment year 1971 u

subsequent years of the evaluation

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Law A158 assessment year 1973 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A344 assessment year 1976 and

subsequent years of the evaluation

Law A380 assessment year 1977 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of the evaluation

Law 264 assessment year 1982 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

Law 309 assessment year 1984 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 328 From the year of assessment 1984

Law 337 assessment year 1988 and

subsequent years of the evaluation

Law 364 assessment year 1989 and

subsequent years of the evaluation

Law 420 assessment year 1990 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053e.FM Page 449 Thursday April 6, 2006 12:07 PM450 Malaysian Law ACT 53

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 497 assessment year 1993 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 600 For the year of assessment 2000 in

for the end of the base period

in 2000 and beyond

evaluation years

Law A619 assessment year 2002 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Appendix 2 Law 77/1967 14.12.1967

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Section Amendment Authority Effective From

053 .FM Page 450 Thursday, April 6, 2006 12:07 AM Income Tax 451

Leu 309 19.10.1984

Appendix 3 Law 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

P.U.(A) 256/1970 assessment year 1970 and

subsequent years of the evaluation

Law A60 assessment year 1970 and

subsequent years of the evaluation

Law A108 assessment year 1968 and

subsequent years of the evaluation

Law A158 assessment year 1968 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

Law A273 assessment year 1975 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law 241 assessment year 1981 and

subsequent years of the evaluation

Law 274 assessment year 1984 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of the evaluation

Law 323 assessment year 1985 and

subsequent years of the evaluation

Law A643 assessment year 1987 and

subsequent years of the evaluation

Section Amendment Authority Effective From

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Law 328 assessment year 1987 and

subsequent years of the evaluation

Law 421 assessment year 1991 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Law A1028 assessment year 1991 and

subsequent years of the evaluation

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of the evaluation

Law 531 assessment year 1995 and

subsequent years of the evaluation

Law 544 assessment year 1996 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 600 For the year of assessment 2000

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law A619 assessment year 2002 and

subsequent years of the evaluation

Law A1151 assessment year 2004 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

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Law 644 assessment year 2006 and

subsequent years of the evaluation

Appendix 4 Law 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of the evaluation

Appendix 4A law 364 assessment year 1989 u

subsequent years of the evaluation

Law 420 assessment year 1989 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

Appendix 4B law 451 assessment year 1992 u

subsequent years of the evaluation

Appendix 4C law 591 assessment year 2000 and

subsequent years of the evaluation

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

Appendix 5 Law 77/1967 14.12.1967

Lei A108 01.01.1972

Lei A225 01-03-1974

You A434 07/01/1978

Section Amendment Authority Effective From

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Leu 328 24.10.1986

Lei 451 14.12.1990

Lei 600 16-06-2000

Appendix 6 Law 77/1967 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

P.U.(B) 146/1969 10.12.1969

P.U.(A) 510/1969 assessment year 1971 and

subsequent years of the evaluation

Law A158 assessment year 1973 and

subsequent years of the evaluation

P.U.(A) 266/1974 assessment year 1973 and

subsequent years of the evaluation

P.U.(A) 267/1974 assessment year 1968 and

subsequent years of the evaluation

P.U.(A) 328/1974 assessment year 1963 and

subsequent years of the evaluation

Law A226 assessment year 1974 and

subsequent years of the evaluation

P.U.(B) 50/1976 assessment year 1976 and

subsequent years of the evaluation

P.U.(B) 303/1976 assessment year 1976 and

subsequent years of the evaluation

P.U.(B) 186/1977 from assessment year 1973

P.U.(B) 187/1977 assessment year 1968 and

subsequent years of the evaluation

P.U.(B) 363/1977 1.12.1974

P.U.(B) 364/1977 From assessment year 1973

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P.U.(B) 365/1977 From assessment year 1977

Law A380 assessment year 1977 and

subsequent years of the evaluation

P.U.(B) 421/1979 assessment year 1977 and

subsequent years of the evaluation

P.U.(B) 422/1979 assessment year 1977 and

subsequent years of the evaluation

Law A429 assessment year 1978 and

subsequent years of the evaluation

Law A451 assessment year 1979 and

subsequent years of the evaluation

P.U.(B) 423/1979 assessment year 1980 and

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 241 Paragraph. 18(a) Year of Assessment

1980s and subsequent years

Valuation;

Per. 18(a) Year of Assessment

1981 and following years from

Valuation;

Law 264 assessment year 1982 and

subsequent years of the evaluation

Law 274 assessment year 1983 and

subsequent years of the evaluation

Law 293 assessment year 1984 and

subsequent years of the evaluation

Law 309 assessment year 1985 and

subsequent years of evaluation;

Per. 19(h) assessment year

1984 and the following years

valuation

Section Amendment Authority Effective From

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Law 323 assessment year 1986 and

subsequent years of the evaluation

Law 328 assessment year 1987 and

subsequent years of evaluation;

Per. 19(h) assessment year

1988 and subsequent years

valuation

Law 364 assessment year 1989 and

subsequent years of the evaluation

Leu 451 01.10.1989

Law 476 assessment year 1992 and

subsequent years of the evaluation

Law 497 assessment year 1993 and

subsequent years of the evaluation

Law 513 assessment year 1994 and

subsequent years of evaluation;

Paragraph 23(d) 02/16/1993

Law 544 assessment year 1995 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Law 591 assessment year 1999 and

subsequent years of the evaluation

Law 600 For the year of assessment 2000

Law 608 assessment year 2001 and

subsequent years of the evaluation

Law 631 assessment year 2004 and

subsequent years of the evaluation

Law 639 assessment year 2005 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

Section Amendment Authority Effective From

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Annex 7 law A226 assessment year 1974 u

subsequent years of the evaluation

Law 591 assessment year 1999 and

subsequent years of the evaluation

Appendix 7A law A451 assessment year 1980 u

subsequent years of the evaluation

Law A471 assessment year 1980 and

subsequent years of the evaluation

Law 274 assessment year 1983 and

subsequent years of the evaluation

Law 323 assessment year 1986 and

subsequent years of the evaluation

Law A643 assessment year 1987 and

subsequent years of the evaluation

Law 328 assessment year 1987 and

subsequent years of the evaluation

Law 364 assessment year 1989 and

subsequent years of evaluation;

Per. 14(b), (e) year from

1990 and subsequent evaluation

evaluation years

Law 420 assessment year 1991 and

subsequent years of the evaluation

Law 421 assessment year 1991 and

subsequent years of the evaluation

Law 451 assessment year 1991 and

subsequent years of the evaluation

Lei 513 01.01.1994

Law 544 assessment year 1997 and

subsequent years of the evaluation

Law 557 assessment year 1997 and

subsequent years of the evaluation

Section Amendment Authority Effective From

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Law 578 assessment year 1998 and

subsequent years of the evaluation

Law 591 assessment year 1998 and

subsequent years of the evaluation

Law 619 assessment year 2002 and

subsequent years of the evaluation

Law 644 assessment year 2006 and

subsequent years of the evaluation

Annex 7B law 544 assessment year 1996 and

subsequent years of the evaluation

Appendix 9 Law 77/1967 14.12.1967

P.U. 144/1968 14.12.1967

Law A13 assessment year 1968 and

subsequent years of the evaluation

P.U.(A) 256/1970 assessment year 1968 and

subsequent years of the evaluation

Law A60 assessment year 1968 and

subsequent years of the evaluation

Lei A108 01.01.1972

Law A158 assessment year 1968 and

subsequent years of the evaluation

Law A471 assessment year 1968 and

subsequent years of the evaluation

P.U.(A) 212/1989 from assessment year 1968

P.U.(A) 266/1990 From assessment year 1968

Section Amendment Authority Effective From

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