30 January 2019
On 27 December 2018, the Finance Act 2018 (“Finance Act”) was published in the Federal Gazette and takes effect from various dates. The Finance Act amends the Income Tax Act 1967 (“ITA”), the Promotion of Investments Act 1986, the Stamp Act 1949, the Real Property Gains Tax Act 1976, the Labuan Business Activity Tax Act 1990, the Service Tax Act 2018 and the Sales Tax Act 2018 (collectively, “Acts”).
The Finance Act make amendments including the following:
- Income Tax Act 1967: Widen the definition of gross income to include the income of a person from a business that is attributable to a place of business in Malaysia, which will be deemed to be gross income derived from Malaysia from the business and subject to the ITA;
- Promotion of Investments Act 1986: Clarify that the income of a pioneer status company does not include income derived from an intellectual property right. Any income derived from an intellectual property right shall be taxed under the ITA;
- Stamp Act 1949: Provide that a company cannot dispose of a property that it has acquired within three years of the date of conveyance or transfer, and also provide that the companies involved have to be associated for a period of three years prior to the transfer of the property;
- Real Property Gains Tax Act 1976: Provide for new rates of tax on the disposal of chargeable property made by an individual who is a citizen or permanent resident of Malaysia, a company, and an individual who is not a citizen nor permanent resident of Malaysia;
- Labuan Business Activity Tax Act 1990: Amend the definition of “Labuan business activity” to provide that the term means a Labuan trading or a Labuan non-trading activity which is carried on in, from or through Labuan. The amendment allows the Labuan entity to deal with residents and in Malaysian ringgit;
- Service Tax Act 2018: Introduce the definition of “imported taxable service” which means any taxable service acquired by any person in Malaysia from any person outside Malaysia; and
- Sales Tax Act 2018: Introduce a new provision empowering the Minister for Finance to make regulations prescribing the amount of sales tax to be deducted in respect of taxable goods purchased by any registered manufacturer, conditions for the deduction, and the form and manner of such deduction. Sales tax deductions shall be made in respect of raw materials, components or packaging materials used solely in the manufacturing of taxable goods.