*AKTA KEWANGAN 2018

) Section 13 has effect for the years of assessment 2019, 2020 and 2021.

) Section 14 has effect for the years of assessment 2019, 2020,

2021, 2022, 2023 and 2024.

) Paragraph 4(b) and sections 5, 6, 6A, 7, 8, 19A and paragraph 23(aa) come into operation on the coming into operation of this Act.

) Paragraph 4(a) and sections 9, 20, 21, 22 and 26 come into operation on 1 January 2019.

Amendment of section 2

by substituting for the definition of “Labuan company” the following definition:

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

Tax Act 1990;’; and

by inserting after the definition of “rent” the following definition:

‘ “research and development” means any systematic,

Finance 11

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

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

research in the social sciences or the humanities;

routine data collection;

efficiency surveys or management studies;

market research or sales promotion;

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

or

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

Amendment of section 4A

)

For the purpose of subsection (3), a place of business includes —

a place of management;

a branch;

an office;

a factory;

a workshop;

a warehouse;

a building site, or a construction, an installation or an assembly project;

a farm or plantation; and

a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and without prejudice to the generality of the foregoing, a person shall be deemed to have a place of business in Malaysia if that person—

carries on supervisory activities in connection with a building or work site, or a construction, an installation or an assembly project; or

Finance 13

has another person acting on his behalf who —

habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification;

habitually maintains a stock of goods or merchandise in that place of business from which such person delivers goods or merchandise; or

regularly fills orders on his behalf.”.

Amendment of section 15A

in the shoulder note, by inserting after the word “research”

the words “and development”; and

14

Laws of Malaysia

in subsections (1), (2) and (5), by inserting after the word

“research” the words “and development”.

Amendment of section 39

by deleting the word “or” at the end of paragraph (p);

by substituting for the full stop at the end of paragraph (q) the words “; or”; and

by inserting after paragraph (q) the following paragraph:

“(r) subject to any rules as may be prescribed by the

Minister, any amount in respect of a payment made by a person, who is a resident, to any Labuan company.”.

Amendment of section 44

any amount ascertained under subsection 44(4) or (5) of the principal Act for the year of assessment 2017 and the preceding years of assessment which has not been deducted pursuant to subsection 43(2) of the principal Act for the year of assessment 2018; or

any amount ascertained under subsection 44(4) or (5) of the principal Act for the year of assessment 2018, may be accounted for the purpose of deduction under subsection 43(2)

of the principal Act for the year of assessment 2019 and subsequent years of assessment until the year of assessment 2028 and any amount which has not been deducted pursuant to subsection 43(2) of the principal Act after the end of the year of assessment 2028 shall be disregarded for the purposes of the principal Act.

Amendment of section 44A

in subsection (1), by inserting after the word “may” the words

“, for the basis period for three consecutive years of assessment,”;

by inserting after subsection (1) the following subsection:

“(1A) For the purpose of subsection (1), the basis period for three consecutive years of assessment commences —

immediately following the basis period for a year of assessment the surrendering company first commences operation, provided that the basis period consists of a period of twelve months; or

immediately following the second basis period the surrendering company first commences operation (in this paragraph referred to as the

“second basis period”), if the basis period for a year of assessment the surrendering company

16

Laws of Malaysia first commences operation is less or more than twelve months and the second basis period consists of a period of twelve months.”;

in subsection (10), by inserting after paragraph (a) the following paragraph:

“(aa) has unutilized investment tax allowance or adjusted loss from a pioneer business under the Promotion of

Investments Act 1986;”; and

in subsection (12) —

in the definition of “ordinary shares”, by deleting the word “nominal”; and

in the definition of “residual profits”, by deleting the word “nominal”.

Special provision relating to section 44A

the year of assessment 2019, in relation to a surrendering company which first commences its operation in the year of assessment 2015;

the years of assessment 2019 and 2020, in relation to a surrendering company which first commences its operation in the year of assessment 2016; and

the years of assessment 2019, 2020 and 2021, in relation to a surrendering company which first commences its operation in the year of assessment 2017.

Finance 17

Amendment of section 46

by substituting for subsection (1) the following subsection:

“(1) Subject to this section, in the case of an individual resident for the basis year for a year of assessment, there shall be allowed for that year of assessment a deduction—

not exceeding three thousand ringgit, in respect of premium paid by that individual for any insurance;

not exceeding four thousand ringgit, in respect of contribution to approved scheme (other than a private retirement scheme) made or suffered by that individual who is an employee or a self-employed person within the meaning of the

Employees Provident Fund Act 1991 [Act 452]; or

not exceeding four thousand ringgit, in respect of any amount made or suffered by that individual on any contribution under any written law relating to widow, widower and orphan’s pension or under any approved scheme within the meaning of any such law.”; and

by substituting for subsection (1A) the following subsection:

“(1A) For the purpose of subsection (1) —

the total amount of deduction under subsection (1)

shall not exceed seven thousand ringgit;

18

Laws of Malaysia

where subsection 50(2) or 50(3) applies, the amount of deduction to be allowed shall be in accordance with paragraphs (1)(a), (b) and (c) and the total deduction under subsection 50(2) or (3)

shall not exceed seven thousand ringgit;

in the case of an individual who is a pensionable officer within the meaning of section 2 of the

Pensions Act 1980 [Act 227] and no deduction is made under paragraph (1)(b) or (c) to that individual, the amount of deduction under paragraph (1)(a) shall not exceed seven thousand ringgit.”.

Amendment of section 60

in subsection (2) —

by substituting for paragraph (b) the following paragraph:

“(b) where an insurer carries on re-insurance business, the re-insurance business and the general business (excluding the re-insurance business) shall be treated as separate general businesses;”; and

in paragraph (c), by substituting for the proviso the following proviso:

“Provided that where the insurer also carries on life re-insurance business, the life re-insurance business shall be a separate source from life business and shall be treated as a general business;”;

in subsection (5A), by deleting the word “inward” wherever appearing;

Finance 19

by deleting subsection (5B);

in subsection (6A), by deleting the word “inward” wherever appearing;

by deleting subsection (6B);

in subsection (7), by substituting for the words “, (6A) or

)” the words “or (6A)”; and

in subsection (11)—

by substituting for the words “, sections 60A and 60B”

the words “and section 60A”; and

by deleting the definitions of “inward re-insurance”,

“inward re-insurance contract”, “offshore insurance”

and “offshore insurance policies”.

Amendment of section 60A

in the shoulder note, by substituting for the words “Inward re-insurance” the word “Re-insurance”;

by deleting the word “inward” wherever appearing;

in subsection (2), by substituting for the words “5 per cent”

the words “8 per cent”; and

by inserting after subsection (2) the following subsection:

“(3) This section shall apply to an insurer who has an adequate number of full time employees and has incurred an adequate amount of annual operating expenditure in

Malaysia as prescribed by the Minister.”.

20

Laws of Malaysia

Amendment of section 60AA

by substituting for subsection (1) the following subsection:

“(1) This section shall apply —

for ascertaining the adjusted income for the basis period for a year of assessment from the takaful business of a takaful operator; and

to a takaful operator who has an adequate number of full time employees and has incurred an adequate amount of annual operating expenditure in Malaysia as prescribed by the Minister.”;

in subsection (2) —

by substituting for paragraph (b) the following paragraph:

“(b) where the takaful operator carries on a re-takaful business, the re-takaful business and the general takaful business (excluding the re-takaful business) shall be treated as separate general takaful businesses;”;

in paragraph (c), by substituting for the proviso the following proviso:

“Provided that where the takaful operator also carries on family re-takaful business, the family re-takaful business shall be a separate source from the family business and shall be treated as a general takaful business;”; and

by substituting for paragraph (e) the following paragraph:

Finance 21

“(e) where a takaful operator carries on re-takaful business which includes family re-takaful business and general takaful business

(excluding those businesses), the income of the fund established in respect of each of the businesses (in this section referred to as

“re-takaful fund”, “family re-takaful fund” and

“general fund” respectively) shall be treated as a separate source of income from the income of the shareholders’ fund in respect of those businesses.”;

by substituting for subsection (6) the following subsection:

“(6) The adjusted income of the re-takaful fund or family re-takaful fund for the basis period for a year of assessment in respect of re-takaful business, or family re-takaful business respectively of a takaful operator resident for the basis year for that year of assessment shall consist of an amount arrived at by applying subsection (5) and references in that subsection to —

“general takaful certificate” shall be construed as references to “re-takaful contract” or “takaful certificate in relation to its family re-takaful business”, as the case may be;

“general takaful business” shall be construed as references to “re-takaful business” or “family re-takaful business”, as the case may be; and

“reserve fund for unexpired risks” and “takaful operator” shall, in the case of family re-takaful business, be construed as references to “actuarial valuation reserve” and “family takaful operator”

respectively:

Provided that in the case of re-takaful business, no deduction shall be allowed on any share of profits distributed or credited to the takaful participant or

22

Laws of Malaysia shareholders’ fund for that period out of any of the takaful operator’s fund, as the case may be.”;

by substituting for subsection (8) the following subsection:

“(8) The adjusted income of the re-takaful fund, or family re-takaful fund for the basis period for a year of assessment in respect of re-takaful business or family re-takaful business respectively of a takaful operator not resident for the basis year for that year of assessment shall, where that business is wholly or partly carried on in

Malaysia, consist of an amount arrived at by applying subsection (7) and references in that subsection to —

“Malaysian general takaful certificate” shall be construed as references to “re-takaful contract” or

“Malaysian takaful certificate in relation to its family re-takaful business”, as the case may be;

“general takaful business” shall be construed as references to “re-takaful business” or “family re-takaful business”, as the case may be; and

“reserve fund for unexpired risks” and “takaful operator” shall, in the case of family re-takaful business, be construed as references to “actuarial valuation reserve” and “family takaful operator”

respectively:

Provided that in the case of re-takaful business, no deduction shall be allowed on any share of profits distributed or credited to the takaful participant or shareholders’ fund for that period out of any of the takaful operator’s re-takaful fund, as the case may be.”;

in subparagraph (9)(a)(iii), by deleting the words “inward”

and “offshore fund”;

in subparagraph (10)(a)(iii), by deleting the words “inward”

and “offshore fund”;

Finance 23

in subsection (20), by deleting the words “inward” and “or offshore takaful business” wherever appearing;

in subsection (21), by deleting the words “inward” and “or offshore takaful business”;

in subsection (22) —

by deleting the words “inward” and “or offshore takaful business” wherever appearing; and

by substituting for the word “five” the word “eight”;

and

in subsection (23), by deleting the definitions of “inward re-takaful”, “inward re-takaful contract” and “offshore takaful”.

Deletion of section 60B

in paragraph (5)(c), by inserting after the word “person” the

24

Laws of Malaysia words “(in this section referred to as “third person”)”; and

by inserting after subsection (5) the following subsection:

“(5A) Without prejudice to the generality of section 139, for the purpose of subsection (5), “control” refers to persons one of whom owns shares of the other person, or a third person who owns shares of both persons, where the percentage of the share capital held in either situation is twenty per cent or more and —

the business operations of that person depends on the proprietary rights, such as patents, non-patented technological know-how, trademarks, or copyrights, provided by the other person or a third person;

the business activities, such as purchases, sales, receipt of services, provision of services, of that person are specified by the other person, and the prices and other conditions relating to the supply are influenced by such other person or a third person; or

where one or more of the directors or members of the board of directors of a person are appointed by the other person or a third person.”.

New section 140C

) In ascertaining the adjusted income of a person from each

Finance 25

of his sources consisting of a business for the basis period for a year of assessment, no deduction from the gross income from that source for that period shall be allowed in respect of any interest expense in connection with or on any financial assistance in a controlled transaction granted directly or indirectly to that person which is in excess of the maximum amount of interest as determined under any rules made under this Act.

) In this section —

“control” has the meaning assigned to it in subsection 140A(5A);

“controlled transaction” shall be construed as a financial assistance —

between persons one of whom has control over the other; or

between persons both of whom are controlled by some other person (in this section referred to as “third person”);

“financial assistance” includes loan, interest bearing trade credit, advances, debt or the provision of any security or guarantee;

“interest expense” means —

interest on all forms of debt; or

payments economically equivalent to interest

(excluding expenses incurred in connection with the raising of finance).”.

Amendment of section 154

in Part I —

in paragraph 2A, in the column Rate of income tax in item 1, by substituting for the words “18 per cent” the words “17 per cent”;

in paragraph 2D, in the column Rate of income tax in item 1, by substituting for the words “18 per cent” the words “17 per cent”;

by substituting for paragraph 3 the following paragraph:

“3. Income tax shall be charged for a year of assessment on the chargeable income of an insurer from a re-insurance business at the rate of 8 per cent on every ringgit of the chargeable income.”; and

by substituting for paragraph 4 the following paragraph:

“4. Income tax shall be charged for a year of assessment on the chargeable income of a takaful operator from a re-takaful business at the rate of 8 per cent on every ringgit of the chargeable income.”;

“(ii) amounts paid in consideration of any advice given, or assistance or services rendered in connection with the management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme; or”;

by substituting for Part VIII the following Part:

Finance 27

“PART VIII

Notwithstanding Part I and Part II, income tax shall be charged on the chargeable income of a life fund, other than income arising from life re-insurance business of a resident or non-resident insurer at the rate of .. .. .. 8 per cent.”;

in Part IX, by inserting after the words “10 per cent” the words “for the years of assessment 2019 and 2020 and 24 per cent for the subsequent years of assessment”; and

by substituting for Part XII the following Part:

“PART XII

Notwithstanding Part I and Part II, income tax shall be charged on the chargeable income of a family fund referred to in section 60AA, other than income arising from a family re-takaful business of a resident or non-resident operator at the rate of .. .. .. .. .. .. ..8 per cent.”.

Amendment of Schedule 3

in paragraph 37B —

in subparagraph (a), by inserting after the word

“research” the words “and development”;

in subparagraph (e), by inserting before the word

“undertaken” the words “and development”;

by inserting after the words “such research” wherever appearing the words “and development”; and

by inserting after the words “in the case of research”

the words “and development”; and

in paragraph 37D, by inserting after the word “research” the words “and development”.

28

Laws of Malaysia

(Deleted)

(Deleted)

in paragraph 4, by deleting the words “until the person has received the whole of the allowance or allowances to which it is so entitled”; and

by inserting after paragraph 4A the following paragraph:

“4B. Notwithstanding paragraph 4, so much of the allowance or allowances as cannot be given as ascertained under that paragraph at the end of the fifteen consecutive years of assessment referred to in paragraph 2 (in this paragraph referred to as “the first mentioned year of assessment”), shall only be given to that person in accordance with paragraph 4 for a period of seven consecutive years of assessment (in this paragraph referred to as “that period”) and that period commences immediately after the end of the first mentioned year of assessment, and any amount of that allowance or that allowances at the end of that period which cannot be given to that person, by reason of insufficiency or absence of statutory income from a business of his for that period, shall be disregarded for the purpose of this Schedule.”.

Finance 29

Special provision relating to paragraph 4B of Schedule 7A

shall only be given to that person in accordance with paragraph 4 of Schedule 7A to the principal Act, as if the principal Act has not been amended, for a period of seven consecutive years of assessment and that period commences immediately following the year of assessment 2018; and

any amount of that allowance or that aggregate amount at the end of that period which has not been given to that person, by reason of insufficiency or absence of statutory income from a business of his for that period, shall be disregarded for the purpose of Schedule 7A of the principal Act.

Amendment of Schedule 7B

in paragraph 5, by deleting the words “until the company has received the whole of the allowance or allowances to which it is so entitled”; and

by inserting after paragraph 5 the following paragraph:

“5A. Notwithstanding paragraph 5, so much of the allowance or allowances as cannot be given as ascertained under that paragraph for the year of assessment that relates to the basis period where the five-year period specified in paragraph 3 ends (in this paragraph referred to as “the first mentioned year of assessment”), shall only be given to that person in accordance with paragraph 5 for a period of

30

Laws of Malaysia seven consecutive years of assessment (in this paragraph referred to as

“that period”) and that period commences immediately after the end of the first mentioned year of assessment, and any amount of that allowance or those allowances at the end of that period which cannot be given to that person, by reason of insufficiency or absence of statutory income from a business of his for that period, shall be disregarded for the purpose of this Schedule.”.

Special provision relating to paragraph 5A of Schedule 7B

shall only be given to that person in accordance with paragraph 5 of Schedule 7B to the principal Act, as if the principal Act has not been amended, for a period of seven consecutive years of assessment and that period commences immediately following the year of assessment 2018; and

any amount of that allowance or that aggregate amount at the end of that period which has not been given to that person, by reason of insufficiency or absence of statutory income from a business of his for those period, shall be disregarded for the purpose of Schedule 7B of the principal Act.

Finance 31

) Sections 36, 37 and 62 have effect from the year of assessment 2019 and subsequent years of assessment.

) Sections 33, 34 and 35 come into operation on 1 January 2019.

Amendment of section 2

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

research in the social sciences or the humanities;

routine data collections;

efficiency surveys or management studies;

market research or sales promotion;

32

Laws of Malaysia

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

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

Amendment of section 6

by substituting for the full stop at end of the subsection a colon; and

by inserting the following proviso:

“Provided that the contract research and development company at the time of application has an adequate number of full time employees and incurred adequate amount of annual operating expenditure in Malaysia for an activity relating to research and development.”.

Special provision relating to section 6

where a contract research and development company has been granted a pioneer status on or before 16 October 2017, the proviso to subsection 6(1AC) shall not apply to that company until 30 June 2021; and

where a contract research and development company has been granted a pioneer status after 16 October 2017, the proviso to subsection 6(1AC) shall not apply to that company until 31 December 2018.

Finance 33

Amendment of section 21E

) Any income derived from intellectual property right referred to in subsection (2A) is subject to tax under the Income

Tax Act 1967.

) For the purpose of this section, “intellectual property right” means a right arising from any patent, utility innovation and discovery, copyright, trade mark and service mark, industrial design, layout-design of integrated circuit, secret processes or formulae and know-how, geographical indication and the grant of protection of a plant variety, and other like rights, whether or not registered or registrable.”.

Amendment of section 25

by deleting subsection (3);

in subsection (4), by deleting the proviso; and

by inserting after subsection (4) the following subsection:

“(5) Notwithstanding subsection (4), the deduction which has not been so made (or so much thereof as has not been so made) for a year of assessment under that subsection, shall only be made to that company in accordance with that subsection for a period of seven consecutive years of assessment and that period

34

Laws of Malaysia commences immediately following the year of assessment that relates to the basis period in which the day the post pioneer business falls, and any amount of deduction at the end of that period which has not been so made to that company, by reason of insufficiency or absence of statutory income for that period, shall be disregarded for the purpose of this section.”.

Special provision relating to section 25

shall only be made to that company in accordance with subsection 25(4) of the principal Act for a period of seven consecutive years of assessment and that period commences immediately following the year of assessment 2018; and

any amount of deduction at the end of that period which has not been so made to that company, by reason of insufficiency or absence of statutory income from its business for that period, shall be disregarded for the purposes of the principal

Act.

) Paragraph 68(d) comes into operation on 1 January 2019.

Amendment of section 2

by substituting for the definition of “banker” the following definition:

‘ “banker” means—

any person licensed under the Financial Services

Act 2013 [Act 758] to carry on a banking business in Malaysia;

any person licensed under the Islamic Financial

Services Act 2013 [Act 759] to carry on an Islamic banking business in Malaysia; or

a development financial institution prescribed under the Development Financial Institutions Act 2002 [Act 618];’; dan

by substituting for the definition of “small and medium enterprise” the following definition:

Finance 37

‘ “small and medium enterprise” means—

in relation to the manufacturing activities, an enterprise with sales turnover not exceeding fifty million ringgit or full-time employees not exceeding two hundred people; or

in relation to the services, and other sectors, an enterprise with sales turnover not exceeding twenty million ringgit or full-time employees not exceeding seventy-five people;’.

Amendment of section 9

by subsituting for subsection (1) the following subsection:

“(1) The Collector, may by notification in the Gazette, authorize any person including any banker, dealer or insurer, to compound for the payment of duty on unstamped instrument subject to the condition that the instrument be drawn or drawn up and issued on a form to be supplied or adopted by the said person.”; dan

in subsection (6), by substituting for the words “as mentioned under paragraph 1(a), (b) or (c)” the words “under subsection (1)”.

Amendment of section 15

by substituting for the words “nominal share capital”

wherever appearing the words “issued share capital”;

by deleting subsection (2);

38

Laws of Malaysia

in subsection (5)—

in paragraph (b), by substituting for the words “two years” the words “three years”; and

in paragraph (c), by substituting for the words “two years” the words “three years”; and

by inserting after subsection (6) the following subsection:

“(6A) Where any claim for exemption from duty under this section has been allowed and any of the circumstances specified under subsection (5) occurs, each company which was a party to the instrument shall notify the

Collector of the circumstances of the occurrence within thirty days from the date of the occurrence.”.

Amendment of section 15A

by substituting for subsection (2) the following subsection:

“(2) This section applies to any instrument with respect to which it is shown to the satisfaction of the Collector—

that the effect is to transfer a beneficial interest in property from one company with limited liability to another such company, and that the companies are associated where one is the beneficial owner of not less than ninety per cent of the issued share capital of the other, or that a third company with limited liability is the beneficial owner of not less than ninety per centum of the issued share capital of each of the aforesaid companies;

that the transfer of the property of the associated companies is to achieve greater efficiency in operation; and

Finance 39

that the company referred to as the transferee company under this section is incorporated in

Malaysia.”;

in subsection (4)—

in paragraph (c)—

by inserting after the word “company” the words “within the period of three years from the date of the conveyance or transfer,”; and

by substituting for the comma at the end of paragraph (c) the words “; or”; and

by inserting after paragraph (c) the following paragraph:

“(d) the transferee company disposes of the property that it has acquired within three years from the date of the conveyance or transfer of the property,”; dan

by inserting after subsection (4) the following subsections:

“(5) Where any claim for exemption from duty under this section has been allowed, it is subsequently found that any declaration or other evidence furnished in support of the claim is untrue, the exemption from duty shall be revoked and duty shall be chargeable, together with interest thereon at the rate of six per centum per annum, from the date on which the duty which the conveyance or transfer ought to be stamped with the proper amount of duty.

) Where any claim for exemption from duty under this section has been allowed and any of the circumstances specified under subsection (4) occurs, each company which was a party to the instrument shall notify the

Collector in writing of the circumstances of the occurrence

40

Laws of Malaysia within thirty days from the date of the occurrence.

) Where a claim is made for exemption under this section, the Collector may require the delivery to him of a statutory declaration in such form as he may direct made by an advocate and solicitor, or, in the case of Sabah and

Sarawak, an advocate, of the High Court, and of such further evidence, if any, as he deems necessary.”.

Amendment of First Schedule

by deleting item 10;

in item 22—

by substituting for subitem (1) the following subitem:

“(1) Being the only or principal or primary security for any annuity (except upon the original creation thereof by way of sale or security, and except a superannuation annuity), or for any sum or sums of money at stated periods, not being interest for any sum secured by a duly stamped instrument, nor rent reserved by a lease or tack—

for a definite and certain period so that the total amount to be ultimately payable can be ascertained

The same ad valorem duty as a charge or mortgage for such total amount.

Finance 41

for the term of life or any other indefinite period—

for every RM100 and also for any fractional part of

RM100

of the annuity or sum periodically payable

RM 1.00

”; and

in subitem (6), by inserting after the words “in accordance with the” the words “conventional hire purchase and”;

by inserting after item 29 the following item:

“29A CONSTITUTION OF A

COMPANY

RM200.00”;

in subitem 32(a), in the column Proper Stamp Duty—

in item (iii), by substituting for the words

“RM500,000.” the words “RM500,000 but not exceeding RM1,000,000;”; and

by inserting after item (iii) the following item:

“(iv) RM4.00 on any amount in excess of RM1,000,000.”; and

by deleting item 53.

by inserting after paragraph 2 the following paragraph:

“2A. For the purposes of this Schedule, where a disposal is subject to tax under Part I of Schedule 5, references to 1 January 1970 shall be construed as references to 1 January 2000.”; and

in subparagraph 12(2)(c), by deleting the words “where the gift is made within five years after the date of acquisition by the donor,”.

Amendment of Schedule 3

in Part I, in the column “Rate of tax” in item 4, by substituting for the word “Nil” the words “5 per cent”;

in Part II, in the column “Rate of tax” in item 4, by substituting for the words “5 per cent” the words

“10 per cent”; and

in Part III, in the column “Rate of tax” in item 2, by substituting for the words “5 per cent” the words “10 per cent”.

Finance 43

) Sections 76, 77, 78, 79, 80, 81 and 82 have effect for the year of assessment 2020 and subsequent years of assessment.

Amendment of section 2

by substituting for the definition of “Labuan business activity” the following definition:

‘ “Labuan business activity” means a Labuan trading or a Labuan non-trading activity carried on in, from or through Labuan, excluding any activity which is an offence under any written law;’; and

by deleting the definition of “Labuan entity”.

Amendment of section 2A

shall be as specified in the Schedule; and

shall, for the purpose of the Labuan business activity, have —

an adequate number of full time employees in

Labuan; and

an adequate amount of annual operating expenditure in Labuan, as prescribed by the Minister by regulations made under this Act.”.

Amendment of section 4

) Any income derived from intellectual property right referred to in subsection (3) is subject to tax under the Income Tax Act 1967.

) For the purpose of this section, “intellectual property right”

means a right arising from any patent, utility innovation and discovery, copyright, trade mark and service mark, industrial design, layout-design of integrated circuit, secret processes or formulae and know-how, geographical indication and the grant of protection of a plant variety, and other like rights, whether or not

Finance 45

registered or registrable.”.

Deletion of section 7

tax to be charged for that year of assessment; or

tax to be charged for that year of assessment after reduction of rebate under section 8A.”.

Amendment of section 12

any taxable service provided in Malaysia by a registered person in carrying on his business; or

any imported taxable service.”.

Amendment of section 9

in paragraph (b), by deleting the word “or” at the end of subparagraph (iii);

by substituting for the full stop at the end of paragraph (c) the words “; or”; and

by inserting after paragraph (c) the following paragraph:

“(d) in the case of imported taxable service, the value of such imported taxable service shall be as prescribed.”.

Amendment of section 11

in the case of taxable service, at the time when payment is received for the service provided to the customer by the registered person; or

in the case of imported taxable service, at the time when the payment is made or invoice is received for the service, whichever is the earlier.”.

Amendment of section 24

in subsection (1)—

in paragraph (a), by deleting the word “and” at the end of that paragraph; and

by inserting after paragraph (a) the following paragraph:

“(aa) all records of imported taxable service; and”;

by inserting after subsection (5) the following subsection:

“(5A) This section shall also apply to any person other than a taxable person who, in carrying on his business, acquires any imported taxable service.”; and

in subsection (6), by substituting for the words “or (4)” the words “, (4) or (5A)”.

New section 26A

account for the service tax due in a declaration as may be prescribed and the declaration shall be furnished to the Director General; and

pay to the Director General the amount of service tax due and payable by him, not later than the last day of the month following the end of the month in which the payment on the service has been made by him or invoice is received by him.

) Any person referred to in subsection (1) who —

contravenes subparagraph (1)(a); or

furnishes an incorrect declaration, commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.

) Any person referred to in subsection (1) who fails to pay to the Director General the amount of service tax due and payable under paragraph (1)(b) commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.

) Where any service tax due and payable is not paid wholly or partly by any person referred to in subsection (1) after the last day on which it is due and payable under subsection (1) and no prosecution is instituted, the taxable person shall pay—

50

Laws of Malaysia

for the first thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), a penalty of ten per cent of the amount of service tax which remains unpaid;

for the second thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid; and

for the third thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid.

) Subject to subsection (7), prosecution for the offence under subsection (3) may be instituted after the expiry of the period specified in paragraph (4)(c).

) The court may order that the person referred to in subsection (1) who is convicted for the offence under subsection (3) to pay the penalty as specified in subsection (4).