a) Gross Business Income
Answer:
Gross business income shall include any sums receivable or deemed to have been received for that basis period in relation to that source by way of sale of trading stock or services. In determining gross business income, Section 12 (should also be read with Section 3), Section 22, Section 24, Section 28 and Section 30 of the Income Tax Act 1967.
Answer:
The income upon which tax is chargeable under this Act is income in respect of gains or profits as prescribed under Paragraph 4(a) ITA 1967 whereby the gains or profits are reflected after the deduction of allowable expenses from the gross business income
Answer:
The interpretation of business under Section 2 of the ITA 1967 includes profession, vocation and trade and every manufacture, adventure or concern in the nature of trade, but excludes employment. Subsection 2 (1) gives a broader meaning of business in whereby focuses on the motives or purposes’ of each transaction made.
b) Pre-Operation Business Expenditure
Answer:
Generally, expenses incurred by a person prior to the commencement of his operations or business would not be allowable as a deduction against the gross income of his business as they are not wholly and exclusively incurred in the production of the income.
However, Schedule 4B of the ITA 1967 and the Rules issued by the Minister of Finance: PU (A) 61/1992, PU (A) 111/1995, PU (A) 160/1996, PU (A) 475/2003, PU (A) 472/2005, PU (A) 135/2006, PU (A) 65/2007, PU (A) 361/2008, PU (A) 401/2009 and PU (A). 76/2012 allows deductions for certain expenses incurred prior to the commencement of operations or business.
Answer:
Kindly log on to IRBM Official Portal at www.hasil.gov.my> Internal Links> Public Ruling> No. 11/2013: Pre-Operational Business Expenditure.
Subsection 33 (1) of the ITA 1967, provides for expenditure which is wholly and exclusively incurred in generating gross income from a source may be allowed as a deduction from the gross income of that source. The provisions of Subsection 33 (1) of the ITA 1967 should be read in conjunction with the provisions of Subsection 39 (1) of the ITA 1967 in determining adjusted income.
d) Deductions Not Allowed
Answer:
Section 39 of the ITA 1967 specifically defines no deduction from the gross income from that source for that period shall be allowed.
e) Allowance Claims
i. Capital Allowance
Answer:
No deduction is allowed for expenses incurred on assets or assets’ depreciation. In determining the adjusted income of a business, no deduction is allowed for expenses incurred on assets or depreciation of assets.
Tax deduction is given in the form of Capital Allowance in lieu of depreciation expense for the purchase of assets used in the business, in determining the statutory income for a business source.
Capital Allowance is only given to a person who incurs Allowable Expenditure on assets used for his business purposes as provided under Schedule 3 of the ITA 1967 and is only given a deduction if claimed.
Capital Allowance is given in the form of Initial Allowance Annual Allowance
Answer:
Syarat-syarat kelayakan tuntutan Elaun Permulaan dan Elaun Tahunan berhubung dengan sesuatu aset bagi suatu tahun taksiran: :
Elaun Permulaan (EP) :
Elaun Tahunan (ET) :
Answer:
Kindly log on to IRBM Official Portal: www.hasil.gov.my> Internal Links> Public Ruling :
ii. Agricultural Allowance
Answer:
Referring to Paragraph 7, Schedule 3 of the ITA1967, Agriculture Allowance is one of the incentives provided to persons carrying on business activities in the agro-based industry.
Answer:
A person who has incurred qualifying agricultural expenditure in relation to an asset and his business is entitled to claim Agricultural Allowance for the year of assessment if he is the owner of the asset at the end of the basis period and the asset is used in the business.
Answer:
Kindly log on to IRBM Official Portal: www.hasil.gov.my> Internal Links> Public Ruling > No. 1/2016: Agricultural Allowances.
iii. Forest Allowance
Answer:
With reference to Paragraph 8, Schedule 3 of the ITA 1967, Forest Allowance is one of the incentives provided to persons carrying on timber extractions.
Answer:
A person who has been granted a concession or license and carries on a business of timber extraction is entitled to claim forest allowances on expenditure incurred on the construction in the forest of :
Answer:
Kindly log on to IRBM Official Portal: www.hasil.gov.my> Internal Links> Public Ruling > No. 11/2014: Forest Allowances And Expenses Relating to Timber Extraction .
iv. Industrial Building Allowance
Answer:
Industrial Building Allowance is provided in accordance with Schedule 3 of the ITA 1967 and is given at the expense of a building eligible either to construct or purchase the building.
Answer:
Kindly log on to IRBM Official Portal: www.hasil.gov.my> Internal Links> Public Ruling :
vi) Investment Tax Allowance (ITA)
Answer:
ITA is an incentive given on capital expenditure incurred in a basis period by any company participating or intending to participate in a promoted activity or producing a promoted product. ITA and pioneer status are “mutually exclusive” in respect of the same promoted activity or product, whereby a company cannot enjoy both of these incentives at the same time and for the same activity.
Answer:
Application and the grant of ITA is within the jurisdiction of the Ministry of International Trade and Industry (MITI). Ministry Of International Trade And Industry (MITI)
Answer:
More details on Investment Tax Allowance.
f) ) Pioneer Status?
Answer:
Pioneer Status is one of the incentives in the provisions of the Promotion of Investments Act 1986 which provides tax exemption (partly or all) on relevant business statutory income given to companies that participate in a promoted activity or of producing a promoted product in Malaysia. The Pioneer Status Incentive and Investment Tax Allowance are "mutually exclusive" whereby a company cannot enjoy both of these incentives at the same time and for the same activity.
Answer:
Application and the grant of Pioneer Status is within the jurisdiction of the Ministry of International Trade and Industry (MITI). Ministry Of International Trade And Industry (MITI)
Answer:
Kindly refer to Section 5 to Section 25 of the Promotion of Investments Act 1986.
g) Transfer Pricing (TP)
Answer:
TP generally refers to intercompany pricing arrangements for the transfer of goods, services and intangibles between a multinational company and a subsidiary company within the country itself (local transfer pricing) or across the border abroad (cross border). These transactions are called controlled transactions or related party transactions.
The selling price of a product charged by the parent company to the subsidiary company may differ from the selling price with an independent third party. This determination of the sale price may be referred to as the transfer price. (independent party). Penetapan harga jualan ini bo;eh disebut sebagai harga pindahan.
Article 9 OECD Model Tax Convention On Income and On Capital – OECD defines related companies as:
Section 139 of the ITA 1967 has provided a person shall be taken to have control of a company if he exercises or is able to exercise or is entitled to acquire control (whether direct or indirect) over the company’s affairs and in particular, without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire the greater part of the share capital or voting power in the company.
Answer:
The IRBM Transfer Price Guidelines are applicable when there is a transaction between the relevant multinational companies, i.e. one business is subject to Malaysian tax and the other is subject to foreign tax. The guidelines issued are based on the (Arm’s Length Principle) as set out in the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations – OECD.
Answer:
The Arm's Length Principle (Arm’s Length Principle) as stated in paragraph 1 of Article 9, OECD Model Tax Convention for determining the transfer price of a transaction between associated persons, (associate enterprises) which were made between independent entities under the same or similar circumstances.
Answer:
Kindly log on to IRBM Official Portal at www.hasil.gov.my> Internal Links> Technical Guidelines> Transfer Price Guidelines and Income Tax (Transfer Pricing) Rules 2012.
g) Investment Holding Company (IHC)
Answer:
IHC means a company whose activities consist mainly in the holding of investments and not less than 80% of its gross income other than gross income from a source consisting of a business of holding of an investment (whether exempt or not) is derived from the holding of those investments.
Answer:
Investment Holding Business means a business of letting of real property where a company in any year of assessment provides maintenance services or support services in respect of the real property.
Answer:
The tax treatment for an IHC depends on whether the IHC is or is not listed on the Bursa Malaysia. The special tax treatment for an IHC is provided under :
Answer:
Kindly log on to IRBM Official Portal: www.hasil.gov.my> Internal Links> Public Ruling> No. 10/2015: Investment Holding Company.
