AKTA KEWANGAN 2020

) Sections 7, 8 and 9 come into operation on the coming into operation of this Act.

) Sections 10, 11, 18, 20, 21, 24, 25 and 26, and paragraph 28(b) come into operation on 1 January 2021.

) Section 12 has effect for the year of assessment 2022 and subsequent years of assessment.

) Subparagraphs 14(a)(vi) and (vii), subparagraph 14(a)(viii)

in relation to paragraph 46(1)(s) of the Income Tax Act 1967, paragraph 14(b) in relation to paragraphs 46(1)(r) and (s) of the

Income Tax Act 1967, and section 29 have effect for the years of assessment 2020 and 2021.

) Subparagraph 14(a)(viii) and paragraph 14(b) in relation to paragraph 46(1)(t) of the Income Tax Act 1967 have effect for the year of assessment 2020.

) Sections 19 and 22 are deemed to have come into operation on 1 January 2020.

) Section 30 has effect for the years of assessment 2020,

2021 and 2022.

Amendment of section 5

in subsection (1)—

in paragraph (a), by substituting for the words

“section 6a” the words “sections 6a and 6d”;

in paragraph (l), by substituting for the full stop at the end of that paragraph a semi colon; and

by inserting after paragraph (l) the following paragraphs:

“(m) income tax shall be charged for each year of assessment upon the chargeable income of a person who carries on business in respect of a qualifying activity under an incentive scheme approved by the

Minister at the appropriate rate as specified in Part XVII of Schedule 1;

income tax shall be charged for each year of assessment upon the chargeable income of an individual resident who is not a citizen having and exercising employment in a company which carries on business in respect of a qualifying activity under an incentive scheme approved by the

Minister at the appropriate rate as specified in Part XVIII of Schedule 1.”; and

by inserting after subsection (1) the following subsection:

“(1a)  An incentive scheme referred to in paragraphs (1)(m) and (n) shall be the incentive scheme for a qualifying activity prescribed by the Minister which includes—

any high technology activity in manufacturing and services sector; and

any other activities which would benefit the economy of Malaysia.”.

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New section 6d

)  Where the total amount of the rebate under subsection (1) exceeds the income tax charged (before any such rebate) for any year of assessment, the excess shall not be paid to the company or limited liability partnership, or be available as credit to set off the tax liability of the company or limited liability partnership for that year of assessment or any subsequent year.

)  The company or limited liability partnership referred to in subsection (1) shall be a company or limited liability partnership resident and incorporated or registered in Malaysia—

which has a paid-up capital in respect of ordinary shares or contribution of capital (whether in cash or in kind) of two million and five hundred thousand ringgit and less at the beginning of the basis period for a year of assessment;

which has a gross income from source or sources consisting of a business not exceeding fifty million ringgit for the basis period for that year of assessment;

and

which has commenced operation on or after 1 July 2020 but not later than 31 December 2021.

)  The Minister may, by statutory order, impose such conditions as he thinks fit to give effect to or for carrying out the purposes of this section.

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)  Where in a year of assessment the company or limited liability partnership fails to fulfil the conditions specified in subsection (3) or (4), the amount of rebate under subsection (1) shall not be granted for that year of assessment in which the failure occurs and in the subsequent years of assessment.

)  The statutory order made under subsection (4) shall be laid before the Dewan Rakyat.”.

Amendment of section 34

in subsection (1)—

by inserting after the words “a person” the words

“resident in Malaysia”; and

by inserting after the words “by the Minister”

the words “and the amount of expenses on research and development incurred during that period outside Malaysia shall not be more than thirty per cent of the total expenses on research and development incurred by that person”;

in subsection (4), by substituting for the proviso to that subsection the following proviso:

“Provided that the amount of deduction to be made shall be the amount of expenditure incurred—

where the amount of expenses on research and development incurred for the basis period for a year of assessment outside Malaysia is more

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than thirty per cent of the total expenses on research and development incurred by that person; or

where subsection (4a) applies.”; and

in subsection (4a), by inserting after the words “A pioneer company” the words “resident in Malaysia”.

Amendment of section 34b

in subparagraph (5b)(a)(ii), by deleting the word “nominal”;

and

in paragraph (5c)(a), by deleting the word “nominal”.

Amendment of section 44a

in subsection (1)—

in paragraph (c), by substituting for the words

“five thousand ringgit” the words “eight thousand ringgit”;

by substituting for paragraph (f) the following paragraph:

“(f) fees expended in that basis year by that individual on himself for—

any course of study up to tertiary level, other than a Masters or Doctorate degree, undertaken for the purpose of acquiring legal, accounting,

Islamic financing, technical, vocational, industrial, scientific or technological qualification or skill, in any institution or professional body in Malaysia recognized by the Government or approved by the

Minister;

any course of study for a Masters or Doctorate degree undertaken for the purpose of acquiring any qualification or skill, in any institution or professional body in Malaysia recognized by the

Government or approved by the

Minister; or

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any course of study undertaken for the purpose of upskilling or self-enhancement and that course is conducted by a body recognized by the Director General of Skills

Development under the National

Skills Development Act 2006

[Act 652], for the years of assessment 2021 and 2022, limited to a maximum amount of one thousand ringgit for each year of assessment, and the total deduction under this paragraph shall be subject to a maximum amount of seven thousand ringgit;”;

in paragraph (g)—

in subparagraph (i), by deleting the word

“or” at the end of that subparagraph;

in subparagraph (ii), by substituting for the colon at the end of that subparagraph the words “; or”;

by inserting after subparagraph (ii) the following subparagraph:

“(iii) on himself, his wife or child for vaccination, or in the case of a wife, on herself, her husband or child for vaccination an amount limited to a maximum of one thousand ringgit:”;

in paragraph (b) of the proviso, by substituting for the words “six thousand ringgit; and” the words “eight thousand ringgit;”;

in subparagraph (c)(B) of the proviso, by inserting the word “and” at the end of that subparagraph; and

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by inserting after paragraph (c) of the proviso the following paragraph:

“(d) for the purposes of subparagraph (iii), the vaccinations which qualify for deduction are for:

pneumococcal;

human papillomavirus

influenza;

rotavirus;

varicella;

meningococcal;

TDAP combination

(tetanus-diphtheria-acellular-pertussis); and

Coronavirus Disease 2019 (COVID-19);”;

in paragraph (h)—

by substituting for the words “five hundred ringgit” the words “one thousand ringgit”;

and

in the proviso, by substituting for the words “six thousand ringgit” the words

“eight thousand ringgit”;

in subparagraph (p)(i)—

by inserting after the word “purchase”

the words “or subscription”; and

by deleting the word “printed”;

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in paragraph (c) of the proviso to paragraph (q), by deleting the word “and” at the end of that paragraph;

in the proviso to paragraph (r)—

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

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

by inserting after paragraph (b) the following paragraph:

“(c) a further one thousand ringgit shall be allowed for the years of assessment 2020 and 2021;”; and

by inserting after paragraph (r) the following paragraphs:

“(s) an amount limited to a maximum of one thousand ringgit expended or deemed expended under subsection (3) in respect of the payment for accommodation at the premises registered with the Commissioner of Tourism under the Tourism Industry

Act 1992 [Act 482] and entrance fee to a tourist attraction in that basis year by that individual as evidenced by receipts on the amount expended:

Provided that the payment is made on or after 1 March 2020 but not later than 31 December 2021;

an amount limited to a maximum of two thousand and five hundred ringgit expended or deemed expended under subsection (3) in that basis year by that individual for the purchase of

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a personal computer, smartphone or tablet (not being used for the purposes of his own business) for his own use or for the use of his wife or child, or in the case of a wife, for her own use or for the use of her husband or child as evidenced by receipts issued in respect of the purchase and the deduction under this paragraph shall be additional to any deduction under paragraph (p):

Provided that—

the purchase is made on or after 1 June 2020 but not later than 31 December 2020; and

the total amount of deduction under this paragraph shall exclude the amount deducted under paragraph (p); and

an amount limited to a maximum of five hundred ringgit expended or deemed expended under subsection (3) in that basis year by that individual—

for the purchase of sports equipment for any sports activity as defined under the Sports Development

Act 1997 [Act 576] (excluding motorized two-wheel bicycles);

for the payment of rental or entrance fee to any sports facility; and

for the payment of registration fee for any sports competition where the organizer is approved and licensed by the Commissioner of Sports under the Sports Development

Act 1997,

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for his own use or under his name or for the use of or under the name of his wife or child, or in the case of a wife, for her own use or under her name or for the use of or under the name of her husband or child as evidenced by receipts issued in respect of the purchase or payment, as the case may be, and the deduction under this paragraph shall be additional to any deduction under paragraph (p):

Provided that the total amount of deduction under this paragraph shall exclude the amount deducted under paragraph (p).”; and

in subsection (3), by substituting for the words “and (r)”

the words “, (r), (s), (t) and (u)”.

Amendment of section 47

)  The chargeable income of a person in respect of the source consisting of the qualifying activity referred to in subsection (1), for a year of assessment shall be the statutory income from that source reduced by any amount of deduction falling to be made pursuant to subsection 43(2)

relating to that source and so much of the amount which has not been deducted from that statutory income for the year of assessment the incentive scheme ends shall only be deductible in accordance with subsection 43(2) for a period of seven consecutive years of assessment.

)  For the purposes of subsection (2), the period of seven consecutive years of assessment shall commence immediately following that year of assessment the incentive scheme ends and any amount of balance of the amount referred to in that subsection which is not deductible at the end of that period shall be disregarded for the purposes of this Act.

)  The chargeable income of a person in respect of the source or sources other than the source consisting of the qualifying activity referred to in subsection (1) for a year of assessment shall be the statutory income from that source or the aggregate of the statutory income from each of those sources, as the case may be, reduced by any deduction falling to be made pursuant to subsections 43(2) and 44(1):

Provided that in so making the deductions under subsections 43(2) and 44(1), no regard shall be had to the adjusted loss, if any, from the source consisting of such qualifying activity.

)  Where the person referred to in subsection (1) fails to comply with the conditions prescribed by the Minister under Part XVII of Schedule 1, the Director General may at any time within five years after the expiration of the year of assessment for which the rate prescribed by the Minister under Part XVII of Schedule 1 was applied, make such additional assessments upon that person as appears to the Director General to be necessary in order to counteract any benefit obtained under Part XVII of Schedule 1.

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)  The person who carries on a business in respect of the source consisting of a qualifying activity referred to in subsection (1) shall maintain a separate account for the income derived from such qualifying activity for the basis period for each year of assessment.”.

Amendment of section 77a

in subsection (2), by substituting for the words “shall not later than one month thereafter give written notice to the Director General stating the full name and address of the individual and the terms and date of commencement of the employment” the words “shall give notice in the prescribed form to the Director General not later than thirty days after the commencement of the employment”;

in subsection (3)—

by inserting after the word “employment” the words

“or where an individual under his employment dies”;

by substituting for the words “not less than one month before the cessation give written notice thereof to the Director General stating the full name and address of the individual and the expected date of cessation” the words

“, not less than thirty days before the cessation of the employment, or in respect of cessation by reason of death not more than thirty days after being informed of the death of the individual, give notice in the prescribed form to the

Director General of the cessation of the employment”;

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in the first proviso to subsection (3), by substituting for the words “a notice given less than one month before the cessation or a notice given on or after the cessation” the words “a notice in the prescribed form given less than thirty days before the cessation of the employment, or a notice in the prescribed form given on or after the cessation, or in respect of cessation by reason of death a notice in the prescribed form given more than thirty days after being informed of the death of the individual”; and

in the second proviso to subsection (3), by substituting for the words “the written notice”

the words “the notice in the prescribed form to the Director General”; and

in subsection (4)—

by substituting for the words “one month”

wherever appearing the words “thirty days”;

by substituting for the words “written notice of the individual’s departure” the words “notice in the prescribed form”; and

in paragraph (a) of the proviso, by inserting after the words “a notice” wherever appearing the words “in the prescribed form”.

Amendment of section 103

in paragraph (1)(b), by substituting for the words

“103(1a), (3)” the words “103(3)”; and

by inserting after subsection (1) the following subsection:

“(1a)  The certificate referred to in subsection (1)

may be issued to any Commissioner of Police or

Director of Immigration through an electronic medium or by way of electronic transmission.”.

Amendment of section 106

)  In any prosecution under subsection (1), the burden of proving that contemporaneous transfer pricing documentation has been furnished shall be upon the accused person.

)  Where a person has been convicted of an offence under subsection (1), the court may make a further order that the person shall comply with the relevant provisions of the rules under which the offence has been committed within thirty days, or such other period as the court deems fit, from the date the order is made.

)  Where in relation to any year of assessment a person makes default in furnishing contemporaneous transfer pricing documentation in accordance with any rules made under paragraph 154(1)(ed) to implement and facilitate the operation of section 140a, and no prosecution under subsection (1) has been instituted in respect of the default in furnishing contemporaneous transfer pricing documentation, the Director General may by notice in writing or in the notice of assessment require that person to pay a penalty

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of not less than twenty thousand ringgit and not more than one hundred thousand ringgit and, if that person pays that penalty, or where the penalty is abated or remitted under subsection 124(3), so much, if any, of the penalty as has not been abated or remitted, he shall not be liable to be charged on the same facts with an offence under subsection (1).

)  The person served with a notice in writing referred to in subsection (4) may appeal to the Special Commissioners within thirty days as if the notice was a notice of assessment and the provisions of this Act relating to appeals shall apply accordingly with any necessary modifications.”.

Amendment of section 124

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

the words “surcharge or”; and

in subsection (3), by inserting after the words “remit any”

the words “surcharge or”.

Amendment of section 140a

in the shoulder note, by substituting for the words

“the price on certain transactions” the words “price, disregard structure and impose surcharge”;

by inserting after subsection (3) the following subsections:

“(3a)  The Director General may disregard any structure adopted by a person in entering into a transaction if—

the economic substance of that transaction differs from its form; or

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the form and substance of that transaction are the same but the arrangement made in relation to the transaction, viewed in totality, differs from those which would have been adopted by independent persons behaving in a commercially rational manner and the actual structure impedes the Director General from determining an appropriate transfer price.

)  Where the Director General disregards any structure adopted by a person entering into a transaction under subsection (3a), the Director General shall make adjustments to the structure of that transaction as he thinks fit to reflect the structure that would have been adopted by an independent person dealing at arm’s length having regard to the economic and commercial reality.

)  Where this section and any rules made under paragraph 154(1)(ed) apply, the Director General may by notice in writing require that person to pay a surcharge of not more than five per cent of the amount of increase of any income generally, or reduction of any deduction or loss, as the case may be, as a consequence of exercising his powers to substitute the price in respect of a transaction entered into by a person to reflect an arm’s length price for that transaction or to disregard any structure adopted by a person in entering into a transaction.

)  Any surcharge required to be paid by a person under subsection (3c) shall be collected by the Director General as if it were tax payable by that person, but shall not be treated as tax so payable for the purposes of any provision of this Act other than sections 103 to 106.”; and

in subsection (5), by substituting for the words

“subsection (2)” for the words “subsections (2) and (3a)”.

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Amendment of Schedule 1

in Part I, in paragraph 1, in the column Rate of income tax, by substituting for the words “14 per cent” appearing in the fifth line the words “13 per cent”; and

by inserting after Part XVI the following parts:

“Part XVII

by inserting after paragraph 70 the following paragraph:

“70a.  In this Schedule, “plant” means an apparatus used by a person for carrying on his business but does not include a building, an intangible asset, or any asset used and that functions as a place within which a business is carried on.”; and

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in subsubsubparagraph 75b(1)(a)(ii), by deleting the word

“nominal”.

Amendment of Schedule 6

this subsubparagraph shall apply to the payment made in respect of an individual who has ceased employment on or after 1 July 2008;

and

a further sum of ten thousand ringgit is allowed to be multiplied by the number of completed years of service in respect of an individual who has ceased employment on or after 1 January 2020 but not later than 31 December 2021.”.

Amendment of Schedule 7a

in subparagraph 2b(a)—

by substituting for the words “year of assessment 2015”

the words “year of assessment 2019”; and

by substituting for the words “years of assessment 2016, 2017 and 2018” the words “years of assessment 2020, 2021 and 2022”;

in subparagraph 2b(b)—

by substituting for the words “year of assessment 2016”

the words “year of assessment 2020”; and

by substituting for the words “years of assessment 2017 and 2018” the words “years of assessment 2021 and 2022”; and

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in subparagraph 2b(c)—

by substituting for the words “year of assessment 2017” the words “year of assessment 2021”; and

by substituting for the words “year of assessment 2018” the words “year of assessment 2022”.

by inserting after subsection (1) the following subsection:

“(1a)  The certificate referred to in subsection (1)

may be issued to any Commissioner of Police or

Director of Immigration through an electronic medium or by way of electronic transmission.”; and

in subsection (6)—

in the English language text, by substituting for the full stop at the end of the definition of

“immigration officer” a semi colon; and

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by inserting after the definition of “immigration officer” the following definition:

‘ “person” includes a director of a company specified in subparagraph 5(1a) of Schedule 1.’.

Amendment of section 57a

) The prescribed form which is furnished pursuant to subsection (3) on behalf of any person shall be presumed to have been furnished on that person’s authority, until the contrary is proved, and that person shall be deemed to be cognizant of its contents.

) Where subsection (3) applies—

the person who gives the authorization to the tax agent, advocate and solicitor of the High

Court of Malaya or advocate of the High Court of Sabah and Sarawak shall make a declaration in the prescribed form stating that—

the tax agent, advocate and solicitor of the High Court of Malaya or advocate of the High Court of Sabah and Sarawak is authorized to furnish the form to the Director General on his behalf; and

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the information given by him to the tax agent, advocate and solicitor of the

High Court of Malaya or advocate of the High Court of Sabah and Sarawak for the preparation of the form is true and correct;

the tax agent, advocate and solicitor of the High

Court of Malaya or advocate of the High Court of Sabah and Sarawak shall make a declaration in the form furnished in accordance with subsection (1) stating that—

the form is prepared pursuant to the information given by the person who gives that authorization; and

he has received the declaration made by the person who gives the authorization under paragraph (a);

the person who gives that authorization shall keep and retain in safe custody the hard copy of the form so furnished and that a copy shall be made under processes and procedures which are designed to ensure that the information contained in the form shall be the only information furnished pursuant to this section;

the hard copy referred to in paragraph (c) shall be signed by the person who gives that authorization;

and

the hard copy referred to in paragraph (c) and the declaration made under paragraph (a) shall be kept and retained for a period of seven years from the end of the year of assessment in which the form is furnished.

) The form referred to in subsection (1) is deemed to have been furnished to the Director General by the person who gives that authorization on the date on which an acknowledgement of receipt of the form transmitted electronically is given by the Director General to him.”.

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Amendment of Schedule 5

the instrument bears an adhesive or impressed stamp of not less than the proper amount or the amount of initial duty or the amount of advance duty paid under subsection 37(1) and that such stamp has been affixed or used in accordance with the law for the time being in force;

an official receipt for the proper amount or the amount of initial duty or the amount of advance duty is affixed to the instrument;

a stamp certificate for the proper amount or the amount of initial duty or the amount of advance duty is attached to the instrument if the instrument is stamped through an electronic medium; or

the instrument is stamped by means of digital stamping for the proper amount or the amount of initial duty or the amount of advance duty;’.

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Amendment of section 7

by inserting after paragraph (a) the following paragraph:

“(aa) means of an impressed stamp;”;

in paragraph (b), by deleting the word “or”;

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) means of digital stamping.”.

Amendment of section 9

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

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) there is denoted by means of digital stamping on the duplicate or counterpart that full and proper duty has been paid in respect of the original instrument.”.

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Amendment of section 48

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

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

by inserting after paragraph (d) the following paragraph:

“(e) by means of digital stamping,”.

Amendment of section 50

by renumbering the existing provision as subsection (1);

in subsection (1) as renumbered, by substituting for the word “Part” the word “Act”; and

by inserting after subsection (1) as renumbered the following subsections:

“(2)  The Collector and any employee of the Inland Revenue Board of Malaysia authorized by the Collector shall be deemed to be public officers authorized by the Minister under subsection 25(1) of the Government Proceedings Act 1956 [Act 359]

in respect of all proceedings under this section.

)  In a suit under this section, the production of a certificate signed by the Collector giving the name and address of the defendant and the amount of the duty or penalty due from him shall be sufficient evidence of the amount so due and authority for the court to give judgment for that amount.”.

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Amendment of section 55

in subsection (2), by deleting the words “and a further duty of ten ringgit by way of adjudication fee”; and

by deleting subsection (3).

Amendment of section 74a

in paragraph (i)—

by inserting a comma after the words

“any instrument”; and

by inserting a comma after the words

“any scheme”; and

in paragraph (ii)—

by inserting a comma after the words

“any instrument”; and

by substituting for the words “any scheme are chargeable” the words “any scheme, are chargeable under this Act”.

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New section 80b

)  The Director General may withdraw, either wholly or partly, any public ruling made under subsection (1).

)  Notwithstanding any other provisions of this Act, where a public ruling made under subsection (1) applies to any chargeable person in relation to an arrangement and the chargeable person applies the provision in the manner stated in the ruling, the Director General shall apply the provision in relation to the chargeable person and the arrangement in accordance with the ruling.”.

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) Section 57 comes into operation on the coming into operation of this Act.

) Paragraph 56(a) and sections 60, 61 and 62 come into operation on 1 January 2021.

Amendment of section 2b

in subsection (1), by substituting for paragraph (b)

the following paragraph:

“(b) shall, for the purposes of the Labuan business activity—

in relation to a Labuan trading activity—

have an adequate number of full time employees in Labuan; and

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

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in relation to a Labuan non-trading activity—

have an adequate number of full time employees in Labuan;

have an adequate amount of annual operating expenditure in Labuan;

and

comply with any condition in relation to control and management in Labuan, as prescribed by the Minister by regulations made under this Act.”; and

by inserting after subsection (1a) the following subsection:

“(1b) For the purposes of subsection (1a)—

the chargeable profits shall be the net profits as reflected in the audited accounts in respect of such Labuan business activity of the Labuan entity for the basis period for that year of assessment; and

sections 6, 6a, 6b, 6c, 6d, 8 and 8a shall apply, with necessary modifications.”.

Amendment of section 3a

in subsection (2), by inserting after the words

“liable to a fine” the words “of not less than twenty thousand ringgit and”; and

by inserting after subsection (2) the following subsections:

“(3) Any person who receives any return of profits, statutory declaration or information made or received for the purposes of this Act, knowing or having reasonable ground to believe at the time when he receives it that such return, declaration or information is communicated or disclosed to him in contravention of this Act, shall not use such return, declaration or information or produce or disclose such return, declaration or information to any other person.

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) Any person who contravenes subsection (3)

commits an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not exceeding one million ringgit or to imprisonment for a term not exceeding two years or to both.”.

Amendment of section 24