/akn/my/act/act/2023/851

AKTA KEWANGAN (NO. 2) 2023

Text is served through the Arturio legal-data gateway. This reader shows the active Malaysia expression when available.

Open source PDF
Front matter

Finance (No. 2)

1 Act 851 Laws of Malaysia 2 Act 851 Date of Royal Assent ... ... 27 December 2023 Date of publication in the ... ... 29 December 2023 Gazette Publisher’s Copyright C PERCETAKAN NASIONAL MALAYSIA BERHAD All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording and/or otherwise without the prior permission of Percetakan Nasional Malaysia Berhad (Appointed Printer to the Government of Malaysia). Finance (No. 2) 3 Act 851 ARRANGEMENT OF SECTIONS

Chapter

Chapter I

Text

PRELIMINARY

Section

Section 1

Short title

No text is available for this node.

Section 2

Amendment of Acts

No text is available for this node.

Chapter

Chapter II

Text

AMENDMENTS TO THE INCOME TAX ACT 1967

No text is available for this node.

Section 3

Commencement of amendments to the Income Tax Act 1967

No text is available for this node.

Section 4

Amendment of section 2

No text is available for this node.

Section 5

Amendment of section 4

No text is available for this node.

Section 6

Amendment of section 4b

No text is available for this node.

Section 7

Amendment of section 6

No text is available for this node.

Section 8

New section 15c

No text is available for this node.

Section 9

Amendment of section 44

No text is available for this node.

Section 10

Amendment of section 46

No text is available for this node.

Section 11

Amendment of section 61

No text is available for this node.

Section 12

New Chapter 9

No text is available for this node.

Section 13

Amendment of section 77a

No text is available for this node.

Section 14

Amendment of section 77b

No text is available for this node.

Section 15

Amendment of section 82

No text is available for this node.

Section 16

New sections 82b and 82c

No text is available for this node.

Section 17

Amendment of section 83

No text is available for this node.

Section 18

Amendment of section 96a

No text is available for this node.

Section 19

Amendment of section 97a

No text is available for this node.

Section 20

Amendment of section 99

Laws of Malaysia 4 Act 851

Section 21

Amendment of section 103

No text is available for this node.

Section 22

Amendment of section 107c

No text is available for this node.

Section 23

Amendment of section 112

No text is available for this node.

Section 24

Amendment of section 120

No text is available for this node.

Section 25

Amendment of section 131a

No text is available for this node.

Section 26

New section 134a

No text is available for this node.

Section 27

Amendment of section 138

No text is available for this node.

Section 28

Amendment of section 152a

No text is available for this node.

Section 29

Amendment of section 154

No text is available for this node.

Section 30

New Part XI

No text is available for this node.

Section 31

Amendment of Schedule 1

No text is available for this node.

Section 32

Amendment of Schedule 3

No text is available for this node.

Section 33

Amendment of Schedule 6

No text is available for this node.

Section 34

Amendment of Schedule 7

No text is available for this node.

Chapter

Chapter III

Text

AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976

No text is available for this node.

Section 35

Commencement of amendments to the Real Property Gains Tax Act 1976

No text is available for this node.

Section 36

Amendment of section 2

No text is available for this node.

Section 37

Amendment of section 13

No text is available for this node.

Section 38

New section 13a

No text is available for this node.

Section 39

Amendment of section 14

No text is available for this node.

Section 40

Amendment of section 15

No text is available for this node.

Section 41

New section 15a

No text is available for this node.

Section 42

New section 16a

No text is available for this node.

Section 43

Amendment of section 17

No text is available for this node.

Section 44

Amendment of section 19

No text is available for this node.

Section 45

New section 19a

No text is available for this node.

Section 46

Amendment of section 20

No text is available for this node.

Section 47

Amendment of section 21

No text is available for this node.

Section 48

New sections 28a, 28b and 28c

Section Finance (No. 2)

Section 49

Amendment of section 57a

No text is available for this node.

Section 50

Amendment of Schedule 2

No text is available for this node.

Chapter

Chapter IV

Text

AMENDMENTS TO THE STAMP ACT 1949

No text is available for this node.

Section 51

Commencement of amendments to the Stamp Act 1949

No text is available for this node.

Section 52

Amendment of section 2

No text is available for this node.

Section 53

Amendment of section 7

No text is available for this node.

Section 54

Deletion of section 8

No text is available for this node.

Section 55

Amendment of section 15

No text is available for this node.

Section 56

Amendment of section 39

No text is available for this node.

Section 57

Amendment of section 42

No text is available for this node.

Section 58

Amendment of section 43

No text is available for this node.

Section 59

Amendment of section 45

No text is available for this node.

Section 60

Amendment of section 48

No text is available for this node.

Section 61

Amendment of section 57

No text is available for this node.

Section 62

Deletion of section 60

No text is available for this node.

Section 63

Deletion of section 60a

No text is available for this node.

Section 64

Deletion of section 71

No text is available for this node.

Section 65

Deletion of section 72

No text is available for this node.

Section 66

Deletion of section 73

No text is available for this node.

Section 67

Amendment of section 82

No text is available for this node.

Section 68

Amendment of First Schedule

No text is available for this node.

Section 69

Deletion of Second Schedule

No text is available for this node.

Section 70

Deletion of Fifth Schedule

No text is available for this node.

Chapter

Chapter V

Text

AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967

No text is available for this node.

Section 71

Commencement of amendments to the Petroleum (Income Tax) Act 1967

No text is available for this node.

Section 72

Amendment of section 2

No text is available for this node.

Section 73

Amendment of section 3

No text is available for this node.

Section 74

Amendment of section 4

No text is available for this node.

Section 75

New section 34b

No text is available for this node.

Section 76

New section 57b

Section Laws of Malaysia 6 Act 851

Section 77

Amendment of section 71

No text is available for this node.

Section 78

Amendment of section 82a

No text is available for this node.

Chapter

Chapter VI

Text

AMENDMENTS TO THE LABUAN BUSINESS ACTIVITY TAX ACT 1990

No text is available for this node.

Section 79

Commencement of amendments to the Labuan Business Activity Tax Act 1990

No text is available for this node.

Section 80

Amendment of section 2

No text is available for this node.

Section 81

Amendment of section 3

No text is available for this node.

Section 82

Amendment of section 9

No text is available for this node.

Section 83

New section 21b

No text is available for this node.

Section 84

Amendment of section 22a

No text is available for this node.

Section 85

New section 22da

No text is available for this node.

Section 86

New section 22ea

No text is available for this node.

Chapter

Chapter VII

Text

AMENDMENT TO THE ENTERTAINMENTS DUTY ACT 1953

No text is available for this node.

Section 87

Commencement of amendment to the Entertainments Duty Act 1953

No text is available for this node.

Section 88

Amendment of section 23

No text is available for this node.

Chapter

Chapter VIII

Text

AMENDMENT TO THE CUSTOMS ACT 1967

No text is available for this node.

Section 89

Commencement of amendment to the Customs Act 1967

No text is available for this node.

Section 90

Amendment of section 11

No text is available for this node.

Chapter

Chapter IX

Text

AMENDMENT TO THE EXCISE ACT 1976

No text is available for this node.

Section 91

Commencement of amendment to the Excise Act 1976

No text is available for this node.

Section 92

Amendment of section 6

No text is available for this node.

Chapter

Chapter X

Text

AMENDMENT TO THE GOODS VEHICLE LEVY ACT 1983

No text is available for this node.

Section 93

Commencement of amendment to the Goods Vehicle Levy Act 1983

No text is available for this node.

Section 94

Amendment of section 3

Section Finance (No. 2)

Chapter

Chapter XI

Text

AMENDMENT TO THE WINDFALL PROFIT LEVY ACT 1998

No text is available for this node.

Section 95

Commencement of amendment to the Windfall Profit Levy Act 1998

No text is available for this node.

Section 96

Amendment of section 7

No text is available for this node.

Chapter

Chapter XII

Text

AMENDMENTS TO THE TOURISM TAX ACT 2017

No text is available for this node.

Section 97

Commencement of amendments to the Tourism Tax Act 2017

No text is available for this node.

Section 98

Amendment of section 8

No text is available for this node.

Section 99

Amendment of section 10 100.

Amendment of section 11 101. Amendment of section 14 102. Amendment of section 19 103. Amendment of section 20c 104. Amendment of section 20i 105. Amendment of section 22 106. New Part VIa 107. Amendment of section 65 108. Deletion of section 66 109. Amendment of section 70

Chapter

Chapter XIII

Text

AMENDMENTS TO THE SALES TAX ACT 2018 110.

Commencement of amendments to the Sales Tax Act 2018 111. Amendment of section 10 112. Amendment of section 11a 113. Amendment of section 11b 114. New section 11e 115. Amendment of section 13 116. Amendment of section 14 117. Amendment of section 23 118. Amendment of section 26 119. Amendment of section 39 120. Amendment of section 43 Laws of Malaysia 8 Act 851 121. Amendment of section 82 122. Amendment of section 90 123. Amendment of section 96 124. Amendment of section 106 125. Amendment of Schedule

Chapter

Chapter XIV

Text

AMENDMENTS TO THE SERVICE TAX ACT 2018 126.

Commencement of amendments to the Service Tax Act 2018 127. Amendment of section 10 128. Amendment of section 13 129. Amendment of section 14 130. Amendment of section 17 131. Amendment of section 26 132. Amendment of section 26a 133. Amendment of section 38 134. Amendment of section 39 135. Amendment of section 42 136. Amendment of section 56c 137. Amendment of section 56h 138. Amendment of section 75 139. Amendment of section 81 140. Amendment of section 91

Chapter

Chapter XV

Text

AMENDMENT TO THE DEPARTURE LEVY ACT 2019 141.

Commencement of amendment to the Departure Levy Act 2019 142. Amendment of section 11 Section Finance (No. 2)

Preamble
Preamble

An Act to amend the Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Stamp Act 1949, the Petroleum (Income Tax) Act 1967, the Labuan Business Activity Tax Act 1990, the Entertainments Duty Act 1953, the Customs Act 1967, the Excise Act 1976, the Goods Vehicle Levy Act 1983, the Windfall Profit Levy Act 1998, the Tourism Tax Act 2017, the Sales Tax Act 2018, the Service Tax Act 2018 and the Departure Levy Act 2019. [ ] ENACTED by the Parliament of Malaysia as follows:

Chapter

Chapter I

Text

PRELIMINARY

Short title

Section 1

This Act may be cited as the Finance (No. 2) Act 2023.

Amendment of Acts

Section 2

The Income Tax Act 1967 [Act 53], the Real Property Gains Tax

Act 1976 [Act 169], the Stamp Act 1949 [Act 378], the Petroleum (Income Tax) Act 1967 [Act 543], the Labuan Business Activity Tax Act 851 Laws of Malaysia 10 Act 851 Act 1990 [Act 445], the Entertainments Duty Act 1953 [Act 103], the Customs Act 1967 [Act 235], the Excise Act 1976 [Act 176], the Goods Vehicle Levy Act 1983 [Act 294], the Windfall Profit Levy Act 1998 [Act 592], the Tourism Tax Act 2017 [Act 791], the Sales Tax Act 2018 [Act 806], the Service Tax Act 2018 [Act 807] and the Departure Levy Act 2019 [Act 813] are amended in the manner specified in Chapters II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV and XV respectively.

Chapter

Chapter II

Text

AMENDMENTS TO THE INCOME TAX ACT 1967

Commencement of amendments to the Income Tax Act 1967

Section 3

Paragraphs 4(a), (b) and (d), 17(b), 22(c), 24(b) and 33(b), and sections 5, 6, 7, 8, 11, 1...

and 31 come into operation on 1 January 2024.

Subsection
Subsection

(2)  Sections 15 and 16, and paragraph 24(a) in relation to section 82c of the Income Tax Act 1967 come into operation on 1 January 2024.

Subsection
Subsection

(3)  Paragraph 17(c) in relation to subsections 83(2), (3) and (4) of the Income Tax Act 1967 comes into operation on 1 January 2024.

Subsection
Subsection

(4)  Paragraphs 4(c), 10(a), (c), (d), and (e), 22(a) and (b) and 33(a), sections 9, 32 and 34 have effect for the year of assessment 2024 and subsequent years of assessment.

Subsection
Subsection

(5)  Paragraph 10(b) has effect from the year of assessment 2024 until the year of assessment 2026.

Subsection
Subsection

(6)  Paragraph 10(f) has effect from the year of assessment 2024 until the year of assessment 2027.

Subsection
Subsection

(7)  Paragraphs 17(a) and (c) in relation to subsection 83(1) of the Income Tax Act 1967 have effect for the year ending 31 December 2023 and subsequent years.

Subsection
Subsection

(8)  Paragraph 24(a) and section 16 in relation to section 82b of the Income Tax Act 1967  have effect for the year of assessment 2025 and subsequent years of assessment. Finance (No. 2)

Subsection
Subsection

(9) Section 28 comes into operation on the coming into operation of this Act.

Subsection
Subsection

(10) Section 29 comes into operation on 1 January 2025.

Subsection
Subsection

(11) Section 30 in relation to—

Paragraph
Paragraph

(a) sections 157 to 197 in new Part XI of the Income Tax Act 1967 have effect for the Financial Year beginning on or after 1 January 2025 and subsequent Financial Years; and

Paragraph
Paragraph

(b) sections 198 to 239 in new Part XI of the Income Tax Act 1967 come into operation on 1 January 2025. Amendment of section 2

Section 4

The Income Tax Act 1967, which is referred to as the

“principal Act” in this Chapter, is amended in subsection 2(1)—

Paragraph
Paragraph

(a) by inserting after the definition of “business trust” the following definition: ‘ “capital asset” means movable or immovable property including any rights or interests thereof;’;

Paragraph
Paragraph

(b) by inserting after the definition of “Director General” the following definition: ‘ “electronic invoice” means an invoice or any document approved by the Director General, issued by a person in respect of goods sold or services performed as provided under section 82c;’;

Paragraph
Paragraph

(c) in the definition of “foreign tax”, by inserting after the word “Malaysia” the words “in which the same income arose”; and Laws of Malaysia 12 Act 851

Paragraph
Paragraph

(d) by inserting after the definition of “statutory order” the following definition: ‘ “stock exchange” has the meaning assigned to it in the Capital Markets and Services Act 2007;’. Amendment of section 4

Section 5

Section 4 of the principal Act is amended by inserting after paragraph (a) the following pa...

“(aa) gains or profits from the disposal of capital asset;”. Amendment of section 4b

Section 6

The principal Act is amended by substituting for section 4b the following section:

“Non-business income 4b.  For the purposes of section 4, gains or profit from a business shall not include—

Paragraph
Paragraph

(a) any interest that first becomes receivable by a person in the basis period for a year of assessment other than interest where subsection 24(5) applies; and

Paragraph
Paragraph

(b) gains or profits from the disposal of capital asset other than gains or profits where subsection 24(1) applies.”. Amendment of section 6

Section 7

Subsection 6(1) of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in paragraph (p), by substituting for the full stop at the end of the paragraph a semi colon; and Finance (No. 2)

Paragraph
Paragraph

(b) by inserting after paragraph (p) the following paragraph: “(q) income tax shall be charged upon the chargeable income of a company, limited liability partnership, trust body or co-operative society from each disposal of capital asset in the basis period for a year of assessment at the appropriate rate as specified under Part XXI of Schedule 1.”. New section 15c

Section 8

The principal Act is amended by inserting after section 15b the following section:

“Derivation of gains or profits from the disposal of capital assets deriving value from real property in Malaysia 15c.  (1)  Subject to subsection (2), gains or profits accruing to a person in a year of assessment on the disposal of capital asset which is a share of a controlled company (hereinafter referred to as the “relevant company”) incorporated outside Malaysia shall be deemed to be derived from Malaysia where the relevant company owns real property situated in Malaysia or shares of another controlled company or both.

Subsection
Subsection

(2)  Subsection (1) shall apply where at the date of acquisition of the shares of the relevant company—

Paragraph
Paragraph

(a) the defined value of the real property situated in Malaysia (including any right or interest thereof)  owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset;

Paragraph
Paragraph

(b) the defined value of shares of another controlled company owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset: Provided that the defined value of the real property situated in Malaysia (including any right or interest thereof) owned by another controlled company, is not less than seventy-five per cent of the value of its total tangible asset; or Laws of Malaysia 14 Act 851

Paragraph
Paragraph

(c) the defined value of real property situated in Malaysia and shares of another controlled company referred to in paragraphs (a) and (b) owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset: Provided that subsection (1) shall continue to apply notwithstanding that at the time of disposal of shares of the relevant company the defined value referred to in paragraph (a), (b) or (c) is less than seventy-five per cent of the value of its total tangible asset.

Subsection
Subsection

(3)  The shares of the relevant company in this section shall be deemed to be acquired—

Paragraph
Paragraph

(a) on the date the defined value of real property or shares or both owned by the relevant company is in accordance with subsection (2); or

Paragraph
Paragraph

(b) on the date of acquisition of the shares of the relevant company.

Subsection
Subsection

(4)  For the purposes of this section, the acquisition price of shares of the relevant company shall—

Paragraph
Paragraph

(a) where paragraph (3)(a) applies, be deemed to be equal to a sum determined in accordance with the formula: A x C B where A is the number of shares of the relevant company referred to in subsection (1); B is the total number of issued shares in the relevant company at the date of acquisition of the shares of the relevant company referred to in subsection (1); and C is the defined value of the real property or shares or both owned by the relevant company at the date of acquisition of the shares of the relevant company referred to in subsection (1); Finance (No. 2)

Paragraph
Paragraph

(b) where paragraph (3)(b) applies, be determined in accordance with paragraph 65e(2)(b) or subsection 65e(8).

Subsection
Subsection

(5)  For the purposes of this section— “defined value” means the market value of real property or the acquisition price of shares of another controlled company as determined under subsection (2); “value of its total tangible assets” means the aggregate of the defined value of real property (including any right or interest thereof)  or shares of another controlled company or both and the value of other tangible assets.”. Amendment of section 44

Section 9

Subsection 44(7a) of the principal Act is amended by substituting for the words “twenty-fiv...

Amendment of section 46

Section 10

Subsection 46(1) of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by substituting for paragraph (c) the following paragraph: “(c) an amount limited to a maximum of eight thousand ringgit in respect of medical treatment, dental treatment, complete medical examination, special needs or carer expenses expended in that basis year by that individual for his parents and the claim is evidenced by certification of a medical practitioner or dental practitioner that the conditions of the parents require medical treatment, dental treatment, complete medical examination, special needs or carer and—

Paragraph
Paragraph

(i) in the case of medical treatment, dental treatment, complete medical examination or special needs, a receipt on the amount expended; or Laws of Malaysia 16 Act 851

Subparagraph
Subparagraph

(ii) in the case of carer, a written certification or receipt from, or work permit of, the carer: Provided that for the purposes of this paragraph—

Paragraph
Paragraph

(a) “carer” shall not include that individual, his wife or her husband or the child of the individual;

Paragraph
Paragraph

(b) “parents” shall be individuals resident in Malaysia;

Paragraph
Paragraph

(c) the medical treatment, dental treatment, complete medical examination or care services are provided in Malaysia;

Paragraph
Paragraph

(d) the medical practitioner or dental practitioner is registered with the Malaysian Medical Council or Malaysian Dental Council, respectively; and

Paragraph
Paragraph

(e) the deduction for the complete medical examination shall be subject to a maximum amount of one thousand ringgit;”;

Paragraph
Paragraph

(b) in subparagraph (f)(iii), by substituting for the words “2022 and 2023” the words “2023, 2024, 2025 and 2026”;

Paragraph
Paragraph

(c) in paragraph (g)—

Paragraph
Paragraph

(i) in subparagraph (ii), by deleting the word “or” at the end of the subparagraph;

Subparagraph
Subparagraph

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

Subparagraph
Subparagraph

(iii) by inserting after subparagraph (iii) the following subparagraph: “(iv) on himself, his wife or child for dental examination or treatment, or in the case of a wife on herself, her husband or child for dental examination or treatment, an amount limited to a maximum of one thousand ringgit:”; and Finance (No. 2)

Subparagraph
Subparagraph

(iv) in the proviso to paragraph (g), by substituting for paragraph (a) the following paragraph: “(a) the claim, in respect of—

Paragraph
Paragraph

(i) serious disease treatment provided to that individual, spouse or child, or the fertility treatment provided to that individual or the spouse, is evidenced by a receipt and certification issued by a medical practitioner registered with the Malaysian Medical Council; or

Subparagraph
Subparagraph

(ii) dental examination or treatment provided to that individual, spouse or child, is evidenced by a receipt and certification issued by a dental practitioner registered with the Malaysian Dental Council;”;

Paragraph
Paragraph

(d) in paragraph (p)—

Paragraph
Paragraph

(i) by deleting subparagraph (iii);

Subparagraph
Subparagraph

(ii) in subparagraph (iv), by substituting for the comma at the end of the subparagraph the words “; and”; and

Subparagraph
Subparagraph

(iii) by inserting after subparagraph (iv) the following subparagraph: “(v) for the payment of any course of study undertaken other than the course of study falling under subparagraph 46(1)(f)(iii) for the purpose of upskilling or self-enhancement,”; Laws of Malaysia 18 Act 851

Paragraph
Paragraph

(e) by substituting for paragraph (u) the following paragraph: “(u) an amount limited to a maximum of one thousand ringgit expended or deemed expended under subsection (3) in that basis year by that individual—

Paragraph
Paragraph

(i) 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);

Subparagraph
Subparagraph

(ii) for the payment of rental or entrance fee to any sports facility;

Subparagraph
Subparagraph

(iii) 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; and

Subparagraph
Subparagraph

(iv) for the payment of fees for gym membership or sports training for carrying out any sports activity as defined under the Sports Development Act 1997 which is provided by a sports club or societies registered with the Commissioner of Sports or companies incorporated under the Companies Act 2016 [Act 777], 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”; and

Paragraph
Paragraph

(f) in paragraph (v), by substituting for the words “2022 and 2023” the words “2023, 2024, 2025, 2026 and 2027”. Finance (No. 2) 19 Amendment of section 61

Section 11

Paragraph 61(1)(b) of the principal Act is amended by substituting for the proviso the foll...

“Provided that in the case of a unit trust, gains arising from the realization of investments shall be treated as income of the trust body of the trust under paragraph 4(aa): Provided further that where such realization of investments relates to real property as defined in the Real Property Gains Tax Act 1976, the gains shall not be treated as income of the trust body of the trust;”. New Chapter 9

Section 12

Part III of the principal Act is amended by inserting after

No text is available for this node.

Chapter

Chapter 8 the following chapter:

Text

“Chapter 9

Gains or profits from the disposal of capital asset Interpretation of Chapter 9 65c.  In this Chapter, unless the context otherwise requires— “consideration” means consideration in money or money’s worth; “disposal” means to sell, convey, transfer, assign, settle or alienate whether by agreement or by force of law and includes a reduction of share capital and purchase by a company of its own shares; “shares” means all or any of the following:

Paragraph
Paragraph

(a) stock and shares in a company;

Paragraph
Paragraph

(b) loan stock and debentures issued by a company or any other corporate body incorporated in Malaysia;

Paragraph
Paragraph

(c) a member’s interest in a company not limited by shares whether or not it has a share capital;

Paragraph
Paragraph

(d) any option or other right in, over or relating to shares as defined in paragraphs (a) to (c). Laws of Malaysia 20 Act 851 Application of Chapter 9 65d.  (1)  This Chapter shall apply for ascertaining the chargeable income of a company, limited liability partnership, trust body or co-operative society which receives gains or profits from the disposal of capital asset on or after 1 January 2024.

Subsection
Subsection

(2)  In a case where any provision of this Chapter applies, the foregoing Chapters shall also apply but shall be modified in their application to the extent necessary to conform with that provision; and, if in that case there is any inconsistency between that provision and any provision of the foregoing Chapters, that provision of those Chapters shall be void to the extent of the inconsistency. Gains or profits from the disposal of capital asset 65e.  (1)  For the purposes of this Act and subject to this section, the gains or profits from the disposal of capital asset in the basis period for a year of assessment shall be—

Paragraph
Paragraph

(a) ascertained by reference to each disposal separately; and

Paragraph
Paragraph

(b) treated as a separate source of gains or profits, from the disposal of capital asset for that year of assessment.

Subsection
Subsection

(2)  Subject to this section, the adjusted income of a company, limited liability partnership, trust body or co-operative society from a source consisting of gains or profits from the disposal of capital asset, for the basis period for a year of assessment (in this section referred to as “relevant year”) shall be ascertained by—

Paragraph
Paragraph

(a) taking the amount or value of the consideration for the disposal of the capital asset at the time of disposal reduced by—

Paragraph
Paragraph

(i) the amount of any expenditure wholly and exclusively incurred on the capital asset at any time after its acquisition by or on behalf of the company, limited liability partnership, trust body or co-operative society making Finance (No. 2) 21 the disposal for the purpose of enhancing or preserving the value of the capital asset, being expenditure reflected in the state or nature of the capital asset at the time of the disposal;

Subparagraph
Subparagraph

(ii) the amount of any expenditure wholly and exclusively incurred at any time after the acquisition of the capital asset by the company, limited liability partnership, trust body or co-operative society in establishing, preserving or defending its title to, or to a right over, the capital asset; and

Subparagraph
Subparagraph

(iii) the incidental costs to the company, limited liability partnership, trust body or co-operative society of making the disposal; and

Paragraph
Paragraph

(b) thereafter, by deducting therefrom the amount or value of the consideration for the acquisition of the capital asset (together with the incidental costs to the company, limited liability partnership, trust body or co-operative society of the acquisition) less—

Paragraph
Paragraph

(i) any sum received by the company, limited liability partnership, trust body or co-operative society by way of compensation for any kind of damage or injury to the asset or for the destruction or dissipation of the asset or for any depreciation or risk of depreciation of the asset;

Subparagraph
Subparagraph

(ii) any sum received by the company, limited liability partnership, trust body or co-operative society under a policy of insurance for any kind of damage or injury to or the loss, destruction or depreciation of the asset; and

Subparagraph
Subparagraph

(iii) any sum forfeited to the company, limited liability partnership, trust body or co-operative society as a deposit made in connection with an intended transfer of the capital asset. Laws of Malaysia 22 Act 851

Subsection
Subsection

(3)  Subsection (2) shall not apply in ascertaining the chargeable income of a company, limited liability partnership, trust body or co-operative society from the gains or profits from the disposal of capital assets where the company, limited liability partnership, trust body or co-operative society has elected for tax payable to be charged at the rate of two per cent of gross disposal price from the disposal of the capital asset.

Subsection
Subsection

(4)  Where—

Paragraph
Paragraph

(a) the amount ascertained under paragraph (2)(a) exceeds the amount ascertained under paragraph (2)(b), there is an adjusted income; and

Paragraph
Paragraph

(b) the amount ascertained under paragraph (2)(a) is less than the amount ascertained under paragraph (2)(b), there is an adjusted loss.

Subsection
Subsection

(5)  The amount of adjusted loss of a company, limited liability partnership, trust body or co-operative society as ascertained in accordance with paragraph (4)(b) shall be allowed only as a deduction to reduce the adjusted income of a company, limited liability partnership, trust body or co-operative society in the subsequent disposal of capital asset in the same basis period for a year of assessment in which the disposal was made.

Subsection
Subsection

(6)  Where by reason of an insufficiency or absence of adjusted income in subsequent disposal of capital asset in the same basis period for a year of assessment in which the adjusted loss arose, effect cannot be given or cannot be given in full to subsection (5), the amount of adjusted loss which has not been so allowed (or so much thereof as has not been so allowed for that year) shall be allowed as a deduction to reduce the adjusted income of a company, limited liability partnership, trust body or co-operative society from the disposal of capital asset for a period of ten consecutive years of assessment and that period commences immediately following the relevant year of assessment and any amount or balance of the amount which is not deductible at the end of that period shall be disregarded for the purposes of this Act. Finance (No. 2)

Subsection
Subsection

(7)  The amount of adjusted income of a company, limited liability partnership, trust body or co-operative society as ascertained in accordance with the foregoing subsections shall be treated as the chargeable income of the company, limited liability partnership, trust body or co-operative society from the source of gains or profits from the disposal of capital asset for a year of assessment.

Subsection
Subsection

(8)  Notwithstanding subsection (2), the consideration for the acquisition or disposal of a capital asset shall be deemed to be equal to the market value of the capital asset at the time of the disposal—

Paragraph
Paragraph

(a) where a company, limited liability partnership, trust body or co-operative society acquires or disposes of the capital asset otherwise than by way of a bargain made at arm’s length and, in particular, where the company, limited liability partnership, trust body or co-operative society acquires or disposes of it by way of gift;

Paragraph
Paragraph

(b) where a company, limited liability partnership, trust body or co-operative society acquires or disposes of the capital asset wholly or partly for a consideration that cannot be valued;

Paragraph
Paragraph

(c) where a company, limited liability partnership, trust body or co-operative society acquires a capital asset as trustee for the creditors of any person in full or part satisfaction of any debt due from that person or where the company, limited liability partnership, trust body or co-operative society transfers a capital asset as trustee for the creditors of any person to the creditors in full or part satisfaction of any debt due to the creditors;

Paragraph
Paragraph

(d) where a company, limited liability partnership, trust body or co-operative society acquires or disposes of a capital asset in a transaction for the transfer of a business for a lump sum consideration; or

Paragraph
Paragraph

(e) where the disposal of the capital asset is a transaction between connected persons. Laws of Malaysia 24 Act 851

Subsection
Subsection

(9)  For the purposes of paragraph (8)(e)—

Paragraph
Paragraph

(a) a company is connected with another company—

Paragraph
Paragraph

(i) if the same person has control of both, or a person has control of one and persons connected with him (or he and persons connected with him) have control over the other; or

Subparagraph
Subparagraph

(ii) if two or more groups of persons have control of each company and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected;

Paragraph
Paragraph

(b) a company is connected with another person if that person has control of it or if that person connected with him together have control of it;

Paragraph
Paragraph

(c) any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

Subsection
Subsection

(10)  Any reference in subsection (9) to a person being connected with another shall be taken as meaning that they are connected persons.

Subsection
Subsection

(11)  Notwithstanding any other provision of this Act, the market value shall be determined by the Director General in the following circumstances where—

Paragraph
Paragraph

(a) the parties to the disposal of a capital asset are unable to agree on its market value;

Paragraph
Paragraph

(b) there is only one party to the disposal of a capital asset; or Finance (No. 2)

Paragraph
Paragraph

(c) the Director General is of the opinion that the market value of a capital asset as agreed on by the parties to its disposal is incorrect.

Subsection
Subsection

(12)  Sections 33 and 34 shall not apply to gains or profits from disposal of a capital asset.

Subsection
Subsection

(13)  For the purposes of subsection (2), the incidental costs of the acquisition or disposal of a capital asset shall consist of expenditure wholly and exclusively incurred by the disposer for the purposes of the acquisition or (as the case may be) the disposal, being—

Paragraph
Paragraph

(a) fees, commission or remuneration paid for the professional services of any valuer, accountant, agent or legal adviser;

Paragraph
Paragraph

(b) costs of transfer (including stamp duty);

Paragraph
Paragraph

(c) in the case of an acquisition, the cost of advertising to find a seller; and

Paragraph
Paragraph

(d) in the case of a disposal, the cost of advertising to find a buyer and costs reasonably incurred for the purposes of this Act in making any valuation or in ascertaining market value.

Subsection
Subsection

(14)  Where an asset is disposed of by being exchanged for another asset (whether chargeable or not) the market value of the asset received by the disposer shall be taken as the consideration for the disposal: Provided that, if the asset received by the disposer has no market value, the Director General may take the market value of the asset disposed of as the consideration for the disposal. Laws of Malaysia 26 Act 851 Disposal and acquisition of capital asset 65f.  (1)  Except where this section provides otherwise, a disposal of a capital asset shall be deemed to take place—

Paragraph
Paragraph

(a) where there is a written agreement for the disposal of the capital asset, on the date of such agreement; or

Paragraph
Paragraph

(b) where there is no written agreement, on the date of the completion of the disposal of the capital asset.

Subsection
Subsection

(2)  Except where this section provides otherwise, where there is a disposal of a capital asset, the date of acquisition of the capital asset by the person which acquires the capital asset (in this section referred to as “acquirer”) shall be deemed to coincide with the date of disposal of that capital asset by the person which disposes the capital asset (in this section referred to as “disposer”) to the acquirer.

Subsection
Subsection

(3)  For the purposes of this section—

Paragraph
Paragraph

(a) the date of completion of a disposal means—

Paragraph
Paragraph

(i) the date on which the ownership of the capital asset disposed of is transferred by the person who disposes the capital asset; or

Subparagraph
Subparagraph

(ii) the date on which the whole of the amount or value of the consideration (in money or money’s worth) for the transfer has been received by the person who disposes the capital asset, whichever is the earlier;

Paragraph
Paragraph

(b) a transfer of ownership of a capital asset is deemed to take place on the date when the last of all such things shall have been done under any written law as are necessary for the transfer of ownership of the capital asset. Finance (No. 2)

Subsection
Subsection

(4)  Where a contract for the disposal of a capital asset is conditional and the condition is satisfied (by the exercise of a right under an option or otherwise), the acquisition and disposal of the capital asset shall be regarded as taking place at the time the contract was made, unless—

Paragraph
Paragraph

(a) the acquisition or disposal requires the approval by the Government or a State Government, the date of disposal shall be the date of such approval; or

Paragraph
Paragraph

(b) the approval referred to in paragraph (a) is conditional, the date of disposal shall be the date when the last of all such conditions is satisfied.

Subsection
Subsection

(5)  Where a capital asset is acquired by a company, limited liability partnership, trust body or co-operative society (hereinafter referred to as “the acquirer”) with a financing facility provided by an Islamic bank in accordance with the Syariah, the acquisition price of the capital asset shall be the amount or value of the consideration given by or on behalf of the acquirer to the person disposing that asset other than such Islamic bank or in the case where the capital asset is owned by such bank, the amount or value of the consideration given to the bank, for the acquisition of the capital asset (together with the incidental costs to him of the acquisition) less the sum of the kind referred to in subparagraph 65e(2)(b)(i), (ii) or (iii) received by or forfeited, as the case may be, to that acquirer.

Subsection
Subsection

(6)  Notwithstanding any other provisions of this Act—

Paragraph
Paragraph

(a) if a capital asset acquired or held by a company, limited liability partnership, trust body or co-operative society is taken into the trading stock of the company, limited liability partnership, trust body or co-operative society, there shall be deemed to be a disposal of the capital asset on the date that capital asset is taken into the trading stock; and

Paragraph
Paragraph

(b) the amount or value of the consideration in money or money’s worth of the capital asset shall be equal to the market value on the date the capital asset is taken into the trading stock. Laws of Malaysia 28 Act 851

Subsection
Subsection

(7)  There is a part disposal of a capital asset where, on a person making a disposal, any description of property derived from the capital asset remains undisposed of.

Subsection
Subsection

(8)  Subject to other provisions of this Act, where at any time the owner of a capital asset disposes of a part of that capital asset, whenever necessary, the amount or value of consideration for acquisition of the capital asset if the capital asset had been disposed of at that time shall each be apportioned between that part of the capital asset and the remainder thereof on whatever basis is most appropriate, and so much of that price and of those amounts as are so apportioned to the part of the capital asset disposed of shall be taken in applying subsection 65e(2) to the acquisition and disposal of that part.”. Amendment of section 77a

Section 13

Section 77a of the principal Act is amended by inserting after subsection (1a) the followin...

“(1b)  Notwithstanding subsections (1), (3) and (4), every company, limited liability partnership, trust body or co-operative society who disposes of capital asset shall, within sixty days (or such other period the Director General may allow on a written request being made to him) of the date of disposal of that asset, furnish to the Director General a return in the prescribed form on an electronic medium or by way of electronic transmission in accordance with section 152a—

Paragraph
Paragraph

(a) specifying the chargeable income and the amount of tax payable (if any) on that chargeable income;

Paragraph
Paragraph

(b) specifying in respect of the capital asset disposed of the acquisition price, the disposal price and the gain or loss on the disposal;

Paragraph
Paragraph

(c) specifying all information necessary to determine the acquisition price and disposal price of the asset disposed of;

Paragraph
Paragraph

(d) where the market value of the asset is to be taken for the purposes of this Act, containing the market value based on a valuation made by a valuer; and Finance (No. 2)

Paragraph
Paragraph

(e) containing such particulars as may be required by the Director General.”. Amendment of section 77b

Section 14

Section 77b of the principal Act is amended by substituting for the words “subsection 77(1)...

Amendment of section 82

Section 15

Section 82 of the principal Act is amended by inserting after subsection (2) the following...

“(2a)  Where a person issues an electronic invoice in respect of goods sold or services performed under section 82c, the issuance of receipts pursuant to paragraph (1)(b) may be dispensed with.

Subsection
Subsection

(2b)  Notwithstanding paragraph (1)(b) and subsection (2a), where a person is required to submit to the Director General a consolidated transaction invoice as provided under subsection 82c(7), that person shall issue a printed receipt for every sum received in that year of assessment in respect of goods sold or services performed.”. New sections 82b and 82c

Section 16

The principal Act is amended by inserting after section 82a the following sections:

“Duty to provide information and furnish documents for ascertaining chargeable income and tax payable 82b.  (1)  Where a person has furnished to the Director General a return in accordance with section 77 or 77a, that person shall provide information and furnish documents as may be determined by the Director General for the purpose of ascertaining his chargeable income and tax payable on an electronic medium or by way of electronic transmission within thirty days after the due date for furnishing of the return. Laws of Malaysia 30 Act 851

Subsection
Subsection

(2)  For the purposes of subsection (1), the provisions under section 152a other than subsection (3a) shall apply accordingly with any necessary modifications. Duty to issue electronic invoice 82c.  (1)  Subject to this section, a person shall, in a year of assessment, issue an electronic invoice for each transaction in respect of any goods sold or services performed by the person for that year of assessment.

Subsection
Subsection

(2)  For the purposes of subsection (1)—

Paragraph
Paragraph

(a) the Minister shall prescribe the persons who shall issue the electronic invoice and the particulars to be included in the electronic invoice; and

Paragraph
Paragraph

(b) the conditions and specifications under which an electronic invoice is to be issued shall be as determined by the Director General under the guidelines issued in accordance with section 134a.

Subsection
Subsection

(3)  Any electronic invoice issued by a person in respect of goods sold or services performed under subsection (1) shall be transmitted electronically to and validated by the Director General.

Subsection
Subsection

(4)  Where for any year of assessment a person is required to issue an invoice under any other written law in respect of goods sold or services performed, the electronic invoice issued in accordance with subsection (1) including any other particulars as may be required shall be construed as an invoice issued under that law provided that where the particulars of electronic invoice are inconsistent with the requirements for the issuance of invoice under that law, the electronic invoice shall only be valid and enforceable for the purposes of this Act.

Subsection
Subsection

(5)  Where for any year of assessment an electronic invoice is issued in accordance with subsection (1), the Director General shall not be liable for any loss or damage suffered by any person due to any error or omission arising, appearing in an electronic invoice provided that the error or omission Finance (No. 2) 31 was made in good faith and in the ordinary course of the discharge of the duties of the Director General or occurred or arose as a result of any defect or breakdown in the service or in the equipment used for the issuance of the electronic invoice.

Subsection
Subsection

(6)  Subject to the conditions as may be determined by the Director General, where for any year of assessment a person acquires any goods sold or enjoys any services performed, the person shall for that year of assessment issue a self-billed invoice in accordance with the conditions as may be imposed by the Director General and the invoice shall be treated as an electronic invoice.

Subsection
Subsection

(7)  The Director General may for any year of assessment in respect of any goods sold or services performed, determine a person to consolidate the number of transactions in respect of such goods sold or services performed in that year of assessment into a consolidated transaction invoice, and that person shall transmit the consolidated transaction invoice to the Director General within a specified time and in accordance with the conditions as determined by the Director General and such consolidated transaction invoice shall for the purposes of this section constitute an electronic invoice issued by that person.

Subsection
Subsection

(8)  Where for any year of assessment a person makes an error or mistake in respect of any electronic invoice issued in accordance with this section, the person may for the purpose of rectifying the error or mistake issue a substitute electronic invoice within three days from the date of issuance of the defective electronic invoice.

Subsection
Subsection

(9)  Where for any year of assessment any goods sold or services performed by a person involves the issuance of credit note or debit note, the person issuing the credit note or debit note shall make adjustments in ascertaining his chargeable income for that year of assessment accordingly.

Subsection
Subsection

(10)  A person may, in respect of any goods sold or services performed by him in any year of assessment, add any additional particulars to the electronic invoice under this section. Laws of Malaysia 32 Act 851

Subsection
Subsection

(11)  The provisions of the Personal Data Protection Act 2010 [Act 709] shall not apply to any personal data processed for electronic invoice issued or transmitted to the Director General under this section and any other related provisions of this Act.”. Amendment of section 83

Section 17

Section 83 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by deleting subsection (1b);

Paragraph
Paragraph

(b) in the second paragraph of the proviso to subsection (3)—

Paragraph
Paragraph

(i) in paragraph (b), by substituting for the comma at the end of the paragraph a full stop; and

Subparagraph
Subparagraph

(ii) by deleting the words “and where it is known to him that the individual is not retiring from any employment.”; and

Paragraph
Paragraph

(c) by inserting after subsection (4) the following subsection: “(4a) The return referred to in subsection (1) and the notice referred to in subsections (2), (3) and (4) shall be furnished to the Director General on an electronic medium or by way of electronic transmission in accordance with section 152a.”. Amendment of section 96a

Section 18

Paragraph 96a(1)(a) of the principal Act is amended by substituting for the words “subsecti...

“subsection 77(1) or subsection 77a(1) or (1b)”. Amendment of section 97a

Section 19

Section 97a of the principal Act is amended by substituting for the words “subsection 77(1)...

Finance (No. 2) 33 Amendment of section 99

Section 20

Subsection 99(1a) of the principal Act is amended by substituting for the words “subsection...

or (1b)”. Amendment of section 103

Section 21

Subsection 103(12) of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in paragraph (a), by inserting after the words “limited liability partnership” the words “referred to in subsection 77a(1),”; and

Paragraph
Paragraph

(b) by inserting after paragraph (a) the following paragraph: “(aa) in the case of a company, limited liability partnership, trust body or co-operative society referred to in subsection 77a(1b), sixty days from the date of disposal of a capital asset;”. Amendment of section 107c

Section 22

Section 107c of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (4b)—

Paragraph
Paragraph

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

Subparagraph
Subparagraph

(ii) in paragraph (c), by substituting for the full stop at the end of the paragraph the words “; or”; and Laws of Malaysia 34 Act 851

Subparagraph
Subparagraph

(iii) by inserting after paragraph (c) the following paragraph: “(d) twenty per cent of the paid-up capital in respect of ordinary shares of the company at the beginning of the basis period for a year of assessment is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia.”;

Paragraph
Paragraph

(b) in subsection (7), by substituting for the words “the sixth month or the ninth month, or in both months” the words “the sixth month, the ninth month or the eleventh month, or in all three months”; and

Paragraph
Paragraph

(c) by inserting after subsection (11b) the following subsection: “(11c)  This section shall not apply to gains or profits from the disposal of a capital asset.”. Amendment of section 112

Section 23

Section 112 of the principal Act is amended by substituting for the words “subsection 77(1)...

Amendment of section 120

Section 24

Subsection 120(1) of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by substituting for paragraph (d) the following paragraph: “(d) contravenes section 82b or 89, or subsection 82c(1), 82c(6), 82c(7), 84(2), 86(1), 106a(2) or 153(1)”; and Finance (No. 2)

Paragraph
Paragraph

(b) in paragraph (h), by substituting for the words “paragraph 77(4)(b) or 77 a(3)(b)” the words “paragraph 77(4)(b) or subsection 77a(1b) or paragraph 77a(3)(b)”. Amendment of section 131a

Section 25

Subsection 131a(1) of the principal Act is amended by substituting for the words “subsectio...

or (1b)”. New section 134a

Section 26

The principal Act is amended by inserting after section 134

the following section: “Power of Director General to issue guidelines 134a.  (1)  The Director General may issue guidelines as the Director General thinks expedient or necessary to clarify the provisions of this Act or to facilitate the compliance of the law or any other matter relating to this Act.

Subsection
Subsection

(2)  The Director General may revoke, revise or amend the whole or any part of any guidelines issued under this section.”. Amendment of section 138

Section 27

Section 138 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (4), by inserting after paragraph (a) the following paragraph: “(aa) the production or disclosure of classified material in relation to electronic invoice to the Director General of Customs and Excise (or to the public officers under his direction and control) or the use of classified material in relation to electronic invoice by the Director General of Customs and Excise, to such an extent as is necessary or expedient for the exercise of his functions;”; and Laws of Malaysia 36 Act 851

Paragraph
Paragraph

(b) in subsection (5), in the definition of “classified person”—

Paragraph
Paragraph

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

Subparagraph
Subparagraph

(ii) in paragraph (d), by inserting after the word “Malaysia;” the word “or”; and

Subparagraph
Subparagraph

(iii) by inserting after paragraph (d) the following paragraph: “(e) any person who, for any reason, has by any means access to any information on an electronic invoice under this Act.”. Amendment of section 152a

Section 28

Section 152a of the principal Act is amended by inserting after subsection (3) the followin...

“(3a)  For the purposes of subsection (1), a person referred to under subsection 75(1) may authorize in writing an employee to furnish on his behalf any form prescribed under this Act in the manner provided for in subsection (1).”. Amendment of section 154

Section 29

Subsection 154(1) of the principal Act is amended by inserting after paragraph (ed) the fol...

“(ee)  implementing and facilitating the operation of Part XI;”. Finance (No. 2) 37 New Part XI

Section 30

The principal Act is amended by inserting after Part X the following part:

“Part XI IMPLEMENTATION OF DOMESTIC TOP-UP TAX AND MULTINATIONAL TOP-UP TAX

Chapter

Chapter 1

Text

Preliminary

Interpretation

Section 157

In this Part, unless the context otherwise requires—

“Acceptable Financial Accounting Standard” means International Financial Reporting Standards and the generally accepted accounting principles of Australia, Brazil, Canada, Member States of the European Union, Member States of the European Economic Area, Hong Kong (China), Japan, Malaysia, Mexico, New Zealand, the People’s Republic of China, the Republic of India, the Republic of Korea, Russia, Singapore, Switzerland, the United Kingdom, and the United States of America; “Additional Current Multinational Top-up Tax” means the amount of tax determined in subsections 181(1) to (6) and any amount treated as Additional Current Multinational Top-up Tax determined under subsections 181(1) to (6), such as the amount determined under subsection 169(3) or section 191; “Adjusted Asset Gain” means, in respect of Aggregate Asset Gain that is subject to an election under subsections 165(16) to (19), an amount equal to the Aggregate Asset Gain in the Election Year, reduced by any amount of such gain that has been applied against the Net Asset Loss in a prior Loss Year under paragraph 165(18)(b) or (c); Laws of Malaysia 38 Act 851 “Adjusted Covered Taxes” means an amount as determined under section 169; “Aggregate Asset Gain” means, in respect of an election under subsection 165(16), the net gain in the Election Year from the disposition of Local Tangible Assets by all Constituent Entities located in the jurisdiction excluding the gain or loss on a transfer of assets between Group Members; “Agreed Administrative Guidance” means the guidance on the interpretation or administration of the Domestic Top-up Tax or Multinational Top-up Tax published by the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting; “Allocable Share of the Multinational Top-up Tax” means an amount determined under subsection 162(1); “Annual Election” means an election in the prescribed form made by a Filing Constituent Entity and furnished to the Director General and that applies only for the Financial Year for which the election is made; “Authorised Accounting Body” means a body with legal authority in a jurisdiction to prescribe, establish, or accept accounting standards for financial reporting purposes; “Authorised Financial Accounting Standard” means, in respect of any Entity, a set of generally acceptable accounting principles permitted by an Authorised Accounting Body in the jurisdiction where that Entity is located; “Consolidated Financial Statement” means—

Paragraph
Paragraph

(a) the financial statements prepared by an Entity in accordance with an Acceptable Financial Accounting Standard, in which the assets, liabilities, income, expenses and cash flows of that Entity and the Entities in which it has a Controlling Interest are presented as those of a single economic unit; Finance (No. 2)

Paragraph
Paragraph

(b) where an Entity is an entity under paragraph (b) of the definition of “Group”, the financial statements of the Entity that are prepared in accordance with an Acceptable Financial Accounting Standard;

Paragraph
Paragraph

(c) where the Ultimate Parent Entity has financial statements described in paragraph (a) or (b) that are not prepared in accordance with an Acceptable Financial Accounting Standard, the financial statements are those that have been prepared subject to adjustments to prevent any Material Competitive Distortions; and

Paragraph
Paragraph

(d) where the Ultimate Parent Entity does not prepare financial statements described in paragraphs (a) to (c), the Consolidated Financial Statements of the Ultimate Parent Entity are those that would have been prepared if such Entity were required to prepare such statements in accordance with an Authorised Financial Accounting Standard that is either an Acceptable Financial Accounting Standard or another financial accounting standard that is adjusted to prevent any Material Competitive Distortions; “Constituent Entity” means—

Paragraph
Paragraph

(a) any Entity that is included in a Group; or

Paragraph
Paragraph

(b) any Permanent Establishment of a Main Entity that is within paragraph (a) and which is treated as separate from the Main Entity and any other Permanent Establishment of that Main Entity, but does not include an Excluded Entity; “Constituent Entity-owner” means a Constituent Entity that directly or indirectly owns an Ownership Interest in another Constituent Entity of the same Multinational Enterprise Group; Laws of Malaysia 40 Act 851 “Controlled Foreign Company Tax Regime” means a set of tax rules other than an Income Inclusion Rule under which a direct or indirect shareholder of a foreign entity being the controlled foreign company is subject to current taxation on its share of part or all of the income earned by the controlled foreign company, irrespective of whether that income is distributed currently to the shareholder; “Controlling Interest” means an Ownership Interest in an Entity such that the interest holder—

Paragraph
Paragraph

(a) is required to consolidate the assets, liabilities, income, expenses and cash flows of the Entity on a line-by-line basis in accordance with an Acceptable Financial Accounting Standard; or

Paragraph
Paragraph

(b) would have been required to consolidate the assets, liabilities, income, expenses and cash flows of the Entity on a line-by-line basis if the interest holder had prepared Consolidated Financial Statements; “Covered Taxes” means—

Paragraph
Paragraph

(a) taxes recorded in the financial accounts of a Constituent Entity with respect to its income or profits or its share of the income or profits of a Constituent Entity in which it owns an Ownership Interest;

Paragraph
Paragraph

(b) taxes on distributed profits, deemed profit distributions, and non-business expenses imposed under an Eligible Distribution Tax System;

Paragraph
Paragraph

(c) taxes imposed in lieu of a generally applicable corporate income tax; and

Paragraph
Paragraph

(d) taxes levied by reference to retained earnings and corporate equity, including a Tax on multiple components based on income and equity, Finance (No. 2) 41 but does not include any amount of—

Paragraph
Paragraph

(a) Multinational Top-up Tax accrued by a Parent Entity under a Qualified Income Inclusion Rule;

Paragraph
Paragraph

(b) Qualified Domestic Top-up Tax accrued by a Constituent Entity;

Paragraph
Paragraph

(c) taxes attributable to an adjustment made by a Constituent Entity as a result of the application of a set of rules equivalent to Articles 2.4 to 2.6 of the GloBE Model Rules (including any provisions of the GloBE Model Rules associated with those articles) that are included in the domestic law of a jurisdiction and that are implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Model Rules provided that such jurisdiction does not provide any benefits that are related to such rules;

Paragraph
Paragraph

(d) a Disqualified Refundable Imputation Tax;

Paragraph
Paragraph

(e) taxes paid by an insurance company in respect of returns to policy holders; “Designated Filing Entity” means the Constituent Entity, other than the Ultimate Parent Entity, that has been appointed by the Multinational Enterprise Group to file the information return on behalf of the Multinational Enterprise Group; “Disqualified Refundable Imputation Tax” means any amount of Tax, other than a Qualified Imputation Tax, accrued or paid by a Constituent Entity that is—

Paragraph
Paragraph

(a) refundable to the beneficial owner of a dividend distributed by such Constituent Entity in respect of that dividend or creditable by the beneficial owner against a tax liability other than a tax liability in respect of such dividend; or Laws of Malaysia 42 Act 851

Paragraph
Paragraph

(b) refundable to the distributing corporation upon distribution of a dividend; “Domestic Top-up Tax” means tax as provided under section 159; “Effective Tax Rate” means, in respect of a Multinational Enterprise Group, the sum of the Adjusted Covered Taxes of each Constituent Entity located in the jurisdiction divided by the Net GloBE Income of the jurisdiction for the Financial Year; “Election Year” means, in respect of an Annual Election, the year for which the election is made; “Eligible Distribution Tax System” means a corporate income tax system that—

Paragraph
Paragraph

(a) imposes an income tax on the corporation with the tax generally payable only when the corporation distributes profits to shareholders, is deemed to distribute profits to shareholders, or incurs certain non-business expenses;

Paragraph
Paragraph

(b) imposes tax at a rate equal to or in excess of the Minimum Rate; and

Paragraph
Paragraph

(c) was in force on or before 1 July 2021; “Eligible Employees” means employees, including part-time employees, of a Constituent Entity that is a member of the Multinational Enterprise Group and independent contractors participating in the ordinary operating activities of the Multinational Enterprise Group under the direction and control of the Multinational Enterprise Group; “Eligible Payroll Costs” means employee compensation expenditures (including salaries, wages, and other expenditures that provide a direct and separate personal benefit to the employee, such as health insurance and pension contributions), payroll and employment taxes, and employer social security contributions; Finance (No. 2) 43 “Eligible Tangible Assets” means—

Paragraph
Paragraph

(a) property, plant, and equipment located in that jurisdiction;

Paragraph
Paragraph

(b) natural resources located in that jurisdiction;

Paragraph
Paragraph

(c) a lessee’s right of use of tangible assets located in that jurisdiction; and

Paragraph
Paragraph

(d) a licence or similar arrangement from the Government for the use of immovable property or exploitation of natural resources that entails significant investment in tangible assets; “Entity” means—

Paragraph
Paragraph

(a) any legal person (other than a natural person); or

Paragraph
Paragraph

(b) an arrangement that prepares separate financial accounts, such as a partnership or trust; “Excess Profit” means the amount computed in accordance with section 176; “Excluded Dividends” means dividends or other distributions received or accrued in respect of an Ownership Interest, except for—

Paragraph
Paragraph

(a) a Short-term Portfolio Shareholding; and

Paragraph
Paragraph

(b) an Ownership Interest in an Investment Entity that is subject to an election under section 194; “Excluded Entity” means—

Paragraph
Paragraph

(a) a Governmental Entity;

Paragraph
Paragraph

(b) an International Organisation; Laws of Malaysia 44 Act 851

Paragraph
Paragraph

(c) a Non-profit Organisation;

Paragraph
Paragraph

(d) a Pension Fund;

Paragraph
Paragraph

(e) an Investment Fund that is an Ultimate Parent Entity;

Paragraph
Paragraph

(f) a Real Estate Investment Vehicle that is an Ultimate Parent Entity; or

Paragraph
Paragraph

(g) an Entity—

Paragraph
Paragraph

(i) where at least ninety-five per cent of the value of the Entity is owned directly or through a chain of Excluded Entities by one or more Excluded Entities referred above other than a Pension Services Entity and where that Entity—

Paragraph
Paragraph

(A) operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the Excluded Entity or Entities; or

Paragraph
Paragraph

(B) only carries out activities that are ancillary to those carried out by the Excluded Entity or Entities; or

Subparagraph
Subparagraph

(ii) where at least eighty-five per cent of the value of the Entity is owned directly or through a chain of Excluded Entities, by one or more Excluded Entities referred above other than a Pension Services Entity provided that substantially all of the Entity’s income is Excluded Dividends or Excluded Equity Gain or Loss that is excluded from the computation of GloBE Income or Loss in accordance with this Part; Finance (No. 2) 45 “Excluded Equity Gain or Loss” means the gain, profit or loss included in the Financial Accounting Net Income or Loss of the Constituent Entity arising from—

Paragraph
Paragraph

(a) gains and losses from changes in fair value of an Ownership Interest, except for a Portfolio Shareholding;

Paragraph
Paragraph

(b) profit or loss in respect of an Ownership Interest included under the equity method of accounting; and

Paragraph
Paragraph

(c) gains and losses from disposition of an Ownership Interest, except for a disposition of a Portfolio Shareholding; “Filing Constituent Entity” means an Entity filing the return in accordance with section 201 or 202; “Financial Accounting Net Income or Loss” means the net income or loss determined for a Constituent Entity before any consolidation adjustments eliminating intra-group transactions in preparing Consolidated Financial Statements of the Ultimate Parent Entity; “Financial Year” means an accounting period with respect to which the Ultimate Parent Entity of the Multinational Enterprise Group prepares its Consolidated Financial Statements and in the case of Consolidated Financial Statements as defined in paragraph (d) of the definition of “Consolidated Financial Statements”, Financial Year means the calendar year; “Five-Year Election” means an election in the prescribed form made by a Filing Constituent Entity and furnished to the Director General with respect to a Financial Year (hereinafter referred to as the “election year”) that cannot be revoked with respect to the election year or the four succeeding Financial Years and if revoked with respect to a Financial Year (hereinafter referred to as the “revocation year”), a new election cannot be made with respect to the four Financial Years succeeding the revocation year; Laws of Malaysia 46 Act 851 “General Government” means the central administration, agencies whose operations are under its effective control, state and local governments and their administrations; “GloBE Implementation Framework” means the procedures to be developed by the Inclusive Framework on Base Erosion and Profit Shifting in order to develop administrative rules, guidance, and procedures that will facilitate the coordinated implementation of this Part; “GloBE Income of all Constituent Entities” means the sum of the GloBE Income of all Constituent Entities located in the jurisdiction determined in accordance with Chapter 5 of this Part for the Financial Year; “GloBE Income or Loss” means the Financial Accounting Net Income or Loss determined for the Constituent Entity for the Financial Year adjusted for the items described in sections 165 to 168 of each Constituent Entity; “GloBE Loss Deferred Tax Asset” means the amount computed in accordance with section 172; “GloBE Losses of all Constituent Entities” means the sum of the GloBE Losses of all Constituent Entities located in the jurisdiction determined in accordance with Chapter 5 of this Part for the Financial Year; “GloBE Model Rules” means the model rules published by the Organisation for Economic Co-operation and Development/ G20 Inclusive Framework on Base Erosion and Profit Shifting as “Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on Base Erosion and Profit Shifting”; “GloBE Reorganisation” means a transformation or transfer of assets and liabilities such as in a merger, demerger, liquidation, or similar transaction where—

Paragraph
Paragraph

(a) the consideration for the transfer is, in whole or in significant part, equity interests issued by the acquiring Constituent Entity or by a person connected with the acquiring Constituent Entity, or, in the case of a liquidation, equity interests of the target or, when no consideration is provided, where the issuance of an equity interest would have no economic significance; Finance (No. 2)

Paragraph
Paragraph

(b) the disposing Constituent Entity’s gain or loss on those assets is not subject to tax, in whole or in part; and

Paragraph
Paragraph

(c) the tax laws of the jurisdiction in which the acquiring Constituent Entity is located require the acquiring Constituent Entity to compute taxable income after the disposition or acquisition using the disposing Constituent Entity’s tax basis in the assets, adjusted for any Non-qualifying Gain or Loss on the disposition or acquisition; “GloBE Rules” means—

Paragraph
Paragraph

(a) the GloBE Model Rules;

Paragraph
Paragraph

(b) the GloBE Rules Commentary and any further commentaries published by the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting that are relevant to the implementation of the GloBE Rules; and

Paragraph
Paragraph

(c) any Agreed Administrative Guidance or any other guidance published by the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting that are relevant to the implementation of the GloBE Rules; “GloBE Rules Commentary” means—

Paragraph
Paragraph

(a) the commentary on the GloBE Model Rules published by the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting as “Tax Challenges Arising from the Digitalisation of the Economy – Commentary to the Global Anti-Base Erosion Model Rules (Pillar Two)”; and Laws of Malaysia 48 Act 851

Paragraph
Paragraph

(b) the examples illustrating the application of the GloBE Model Rules published by the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting as “Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two) Examples”; “Governmental Entity” means an Entity that meets all of the following criteria:

Paragraph
Paragraph

(a) it is part of or wholly-owned by a government, (including any political subdivision or local authority thereof);

Paragraph
Paragraph

(b) it does not carry on a trade or business and it has the principal purpose of—

Paragraph
Paragraph

(i) fulfilling a government function; or

Subparagraph
Subparagraph

(ii) managing or investing that government’s or jurisdiction’s assets through the making and holding of investments, asset management, and related investment activities for the government’s or jurisdiction’s assets;

Paragraph
Paragraph

(c) it is accountable to the government on its overall performance, and provides annual information reporting to the government; and

Paragraph
Paragraph

(d) its assets vest in such government upon dissolution and to the extent it distributes net earnings, such net earnings are distributed solely to such government with no portion of its net earnings inuring to the benefit of any private person; “Group” means—

Paragraph
Paragraph

(a) a collection of Entities that are related through ownership or control such that the assets, liabilities, income, expenses and cash flows of those Entities are—

Paragraph
Paragraph

(i) included in the Consolidated Financial Statements of the Ultimate Parent Entity; or Finance (No. 2)

Subparagraph
Subparagraph

(ii) excluded from the Consolidated Financial Statements of the Ultimate Parent Entity solely on size or materiality grounds, or on the grounds that the Entity is held for sale; or

Paragraph
Paragraph

(b) an Entity that is located in one jurisdiction and has one or more Permanent Establishments located in other jurisdictions provided that the Entity is not a part of another Group mentioned in paragraph (a); “Group Entity” means, in respect of any Entity or Group, an Entity that is a member of the same Group; “High-Tax Counterparty” means a Constituent Entity that is located in a jurisdiction that is not a Low-Tax Jurisdiction or that is located in a jurisdiction that would not be a Low-Tax Jurisdiction if its Effective Tax Rate were determined without regard to any income or expense accrued by that Entity in respect of an Intragroup Financing Arrangement; “Income Inclusion Rule” means the rules for the allocation of Multinational Top-up Tax as provided in Chapter 4 of this Part; “information return” means a return in the prescribed form as provided for under section 201; “Insurance Investment Entity” means an Entity that would meet the definition of an Investment Fund or a Real Estate Investment Vehicle except that it is established in relation to liabilities under an insurance or annuity contract and is wholly-owned by an Entity that is subject to regulation in its location as an insurance company; “Intermediate Parent Entity” means a Constituent Entity (other than an Ultimate Parent Entity, Partially-Owned Parent Entity, Permanent Establishment, or Investment Entity) which owns (directly or indirectly) an Ownership Interest in another Constituent Entity in the same Multinational Enterprise Group; Laws of Malaysia 50 Act 851 “International Organisation” means any intergovernmental organisation (including a supranational organisation) or wholly-owned agency or instrumentality thereof that meets all of the following criteria:

Paragraph
Paragraph

(a) it is comprised primarily of governments;

Paragraph
Paragraph

(b) it has in effect a headquarters or substantially similar agreement such as arrangements that entitle the organisation’s offices or establishments in the jurisdiction to privileges and immunities with the jurisdiction in which it is established; and

Paragraph
Paragraph

(c) law or its governing documents prevent its income inuring to the benefit of private persons; “International Shipping Income” means the net income obtained by a Constituent Entity from the following activities:

Paragraph
Paragraph

(a) the transportation of passengers or cargo by ships that it operates in international traffic, whether the ship is owned, leased or otherwise at the disposal of the Constituent Entity;

Paragraph
Paragraph

(b) the transportation of passengers or cargo by ships operated in international traffic under slot-chartering arrangements;

Paragraph
Paragraph

(c) leasing a ship, to be used for the transportation of passengers or cargo in international traffic, on charter fully equipped, crewed and supplied;

Paragraph
Paragraph

(d) leasing a ship on a bare boat charter basis, for the use of transportation of passengers or cargo in international traffic, to another Constituent Entity;

Paragraph
Paragraph

(e) the participation in a pool, a joint business or an international operating agency for the transportation of passengers or cargo by ships in international traffic;

Paragraph
Paragraph

(f) the sale of a ship used for the transportation of passengers or cargo in international traffic provided that the ship has been held for use by the Constituent Entity for a minimum of one year, Finance (No. 2) 51 and shall not include net income obtained from the transportation of passengers or cargo by ships via inland waterways within the same jurisdiction; “Intragroup Financing Arrangement” means any arrangement entered into between two or more members of the Multinational Enterprise Group whereby a High-Tax Counterparty directly or indirectly provides credit or otherwise makes an investment in a Low-Tax Entity; “Investment Entity” means—

Paragraph
Paragraph

(a) an Investment Fund or a Real Estate Investment Vehicle;

Paragraph
Paragraph

(b) an Entity that is at least ninety-five per cent owned directly by an Entity described in paragraph (a) or through a chain of such Entities and that operates exclusively or almost exclusively to hold assets or invest funds for the benefit of such Investment Entities; and

Paragraph
Paragraph

(c) an Entity where at least eighty-five per cent of the value of the Entity is owned by an Entity referred to in paragraph (a) provided that substantially all of the Entity’s income is Excluded Dividends or Excluded Equity Gain or Loss that is excluded from the computation of GloBE Income or Loss in accordance with paragraph 165(1)(b) or (c); “Investment Fund” means an Entity that meets all of the following criteria:

Paragraph
Paragraph

(a) it is designed to pool assets (which may be financial and non-financial) from a number of investors some of which are not connected;

Paragraph
Paragraph

(b) it invests in accordance with a defined investment policy;

Paragraph
Paragraph

(c) it allows investors to reduce transaction, research, and analytical costs, or to spread risk collectively; Laws of Malaysia 52 Act 851

Paragraph
Paragraph

(d) it is primarily designed to generate investment income or gains, or protection against a particular or general event or outcome;

Paragraph
Paragraph

(e) investors have a right to return from the assets of the fund or income earned on those assets, based on the contributions made by those investors;

Paragraph
Paragraph

(f) the Entity or its management is subject to a regulatory regime in the jurisdiction in which it is established or managed (including appropriate anti-money laundering and investor protection regulation); and

Paragraph
Paragraph

(g) it is managed by investment fund management professionals on behalf of the investors; “Joint Venture” means an Entity whose financial results are reported under the equity method in the Consolidated Financial Statements of the Ultimate Parent Entity provided that the Ultimate Parent Entity holds directly or indirectly at least fifty per cent of its Ownership Interests and does not include—

Paragraph
Paragraph

(a) an Ultimate Parent Entity of a Multinational Enterprise Group that is subject to this Part;

Paragraph
Paragraph

(b) an Excluded Entity mentioned in paragraphs (a) to (f) of the definition of “Excluded Entity”;

Paragraph
Paragraph

(c) an Entity whose Ownership Interest held by the Multinational Enterprise Group are held directly through an Excluded Entity referred in paragraphs (a) to (f) of the definition of “Excluded Entity” and the Entity—

Paragraph
Paragraph

(i) operates exclusively or almost exclusively to hold assets or invest funds for the benefit of its investors;

Subparagraph
Subparagraph

(ii) carries out activities that are ancillary to those carried out by the Excluded Entity; or Finance (No. 2)

Subparagraph
Subparagraph

(iii) substantially all of its income is excluded from the computation of GloBE Income or Loss in accordance with paragraphs 165(1)(b) and (c);

Paragraph
Paragraph

(d) an Entity which is held by a Multinational Enterprise Group composed exclusively of Excluded Entities; or

Paragraph
Paragraph

(e) a Joint Venture Subsidiary; “Joint Venture Group” means a Joint Venture and its Joint Venture Subsidiaries; “Joint Venture Subsidiary” means an Entity whose assets, liabilities, income, expenses and cash flows are consolidated by a Joint Venture under an Acceptable Financial Accounting Standard (or would have been consolidated had it been required to consolidate such items in accordance with an Acceptable Financial Accounting Standard); “Local Tangible Asset” means immovable property located in the same jurisdiction as the Constituent Entity; “Look-back Period” means, in respect of an election under subsections 165(16) to (19), the Election Year and the four prior Financial Years; “Loss Year” means, in respect of jurisdiction for which the Filing Constituent Entity has made an election under subsections 165(16) to (19), a Financial Year in the Look-back Period for which there is a Net Asset Loss for a Constituent Entity located in that jurisdiction and the total amount of Net Asset Loss of all such Constituent Entities exceeds the total amount of their Net Asset Gain; “Low-Taxed Constituent Entity” means a Constituent Entity of the Multinational Enterprise Group that is located in a Low-Tax Jurisdiction or a Stateless Constituent Entity that, in respect of a Financial Year, has GloBE Income and is subject to an Effective Tax Rate as determined under Chapter 7 of this Part in that Financial Year that is lower than the Minimum Rate; Laws of Malaysia 54 Act 851 “Low-Tax Jurisdiction”, in respect of a Multinational Enterprise Group in any Financial Year, means a jurisdiction where the Multinational Enterprise Group has Net GloBE Income and is subject to an Effective Tax Rate as determined under Chapter 7 of this Part in that period that is lower than the Minimum Rate; “Main Entity” means, in respect of a Permanent Establishment—

Paragraph
Paragraph

(a) the Entity that includes the Financial Accounting Net Income or Loss of the Permanent Establishment in its financial statements; and

Paragraph
Paragraph

(b) is deemed to have the Controlling Interests of its Permanent Establishment; “Material Competitive Distortion” means, in respect of the application of a specific principle or procedure under a set of generally accepted accounting principles, an application that results in an aggregate variation greater than seventy five million euro in a Financial Year as compared to the amount that would have been determined by applying the corresponding International Financial Reporting Standards principle or procedure and where the application of a specific principle or procedure results in a Material Competitive Distortion, the accounting treatment of any item or transaction subject to that principle or procedure must be adjusted to conform to the treatment required for the item or transaction under International Financial Reporting Standards in accordance with any Agreed Administrative Guidance; “Minimum Rate” means fifteen per cent; “Minority-Owned Constituent Entity” means a Constituent Entity where the Ultimate Parent Entity has a direct or indirect Ownership Interest in that Entity of thirty per cent or less; “Multinational Enterprise Group” means any Group that includes at least one Entity or Permanent Establishment that is not located in the jurisdiction of the Ultimate Parent Entity; Finance (No. 2) 55 “Multinational Top-up Tax” means tax computed for the jurisdiction or Constituent Entity in accordance with sections 175 to 179; “Multinational Top-up Tax Percentage” means the percentage computed in accordance with section 175; “Net Asset Gain” means, in respect of an election under subsections 165(16) to (19), the net gain from the disposition of Local Tangible Assets by a Constituent Entity located in the jurisdiction for which the election was made excluding the gain or loss on a transfer of assets to another Group Member; “Net Asset Loss” means, in respect of a Constituent Entity and a Financial Year, the net loss from the disposition of Local Tangible Assets by that Constituent Entity in that year excluding the gain or loss on a transfer of assets to another Group Member. The amount of Net Asset Loss shall be reduced by the amount of Net Asset Gain or Adjusted Asset Gain which is set-off against such loss pursuant to the application of paragraph 165(18)(b) or (c) as a result of a previous election made under subsections 165(16) to (19); “Net GloBE Income” means the amount as determined in accordance with subsection 174(4); “Net GloBE Loss” means the amount as determined in accordance with subsection 172(3); “Non-profit Organisation” means an Entity that meets all of the following criteria:

Paragraph
Paragraph

(a) it is established and operated in its jurisdiction of residence—

Paragraph
Paragraph

(i) exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, or other similar purposes; or

Subparagraph
Subparagraph

(ii) as a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare; Laws of Malaysia 56 Act 851

Paragraph
Paragraph

(b) substantially all of the income from the activities mentioned in paragraph (a) is exempt from income tax in its jurisdiction of residence;

Paragraph
Paragraph

(c) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;

Paragraph
Paragraph

(d) the income or assets of the Entity may not be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than—

Paragraph
Paragraph

(i) pursuant to the conduct of the Entity’s charitable activities;

Subparagraph
Subparagraph

(ii) as payment of reasonable compensation for services rendered or for the use of property or capital; or

Subparagraph
Subparagraph

(iii) as payment representing the fair market value of property which the Entity has purchased; and

Paragraph
Paragraph

(e) upon termination, liquidation or dissolution of the Entity, all of its assets must be distributed or revert to a Non-profit Organisation or to the government including any Governmental Entity of the Entity’s jurisdiction of residence or any political subdivision thereof, but does not include any Entity carrying on a trade or business which is not directly related to the purposes for which it was established; “Non-Qualified Refundable Tax Credit” means a tax credit that is not a Qualified Refundable Tax Credit but that is refundable in whole or in part; “Non-qualifying Gain or Loss” means the lesser of the gain or loss of the disposing Constituent Entity arising in connection with a GloBE Reorganisation that is subject to tax in the disposing Constituent Entity’s location and the financial accounting gain or loss arising in connection with the GloBE Reorganisation; Finance (No. 2) 57 “OECD Model Tax Convention” means the Model Tax Convention on Income and on Capital: Condensed Version 2017 published by the Organisation for Economic Co-operation and Development; “Other Comprehensive Income” means items of income and expense that are not recognised in profit or loss as required or permitted by the Authorised Financial Accounting Standard used in the Consolidated Financial Statements. Other Comprehensive Income is usually reported as an adjustment to equity in the statement of financial position; “Ownership Interest” means any equity interest that carries rights to the profits, capital or reserves of an Entity, including the profits, capital or reserves of a Main Entity’s Permanent Establishment; “Parent Entity” means an Ultimate Parent Entity that is not an Excluded Entity, an Intermediate Parent Entity, or a Partially-Owned Parent Entity; “Partially-Owned Parent Entity” means a Constituent Entity other than an Ultimate Parent Entity, Permanent Establishment, Investment Entity or an Insurance Investment Entity that—

Paragraph
Paragraph

(a) owns directly or indirectly an Ownership Interest in another Constituent Entity of the same Multinational Enterprise Group; and

Paragraph
Paragraph

(b) has more than twenty per cent of the Ownership Interests in its profits held directly or indirectly by persons that are not Constituent Entities of the Multinational Enterprise Group; “Pension Fund” means—

Paragraph
Paragraph

(a) an Entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to persons and regulated as such by that jurisdiction or one of its political subdivisions or local authorities or those benefits are secured or otherwise protected by national regulations and funded by a pool of assets held through a fiduciary Laws of Malaysia 58 Act 851 arrangement or trustor to secure the fulfilment of the corresponding pension obligations against a case of insolvency of the Multinational Enterprise Group; or

Paragraph
Paragraph

(b) a Pension Services Entity; “Pension Services Entity” means an Entity that is established and operated exclusively or almost exclusively—

Paragraph
Paragraph

(a) to invest funds for the benefit of Entities referred to in paragraph (a) of the definition of “Pension Fund”; or

Paragraph
Paragraph

(b) to carry out activities that are ancillary to those regulated activities carried out by the Entities referred to in paragraph (a) of the definition of “Pension Fund” provided that they are members of the same Group; “Permanent Establishment” means—

Paragraph
Paragraph

(a) a place of business including a deemed place of business situated in a jurisdiction and treated as a permanent establishment in accordance with an applicable Tax Treaty in force provided that such jurisdiction taxes the income attributable to it in accordance with a provision similar to Article 7 of the OECD Model Tax Convention;

Paragraph
Paragraph

(b) if there is no applicable Tax Treaty in force, a place of business including a deemed place of business in respect of which a jurisdiction taxes under its domestic law the income attributable to such place of business on a net basis similar to the manner in which it taxes its own tax residents;

Paragraph
Paragraph

(c) if a jurisdiction has no corporate income tax system, a place of business including a deemed place of business situated in that jurisdiction that would be treated as a permanent establishment in accordance Finance (No. 2) 59 with the OECD Model Tax Convention provided that such jurisdiction would have had the right to tax the income attributable to it in accordance with Article 7 of that model; or

Paragraph
Paragraph

(d) a place of business or a deemed place of business that is not already described in paragraphs (a) to (c) through which operations are conducted outside the jurisdiction where the Entity is located provided that such jurisdiction exempts the income attributable to such operations; “Portfolio Shareholding” means Ownership Interests in an Entity that are held by the Multinational Enterprise Group and that carry rights to less than ten per cent of the profits, capital, reserves, or voting rights of that Entity at the date of the distribution or disposition; “Qualified Ancillary International Shipping Income” means net income obtained by a Constituent Entity from the following activities that are performed primarily in connection with the transportation of passengers or cargo by ships in international traffic:

Paragraph
Paragraph

(a) leasing a ship on a bare boat charter basis to another shipping enterprise that is not a Constituent Entity, provided that the charter does not exceed three years;

Paragraph
Paragraph

(b) sale of tickets issued by other shipping enterprises for the domestic leg of an international voyage;

Paragraph
Paragraph

(c) leasing and short-term storage of containers or detention charges for the late return of containers;

Paragraph
Paragraph

(d) provision of services to other shipping enterprises by engineers, maintenance staff, cargo handlers, catering staff, and customer services personnel;

Paragraph
Paragraph

(e) investment income where the investment that generates the income is made as an integral part of the carrying on the business of operating the ships in international traffic; Laws of Malaysia 60 Act 851 “Qualified Domestic Top-up Tax” means a minimum tax that is included in the domestic law of a jurisdiction and that—

Paragraph
Paragraph

(a) determines the Excess Profits of the Constituent Entities located in the jurisdiction in a manner that is equivalent to the GloBE Rules;

Paragraph
Paragraph

(b) operates to increase domestic tax liability with respect to domestic Excess Profits to the Minimum Rate for the jurisdiction and Constituent Entities for a Financial Year;

Paragraph
Paragraph

(c) is implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Model Rules and GloBE Rules Commentary and that jurisdiction does not provide any benefits that are related to such rules; and

Paragraph
Paragraph

(d) may compute domestic Excess Profits based on an Acceptable Financial Accounting Standard permitted by the Authorised Accounting Body or an Authorised Financial Accounting Standard adjusted to prevent any Material Competitive Distortions, rather than the financial accounting standard used in the Consolidated Financial Statements; “Qualified Imputation Tax” means a Covered Tax accrued or paid by a Constituent Entity that is refundable or creditable to the beneficial owner of a dividend distributed by such Constituent Entity or, in the case of a Covered Tax accrued or paid by a Permanent Establishment, a dividend distributed by the Main Entity, to the extent that the refund is payable, or the credit is provided—

Paragraph
Paragraph

(a) by a jurisdiction other than the jurisdiction which imposed the Covered Taxes under a foreign tax credit regime;

Paragraph
Paragraph

(b) to a beneficial owner of the dividend that is subject to tax at a nominal rate that equals or exceeds the Minimum Rate on the dividend on a current basis under the domestic law of the jurisdiction which imposed the Covered Taxes on the Constituent Entity; Finance (No. 2)

Paragraph
Paragraph

(c) to a person who is the beneficial owner of the dividend and tax resident in the jurisdiction which imposed the Covered Taxes on the Constituent Entity and who is subject to tax on the dividends as ordinary income; or

Paragraph
Paragraph

(d) to a Governmental Entity, an International Organisation, a resident Non-profit Organisation, a resident Pension Fund, a resident Investment Entity that is not a Group Entity, or a resident life insurance company to the extent that the dividends are received in connection with a Pension Fund business and subject to tax in a similar manner as a dividend received by Pension Fund (a Non-Profit Organisation or Pension Fund is resident in a jurisdiction if it is created and managed in that jurisdiction, an Investment Entity is resident in a jurisdiction if it is created and regulated in the jurisdiction and a life insurance company is resident in the jurisdiction in which it is located); “Qualified Income Inclusion Rule” means a set of rules equivalent to Article 2.1 to Article 2.3 of the GloBE Model Rules including any provisions of the GloBE Model Rules associated with those articles that are included in the domestic law of a jurisdiction and that are implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Model Rules and the GloBE Rules Commentary provided that such jurisdiction does not provide any benefits that are related to such rules; “Qualified Refundable Tax Credit” means—

Paragraph
Paragraph

(a) a refundable tax credit designed in a way such that it must be paid as cash or available as cash equivalents within four years from when a Constituent Entity satisfies the conditions for receiving the credit under the laws of the jurisdiction granting the credit;

Paragraph
Paragraph

(b) a tax credit that is refundable in part to the extent it must be paid as cash or available as cash equivalents within four years from when a Constituent Entity satisfies the conditions for receiving the credit under the laws of the jurisdiction granting the credit; and Laws of Malaysia 62 Act 851

Paragraph
Paragraph

(c) a refundable tax credit that does not include any amount of tax creditable or refundable pursuant to a Qualified Imputation Tax or a Disqualified Refundable Imputation Tax; “Real Estate Investment Vehicle” means an Entity the taxation of which achieves a single level of taxation either in its hands or the hands of its interest holders with at most one year of deferral, provided that the person holds predominantly immovable property and is itself widely held; “Reporting Financial Year” means the Financial Year that is the subject of the information return or the Top-up Tax return; “Short-term Portfolio Shareholding” means a Portfolio Shareholding that has been economically held by the Constituent Entity that receives or accrues the dividends or other distributions for less than one year at the date of the distribution; “Stateless Constituent Entity” means a Constituent Entity described in paragraphs 157(10)(b) and (11)(d); “Substance-based Income Exclusion” means the jurisdictional payroll carve-out and the tangible asset carve-out for each Constituent Entity as determined under section 180; “Tax” means a compulsory unrequited payment to General Government; “Tax Treaty” means an agreement for the avoidance of double taxation with respect to taxes on income and on capital; “Top-up Tax return” means a return in the prescribed form as provided under section 202; Finance (No. 2) 63 “Total Deferred Tax Adjustment Amount” means an amount as determined under subsection 171(1); “Ultimate Parent Entity” means either—

Paragraph
Paragraph

(a) an Entity that—

Paragraph
Paragraph

(i) owns directly or indirectly a Controlling Interest in any other Entity; and

Subparagraph
Subparagraph

(ii) is not owned, with a Controlling Interest, directly or indirectly by another Entity; or

Paragraph
Paragraph

(b) the Main Entity of a Group that is located in one jurisdiction and has one or more Permanent Establishments located in other jurisdictions provided that the Entity is not a part of another Group; “Ultimate Parent Entity Jurisdiction” means the jurisdiction where the Ultimate Parent Entity is located.

Subsection
Subsection

(2)  An Entity is a Flow-through Entity to the extent it is fiscally transparent with respect to its income, expenditure, profit or loss in the jurisdiction where it was created unless it is tax resident and subject to a Covered Tax on its income or profit in another jurisdiction.

Subsection
Subsection

(3)  A Flow-through Entity is a Tax Transparent Entity with respect to its income, expenditure, profit or loss to the extent that it is fiscally transparent in the jurisdiction in which its owner is located.

Subsection
Subsection

(4)  A Flow-through Entity is a Reverse Hybrid Entity with respect to its income, expenditure, profit or loss to the extent that it is not fiscally transparent in the jurisdiction in which the owner is located.

Subsection
Subsection

(5)  An Entity is treated as fiscally transparent under the laws of a jurisdiction, if that jurisdiction treats the income, expenditure, profit or loss of that Entity as if it were derived or incurred by the direct owner of that Entity in proportion to its interest in that Entity. Laws of Malaysia 64 Act 851

Subsection
Subsection

(6)  An Ownership Interest in an Entity or a Permanent Establishment that is a Constituent Entity shall be treated as held through a Tax Transparent Structure if that Ownership Interest is held indirectly through a chain of Tax Transparent Entities.

Subsection
Subsection

(7)  A Constituent Entity that is not a tax resident and not subject to a Covered Tax or a Qualified Domestic Top-up Tax based on its place of management, place of creation, or similar criteria shall be treated as a Flow-through Entity and a Tax Transparent Entity in respect of its income, expenditure, profit or loss to the extent that—

Paragraph
Paragraph

(a) its owners are located in a jurisdiction that treats the Entity as fiscally transparent;

Paragraph
Paragraph

(b) it does not have a place of business in the jurisdiction where it was created; and

Paragraph
Paragraph

(c) the income, expenditure, profit or loss is not attributable to a Permanent Establishment.

Subsection
Subsection

(8)  An Entity that is treated as a separate taxable person for income tax purposes in the jurisdiction where it is located is a Hybrid Entity with respect to its income, expenditure, profit or loss to the extent that it is fiscally transparent in the jurisdiction in which its owner is located.

Subsection
Subsection

(9)  The location of an Entity that is not a Flow-through Entity is determined in the following manner:

Paragraph
Paragraph

(a) if it is a tax resident in a jurisdiction based on its place of management, place of creation or similar criteria, it is located in that jurisdiction; and

Paragraph
Paragraph

(b) in other cases, it is located in the jurisdiction in which it was created.

Subsection
Subsection

(10)  The location of an Entity that is a Flow-through Entity is determined in the following manner:

Paragraph
Paragraph

(a) if it is the Ultimate Parent Entity of the Multinational Enterprise Group or it is required to apply an Income Inclusion Rule in accordance with section 161, it is located in the jurisdiction where it was created; and Finance (No. 2)

Paragraph
Paragraph

(b) in other cases, it shall be treated as a stateless Entity.

Subsection
Subsection

(11)  The location of a Permanent Establishment is determined in the following manner:

Paragraph
Paragraph

(a) if it is described in paragraph (1)(a) of the definition of “Permanent Establishment”, it is located in the jurisdiction where it is treated as a permanent establishment and is taxed under the applicable Tax Treaty in force;

Paragraph
Paragraph

(b) if it is described in paragraph (1)(b) of the definition of “Permanent Establishment”, it is located in the jurisdiction where it is subject to net basis taxation based on its business presence;

Paragraph
Paragraph

(c) if it is described in paragraph (1)(c) of the definition of “Permanent Establishment”, it is located in the jurisdiction where it is situated; and

Paragraph
Paragraph

(d) if it is described in paragraph (1)(d) of the definition of “Permanent Establishment”, it is considered as a stateless Permanent Establishment.

Subsection
Subsection

(12)  Where by reason of subsection (9), a Constituent Entity is located in more than one jurisdiction, then its status for the purposes of this Part shall be determined in the following manner:

Paragraph
Paragraph

(a) if it is located in two jurisdictions that have an applicable Tax Treaty in force—

Paragraph
Paragraph

(i) it shall be located in the jurisdiction where it is considered as a deemed resident for the purposes of the Tax Treaty;

Subparagraph
Subparagraph

(ii) if the Tax Treaty requires the competent authorities to reach a mutual agreement on the deemed residence of the Constituent Entity for the purposes of the Tax Treaty and no agreement exists, then paragraph (b) shall apply; Laws of Malaysia 66 Act 851

Subparagraph
Subparagraph

(iii) if the Tax Treaty does not provide relief or exemption from tax because the Constituent Entity is a tax resident of both Contracting Parties, then paragraph (b) shall apply;

Paragraph
Paragraph

(b) if no Tax Treaty applies, then its location shall be determined in the following manner:

Paragraph
Paragraph

(i) it shall be located in the jurisdiction where it paid the greater amount of Covered Taxes for the Financial Year, without considering the ones paid in accordance with a Controlled Foreign Company Tax Regime;

Subparagraph
Subparagraph

(ii) if the amount of Covered Taxes paid in both jurisdictions is the same or zero, it shall be located in the jurisdiction where it has the greater amount of Substance-based Income Exclusion computed on an entity basis in accordance with section 180;

Subparagraph
Subparagraph

(iii) if the amount of the Substance-based Income Exclusion in both jurisdictions is the same or zero, then it is considered a Stateless Constituent Entity unless it is the Ultimate Parent Entity of the Multinational Enterprise Group in which case it shall be located in the jurisdiction where it was created.

Subsection
Subsection

(13)  Where, under subsection (12), a Constituent Entity that is located in more than one jurisdiction is a Parent Entity located in a jurisdiction where it is not subject to a Qualified Income Inclusion Rule, then the other jurisdiction can require such Entity to apply its Qualified Income Inclusion Rule unless it is restricted by an applicable Tax Treaty in force.

Subsection
Subsection

(14)  Where an Entity has changed its location during the Financial Year, it shall be located in the jurisdiction where it was located at the beginning of that year. Finance (No. 2)

Chapter

Chapter 2

Text

Scope

Scope of application

Section 158

This Part shall apply to Constituent Entities that are members of a Multinational Enterpris...

Financial Year.

Subsection
Subsection

(2)  Where one or more of the Financial Years of the Multinational Enterprise Group taken into account for the purposes of subsection (1) is of a period other than twelve months, for each of those Financial Years the seven hundred and fifty million euro annual revenue is adjusted proportionally to correspond with the length of the relevant Financial Year.

Subsection
Subsection

(3)  Except for subsection (1), this Part shall not apply to Excluded Entities.

Subsection
Subsection

(4)  A Filing Constituent Entity may elect not to treat an Entity as an Excluded Entity in accordance with paragraph 157(1)(g) of the definition of “Excluded Entity” and such election is a Five-Year Election.

Chapter

Chapter 3

Text

Imposition and General Characteristic of the Tax

Domestic Top-up Tax

Section 159

Notwithstanding section 160 and Chapter 4 of this

Part, an income tax to be known as Domestic Top-up Tax shall be charged for each Financial Year on a Low-Taxed Constituent Entity located in Malaysia of a Multinational Enterprise Group in an amount equal to the Multinational Top-up Tax of a Constituent Entity as calculated under

Chapter

Chapter 7 of this Part for a Financial Year and for that purpose the provisions of this Par...

Chapter 7 of this Part for a Financial Year and for that purpose the provisions of this Part shall apply accordingly with any necessary modifications to determine liability to and to administer Domestic Top-up Tax.

Text

Multinational Top-up Tax

No text is available for this node.

Section 160

An income tax to be known as Multinational Top-up

Tax shall be charged for each Financial Year on a Constituent Entity that is the Ultimate Parent Entity located in Malaysia of a Multinational Enterprise Group equal to the amount as calculated under Chapter 7 of this Part for a Financial Year.

Chapter

Chapter 4

Text

Income Inclusion Rule

Application of Income Inclusion Rule

Section 161

A Constituent Entity which is the Ultimate Parent

Entity located in Malaysia of a Multinational Enterprise Group that owns directly or indirectly an Ownership Interest in a Low-Taxed Constituent Entity at any time during the Financial Year shall pay a Multinational Top-up Tax in an amount equal to its Allocable Share of such tax of that Low-Taxed Constituent Entity for the Financial Year.

Subsection
Subsection

(2)  An Intermediate Parent Entity located in Malaysia of a Multinational Enterprise Group that owns directly or indirectly an Ownership Interest in a Low-Taxed Constituent Entity at any time during a Financial Year shall pay a Multinational Top-up Tax in an amount equal to its Allocable Share of such tax of that Low-Taxed Constituent Entity for the Financial Year.

Subsection
Subsection

(3)  Subsection (2) shall not apply if—

Paragraph
Paragraph

(a) the Ultimate Parent Entity of the Multinational Enterprise Group is required to apply a Qualified Income Inclusion Rule for that Financial Year; or

Paragraph
Paragraph

(b) another Intermediate Parent Entity that owns directly or indirectly a Controlling Interest in the Intermediate Parent Entity is required to apply a Qualified Income Inclusion Rule for that Financial Year. Finance (No. 2)

Subsection
Subsection

(4)  Notwithstanding subsections (1) to (3), a Partially-Owned Parent Entity located in Malaysia that owns directly or indirectly an Ownership Interest in a Low-Taxed Constituent Entity at any time during the Financial Year shall pay a Multinational Top-up Tax in an amount equal to its Allocable Share of such tax of that Low-Taxed Constituent Entity for the Financial Year.

Subsection
Subsection

(5)  Subsection (4) shall not apply if the Partially-Owned Parent Entity is wholly owned directly or indirectly by another Partially-Owned Parent Entity that is required to apply a Qualified Income Inclusion Rule for that Financial Year.

Subsection
Subsection

(6)  A Parent Entity located in Malaysia shall apply the provisions of subsections (1) to (5) with respect to a Low-Taxed Constituent Entity that is not located in Malaysia. Allocation of Multinational Top-up Tax under the Income Inclusion Rule

Section 162

A Parent Entity’s Allocable Share of the Multinational

Top-up Tax of a Low-Taxed Constituent Entity is an amount equal to the Multinational Top-up Tax of the Low-Taxed Constituent Entity as calculated under Chapter 7 of this Part multiplied by the Parent Entity’s Inclusion Ratio for the Low-Taxed Constituent Entity for the Financial Year.

Subsection
Subsection

(2)  A Parent Entity’s Inclusion Ratio for a Low-Taxed Constituent Entity for a Financial Year shall be determined in accordance with the formula: A – B C where A is the GloBE Income of the Low-Taxed Constituent Entity for the Financial Year; B is the amount of such income attributable to Ownership Interests held by other owners; and C is the GloBE Income of the Low-Taxed Constituent Entity for the Financial Year. Laws of Malaysia 70 Act 851

Subsection
Subsection

(3)  The amount of GloBE Income attributable to Ownership Interests in a Low-Taxed Constituent Entity held by other owners is the amount that would have been treated as attributable to such owners under the principles of the Acceptable Financial Accounting Standard used in the Ultimate Parent Entity’s Consolidated Financial Statements if the Low-Taxed Constituent Entity’s net income were equal to its GloBE Income and—

Paragraph
Paragraph

(a) the Parent Entity had prepared Consolidated Financial Statements in accordance with that accounting standard referred to as the hypothetical Consolidated Financial Statements;

Paragraph
Paragraph

(b) the Parent Entity owned a Controlling Interest in the Low-Taxed Constituent Entity such that all of the income and expenses of the Low-Taxed Constituent Entity were consolidated on a line-by-line basis with those of the Parent Entity in the hypothetical Consolidated Financial Statements;

Paragraph
Paragraph

(c) all of the Low-Taxed Constituent Entity’s GloBE Income were attributable to transactions with persons that are not Group Entities; and

Paragraph
Paragraph

(d) all Ownership Interests not directly or indirectly held by the Parent Entity were held by persons other than Group Entities.

Subsection
Subsection

(4)  In the case of a Flow-through Entity, GloBE Income under subsections (1) to (3) shall not include any income allocated, pursuant to subsection 168(3), to an owner that is not a Group Entity. Income Inclusion Rule offset mechanism

Section 163

A Parent Entity that owns an Ownership Interest in a Low-Taxed Constituent Entity indirectl...

Intermediate Parent Entity or a Partially-Owned Parent Entity which is not excluded from the Income Inclusion Rule under subsection 161(3) or (5) shall reduce its Allocable Share of a Multinational Top-up Tax of the Low-Taxed Constituent Entity in accordance with subsection (2). Finance (No. 2)

Subsection
Subsection

(2)  The reduction in subsection (1) will be an amount equal to the portion of the Parent Entity’s Allocable Share of the Multinational Top-up Tax which is included in the determination of the Qualified Income Inclusion Rule by the Intermediate Parent Entity or the Partially-Owned Parent Entity.

Chapter

Chapter 5

Text

Computation of GloBE Income or Loss

Financial Accounts

Section 164

Where it is not reasonably practicable to determine the Financial Accounting Net Income or...

Entity based on the accounting standard used in the preparation of Consolidated Financial Statements of the Ultimate Parent Entity, the Financial Accounting Net Income or Loss for the Constituent Entity for the Financial Year may be determined using another Acceptable Financial Accounting Standard or an Authorised Financial Accounting Standard if—

Paragraph
Paragraph

(a) the financial accounts of the Constituent Entity are maintained based on that accounting standard;

Paragraph
Paragraph

(b) the information contained in the financial accounts is reliable; and

Paragraph
Paragraph

(c) permanent differences in excess of one million euro that arise from the application of a particular principle or standard to items of income or expense or transactions that differs from the financial standard used in the preparation of the Consolidated Financial Statements of the Ultimate Parent Entity are conformed to the treatment required under the accounting standard used in the Consolidated Financial Statements of the Ultimate Parent Entity. Laws of Malaysia 72 Act 851 Adjustments to determine GloBE Income or Loss

Section 165

A Constituent Entity’s Financial Accounting Net

Income or Loss is adjusted for the following items to arrive at that Entity’s GloBE Income or Loss:

Paragraph
Paragraph

(a) Net Taxes Expense;

Paragraph
Paragraph

(b) Excluded Dividends;

Paragraph
Paragraph

(c) Excluded Equity Gain or Loss;

Paragraph
Paragraph

(d) Included Revaluation Method Gain or Loss;

Paragraph
Paragraph

(e) Gain or loss from disposition of assets and liabilities excluded under section 186;

Paragraph
Paragraph

(f) Asymmetric Foreign Currency Gains or Losses;

Paragraph
Paragraph

(g) Policy Disallowed Expenses;

Paragraph
Paragraph

(h) Prior Period Errors and Changes in Accounting Principles; and

Paragraph
Paragraph

(i) Accrued Pension Expense.

Subsection
Subsection

(2)  At the election of the Filing Constituent Entity, a Constituent Entity may substitute the amount allowed as a deduction in the computation of its taxable income in its location for the amount expensed in its financial accounts for a cost or expense of such Constituent Entity that was paid with stock-based compensation.

Subsection
Subsection

(3)  If the stock-based compensation expense arises in connection with an option that expires without exercise, the Constituent Entity shall include the total amount previously deducted in the computation of its GloBE Income or Loss for the Financial Year in which the option expires.

Subsection
Subsection

(4)  The election in subsection (2) is a Five-Year Election and shall be applied consistently to the stock-based compensation of all Constituent Entities located in the same jurisdiction for the year in which the election is made and all subsequent Financial Years. Finance (No. 2)

Subsection
Subsection

(5)  If the election is made in a Financial Year after some of the stock-based compensation of a transaction has been recorded in the financial accounts, the Constituent Entity shall include in the computation of its GloBE Income or Loss for that Financial Year an amount equal to the excess of the cumulative amount allowed as an expense in the computation of its GloBE Income or Loss in previous Financial Years over the cumulative amount that would have been allowed as an expense if the election had been in place in those Financial Years.

Subsection
Subsection

(6)  If the election is revoked, the Constituent Entity shall include in the computation of its GloBE Income or Loss for the revocation year the amount deducted pursuant to the election that exceeds financial accounting expense accrued in respect of the stock-based compensation that has not been paid.

Subsection
Subsection

(7)  Any transaction between Constituent Entities located in different jurisdictions that is not recorded in the same amount in the financial accounts of both Constituent Entities or that is not consistent with the Arm’s Length Principle shall be adjusted so as to be in the same amount and consistent with the Arm’s Length Principle.

Subsection
Subsection

(8)  A loss from a sale or other transfer of an asset between two Constituent Entities located in the same jurisdiction that is not recorded consistent with the Arm’s Length Principle shall be recomputed based on the Arm’s Length Principle if that loss is included in the computation of GloBE Income or Loss.

Subsection
Subsection

(9)  Rules for allocating income or loss between a Main Entity and its Permanent Establishments are as provided in section 167.

Subsection
Subsection

(10)  Qualified Refundable Tax Credits shall be treated as income in the computation of GloBE Income or Loss of a Constituent Entity.

Subsection
Subsection

(11)  Non-Qualified Refundable Tax Credits shall not be treated as income in the computation of GloBE Income or Loss of a Constituent Entity. Laws of Malaysia 74 Act 851

Subsection
Subsection

(12)  With respect to assets and liabilities that are subject to fair value or impairment accounting in the Consolidated Financial Statements, a Filing Constituent Entity may elect to determine gains and losses using the realisation principle for the purpose of computing GloBE Income.

Subsection
Subsection

(13)  The election in subsection (12) is a Five-Year Election and applies to—

Paragraph
Paragraph

(a) all Constituent Entities located in the jurisdiction to which the election applies; and

Paragraph
Paragraph

(b) all assets and liabilities of such Constituent Entities, unless the Filing Constituent Entity chooses to limit the election to tangible assets of such Constituent Entities or to Constituent Entities that are Investment Entities.

Subsection
Subsection

(14)  For the purposes of an election under subsection (12)—

Paragraph
Paragraph

(a) all gains or losses attributable to fair value or impairment accounting with respect to an asset or liability shall be excluded from the computation of GloBE Income or Loss;

Paragraph
Paragraph

(b) the carrying value of an asset or liability for the purpose of determining gain or loss shall be its carrying value adjusted for accumulated depreciation at the later of—

Paragraph
Paragraph

(i) the first day of the election year; or

Subparagraph
Subparagraph

(ii) the date the asset was acquired or liability was incurred.

Subsection
Subsection

(15)  If the election under subsection (12) is revoked, the GloBE Income or Loss of the Constituent Entities is adjusted by the difference at the beginning of the revocation year between the fair value of the asset or liability and the carrying value of the asset or liability determined pursuant to the election adjusted for accumulated depreciation. Finance (No. 2)

Subsection
Subsection

(16)  Where there is Aggregate Asset Gain in a jurisdiction in a Financial Year, the Filing Constituent Entity may make, under this subsection, an Annual Election for that jurisdiction to adjust GloBE Income or Loss with respect to each previous Financial Year in the Look-back Period in the manner described in paragraphs (18)(b) and (c) and shall spread any remaining Adjusted Asset Gain over the Look-back Period in the manner described in paragraphs (18)(d) and (e).

Subsection
Subsection

(17)  For the purposes of subsection (16) the Effective Tax Rate and Multinational Top-up Tax, if any, for any previous Financial Year must be re-calculated under subsection 181(1).

Subsection
Subsection

(18)  When an election is made under subsection (16)—

Paragraph
Paragraph

(a) Covered Taxes with respect to any Net Asset Gain or Net Asset Loss in the Election Year shall be excluded from the computation of Adjusted Covered Taxes;

Paragraph
Paragraph

(b) the Aggregate Asset Gain in the Election Year shall be carried-back to the earliest Loss Year and set-off rateably against any Net Asset Loss of any Constituent Entity located in that jurisdiction;

Paragraph
Paragraph

(c) if, for any Loss Year, the Adjusted Asset Gain exceeds the total amount of Net Asset Loss of all Constituent Entities located in that jurisdiction, the Adjusted Asset Gain shall be carried forward to the following Loss Year, if any, and applied rateably against any Net Asset Loss of any Constituent Entity located in that jurisdiction;

Paragraph
Paragraph

(d) any Adjusted Asset Gain that remains after the application of paragraphs (b) and (c) shall be allocated evenly to each Financial Year in the Look-back Period; Laws of Malaysia 76 Act 851

Paragraph
Paragraph

(e) the Allocated Asset Gain for the relevant year shall be included in the computation of GloBE Income or Loss for a Constituent Entity located in that jurisdiction in that year in accordance with the following formula: A x B C where A is the Allocated Asset Gain for the relevant year; B is the specified Constituent Entity’s Net Asset Gain in the Election Year; and C is the Net Asset Gain of all specified Constituent Entities in the Election Year.

Subsection
Subsection

(19)  If there is no specified Constituent Entity for a relevant year the Adjusted Asset Gain allocated to that year will be allocated equally to each Constituent Entity in the jurisdiction in that year.

Subsection
Subsection

(20)  The computation of a Low-Tax Entity’s GloBE Income or Loss shall exclude any expense attributable to an Intragroup Financing Arrangement that can reasonably be anticipated, over the expected duration of the arrangement to increase the amount of expenses taken into account in calculating the GloBE Income or Loss of the Low-Tax Entity without resulting in a commensurate increase in the taxable income of the High-Tax Counterparty.

Subsection
Subsection

(21)  An Ultimate Parent Entity may elect to apply its consolidated accounting treatment to eliminate income, expense, gains, and losses from transactions between Constituent Entities that are located, and included in a tax consolidation group, in the same jurisdiction for the purpose of computing each such Constituent Entity’s Net GloBE Income or Loss. Finance (No. 2)

Subsection
Subsection

(22)  The election under subsection (21) is a Five-Year Election and upon making or revoking such election, appropriate adjustments shall be made for the purposes of the GloBE Rules such that there shall not be duplications or omissions of items of GloBE Income or Loss as a result of having made or revoked the election.

Subsection
Subsection

(23)  An insurance company shall—

Paragraph
Paragraph

(a) exclude from the computation of GloBE Income or Loss amounts charged to policy holders for Taxes paid by the insurance company in respect of returns to the policy holders; and

Paragraph
Paragraph

(b) include in the computation of GloBE Income or Loss any returns to policy holders that are not reflected in Financial Accounting Net Income or Loss to the extent the corresponding increase or decrease in liability to the policy holders is reflected in its Financial Accounting Net Income or Loss.

Subsection
Subsection

(24)  Amounts recognised as—

Paragraph
Paragraph

(a) a decrease to the equity of a Constituent Entity attributable to distributions paid or payable in respect of Additional Tier One Capital or Restricted Tier One Capital issued by the Constituent Entity shall be treated as an expense in the computation of its GloBE Income or Loss; and

Paragraph
Paragraph

(b) an increase to the equity of a Constituent Entity attributable to distributions received or receivable in respect of Additional Tier One Capital or Restricted Tier One Capital held by the Constituent Entity shall be included in the computation of its GloBE Income or Loss.

Subsection
Subsection

(25)  A Constituent Entity’s Financial Accounting Net Income or Loss must be adjusted as necessary to reflect the requirements of the relevant provisions of Chapters 8 and 9 of this Part. Laws of Malaysia 78 Act 851

Subsection
Subsection

(26)  For the purposes of this section— “accounting functional currency” means the functional currency used to determine the Constituent Entity’s Financial Accounting Net Income or Loss; “Accrued Pension Expense” means the difference between the amount of pension liability expense included in the Financial Accounting Net Income or Loss and the amount contributed to a Pension Fund for the Financial Year; “Additional Tier One Capital” means an instrument issued by a Constituent Entity pursuant to prudential regulatory requirements applicable to the banking sector that is convertible to equity or written down if a pre-specified trigger event occurs and that has other features which are designed to aid loss absorbency in the event of a financial crisis; “Allocated Asset Gain” means the Adjusted Asset Gain that is allocated to a Financial Year in the Look-back Period, for the relevant year; “Arm’s Length Principle” means the principle under which transactions between Constituent Entities must be recorded by reference to the conditions that would have been obtained between independent enterprises in comparable transactions and under comparable circumstances; “Asymmetric Foreign Currency Gains or Losses” means foreign currency gains or losses of an entity whose accounting and tax functional currencies are different and that are—

Paragraph
Paragraph

(a) included in the computation of a Constituent Entity’s taxable income or loss and attributable to fluctuations in the exchange rate between its accounting functional currency and its tax functional currency;

Paragraph
Paragraph

(b) included in the computation of a Constituent Entity’s Financial Accounting Net Income or Loss and attributable to fluctuations in the exchange rate between its tax functional currency and its accounting functional currency; Finance (No. 2)

Paragraph
Paragraph

(c) included in the computation of a Constituent Entity’s Financial Accounting Net Income or Loss and attributable to fluctuations in the exchange rate between a third foreign currency and its accounting functional currency; and

Paragraph
Paragraph

(d) attributable to fluctuations in the exchange rate between a third foreign currency and its tax functional currency, whether or not such foreign currency gain or loss is included in taxable income; “Included Revaluation Method Gain or Loss” means the net gain or loss, increased or decreased by any associated Covered Taxes, for the Financial Year in respect of all property, plant and equipment that arises under an accounting method or practice that—

Paragraph
Paragraph

(a) periodically adjusts the carrying value of such property to its fair value;

Paragraph
Paragraph

(b) records the changes in value in Other Comprehensive Income; and

Paragraph
Paragraph

(c) does not subsequently report the gains or losses recorded in Other Comprehensive Income through profit and loss; “Low-Tax Entity” means a Constituent Entity located in a Low-Tax Jurisdiction or a jurisdiction that would be a Low-Tax Jurisdiction if the Effective Tax Rate for the jurisdiction were determined without regard to any income or expense accrued by that Entity in respect of an Intragroup Financing Arrangement; “Net Taxes Expense” means the net amount of—

Paragraph
Paragraph

(a) any Covered Taxes accrued as an expense and any current and deferred Covered Taxes included in the income tax expense, including Covered Taxes on income that is excluded from the GloBE Income or Loss computation;

Paragraph
Paragraph

(b) any deferred tax asset attributable to a loss for the Financial Year; Laws of Malaysia 80 Act 851

Paragraph
Paragraph

(c) any Qualified Domestic Top-up Tax accrued as an expense;

Paragraph
Paragraph

(d) any taxes arising pursuant to this Part accrued as an expense;

Paragraph
Paragraph

(e) any Disqualified Refundable Imputation Tax accrued as an expense; and

Paragraph
Paragraph

(f) taxes accrued by an insurance company in respect of returns to policyholders to the extent that subsection (23) applies in relation to those taxes; “Policy Disallowed Expenses” means—

Paragraph
Paragraph

(a) expenses accrued by the Constituent Entity for illegal payments, including bribes and kickbacks; and

Paragraph
Paragraph

(b) expenses accrued by the Constituent Entity for fines and penalties that equal or exceed fifty thousand euro or an equivalent in the functional currency in which the Constituent Entity’s Financial Accounting Net Income or Loss was calculated; “Prior Period Errors and Changes in Accounting Principles” means all changes in the opening equity at the beginning of the Financial Year of a Constituent Entity attributable to—

Paragraph
Paragraph

(a) a correction of an error in the determination of Financial Accounting Net Income in a previous Financial Year that affected the income or expenses includible in the computation of GloBE Income or Loss for such Financial Year, except to the extent such error correction resulted in a material decrease to a liability for Covered Taxes subject to section 173; or

Paragraph
Paragraph

(b) a change in accounting principle or policy that affects income or expenses includible in the computation of GloBE Income or Loss; Finance (No. 2) 81 “Restricted Tier One Capital” means an instrument issued by a Constituent Entity pursuant to prudential regulatory requirements applicable to the insurance sector that is convertible to equity or written down if a pre-specified trigger event occurs and that has other features which are designed to aid loss absorbency in the event of a financial crisis; “specified Constituent Entity” means a Constituent Entity that has Net Asset Gain in the Election Year and was located in the jurisdiction in the relevant year; “tax functional currency” means the functional currency used to determine the Constituent Entity’s taxable income or loss for a Covered Tax in the jurisdiction in which it is located; “third foreign currency” means a currency that is not the Constituent Entity’s tax functional currency or accounting functional currency. International Shipping Income exclusion

Section 166

For a Multinational Enterprise Group that has

International Shipping Income, each Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income shall be excluded from the computation of its GloBE Income or Loss under section 165 for the jurisdiction in which it is located.

Subsection
Subsection

(2)  Where the computation of a Constituent Entity’s International Shipping Income or Qualified Ancillary International Shipping Income results in a loss, the loss shall be excluded from the computation of its GloBE Income or Loss.

Subsection
Subsection

(3)  The aggregated Qualified Ancillary International Shipping Income of all Constituent Entities located in a jurisdiction shall not exceed fifty per cent of the International Shipping Income of those Constituent Entities. Laws of Malaysia 82 Act 851

Subsection
Subsection

(4)  The costs incurred by a Constituent Entity that are directly attributable to its international shipping activities listed in the definition of “International Shipping Income” and the costs directly attributable to its qualified ancillary activities listed in the definition of “Qualified Ancillary International Shipping Income” shall be deducted from the Constituent Entity’s revenues from such activities to compute its International Shipping Income and Qualified Ancillary International Shipping Income.

Subsection
Subsection

(5)  Other costs incurred by a Constituent Entity that are indirectly attributable to a Constituent Entity’s international shipping activities and qualified ancillary activities shall be allocated on the basis of the Constituent Entity’s revenues from such activities in proportion to its total revenues.

Subsection
Subsection

(6)  All direct and indirect costs attributed to a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income shall be excluded from the computation of its GloBE Income or Loss.

Subsection
Subsection

(7)  In order for a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income to qualify for the exclusion from its GloBE Income or Loss under this section, the Constituent Entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from within the jurisdiction where the Constituent Entity is located. Allocation of Income or Loss between a Main Entity and a Permanent Establishment

Section 167

The Financial Accounting Net Income or Loss of

Constituent Entity that is a Permanent Establishment in accordance with paragraphs 157(1)(a) to (c) of the definition of “Permanent Establishment” is the net income or loss reflected in the separate financial accounts of the Permanent Establishment. Finance (No. 2)

Subsection
Subsection

(2)  If the Permanent Establishment does not have separate financial accounts, then the Financial Accounting Net Income or Loss is the amount that would have been reflected in its separate financial accounts if prepared on a stand alone basis and in accordance with the accounting standard used in the preparation of the Consolidated Financial Accounts of the Ultimate Parent Entity.

Subsection
Subsection

(3)  The Financial Accounting Net Income or Loss of a Permanent Establishment referred to in subsections (1) and (2) shall be adjusted, if necessary—

Paragraph
Paragraph

(a) in the case of a Permanent Establishment as defined in paragraphs 157(1)(a) and (b) of the definition of “Permanent Establishment”, to reflect only the amounts and items of income and expense that are attributable to the Permanent Establishment in accordance with the applicable Tax Treaty or domestic law of the jurisdiction where it is located regardless of the amount of income subject to tax and the amount of deductible expenses in that jurisdiction; or

Paragraph
Paragraph

(b) in the case of a Permanent Establishment as defined in paragraph 157(1)(c) of the definition of “Permanent Establishment”, to reflect only the amounts and items of income and expense that would have been attributed to it in accordance with Article 7 of the OECD Model Tax Convention.

Subsection
Subsection

(4)  In the case of a Constituent Entity that is a Permanent Establishment in accordance with paragraph 157(1)(d) of the definition of “Permanent Establishment”—

Paragraph
Paragraph

(a) its income used for computing Financial Accounting Net Income or Loss is the income being exempted in the jurisdiction where the Main Entity is located and attributable to the operations conducted outside that jurisdiction; and

Paragraph
Paragraph

(b) its expenses used for computing Financial Accounting Net Income or Loss are those that are not deducted for taxable purposes in the jurisdiction where the Main Entity is located and that are attributable to such operations. Laws of Malaysia 84 Act 851

Subsection
Subsection

(5)  The Financial Accounting Net Income or Loss of a Permanent Establishment is not taken into account in determining the GloBE Income or Loss of the Main Entity, except as provided in subsections (6) and (7).

Subsection
Subsection

(6)  A GloBE Loss of a Permanent Establishment shall be treated as an expense of the Main Entity and not of the Permanent Establishment for the purpose of computing its GloBE Income or Loss to the extent that the loss of the Permanent Establishment is treated as an expense in the computation of the domestic taxable income of such Main Entity and is not set off against an item of income that is subject to tax under the laws of both the jurisdiction of the Main Entity and the jurisdiction of the Permanent Establishment.

Subsection
Subsection

(7)  GloBE Income subsequently arising in the Permanent Establishment shall be treated as GloBE Income of the Main Entity and not the Permanent Establishment up to the amount of the GloBE Loss that previously was treated as an expense for the purpose of computing the GloBE Income or Loss of the Main Entity. Allocation of Income or Loss from a Flow-through Entity

Section 168

The Financial Accounting Net Income or Loss of a Constituent Entity that is a Flow-through...

No text is available for this node.

Paragraph
Paragraph

(a) in the case of a Permanent Establishment through which the business of the Entity is wholly or partly carried out, the Financial Accounting Net Income or Loss of the Entity is allocated to that Permanent Establishment in accordance with section 167;

Paragraph
Paragraph

(b) in the case of a Tax Transparent Entity that is not the Ultimate Parent Entity, any Financial Accounting Net Income or Loss remaining after application of paragraph (a) is allocated to its Constituent Entity-owners in accordance with their Ownership Interests; and Finance (No. 2)

Paragraph
Paragraph

(c) in the case of a Tax Transparent Entity that is the Ultimate Parent Entity or a Reverse Hybrid Entity, any Financial Accounting Net Income or Loss remaining after application of paragraph (a) is allocated to it.

Subsection
Subsection

(2)  Subsection (1) shall be applied separately with respect to each Ownership Interest in the Flow-through Entity.

Subsection
Subsection

(3)  Prior to the application of subsection (1), the Financial Accounting Net Income or Loss of a Flow-through Entity shall be reduced by the amount allocable to its owners that are not Group Entities and that hold their Ownership Interest in the Flow-through Entity directly or through a Tax Transparent Structure.

Subsection
Subsection

(4)  Subsection (3) does not apply to—

Paragraph
Paragraph

(a) an Ultimate Parent Entity that is a Flow-through Entity; or

Paragraph
Paragraph

(b) any Flow-through Entity owned by such an Ultimate Parent Entity directly or through a Tax Transparent Structure.

Subsection
Subsection

(5)  The Financial Accounting Net Income or Loss of a Flow-through Entity is reduced by the amount that is allocated to another Constituent Entity.

Chapter

Chapter 6

Text

Computation of Adjusted Covered Taxes

Adjusted Covered Taxes

Section 169

The Adjusted Covered Taxes of a Constituent

Entity for the Financial Year shall be equal to the current tax expense accrued in its Financial Accounting Net Income or Loss with respect to Covered Taxes for the Financial Year adjusted by—

Paragraph
Paragraph

(a) the net amount of its Additions to Covered Taxes for the Financial Year and Reductions to Covered Taxes for the Financial Year; Laws of Malaysia 86 Act 851

Paragraph
Paragraph

(b) the Total Deferred Tax Adjustment Amount as determined under section 171; and

Paragraph
Paragraph

(c) any increase or decrease in Covered Taxes recorded in equity or Other Comprehensive Income relating to amounts included in the computation of GloBE Income or Loss that will be subject to tax under local tax rules.

Subsection
Subsection

(2)  No amount of Covered Taxes may be taken into account more than once.

Subsection
Subsection

(3)  In a Financial Year in which there is no Net GloBE Income for a jurisdiction, if the Adjusted Covered Taxes for a jurisdiction are less than zero and less than the Expected Adjusted Covered Taxes Amount the Constituent Entities in that jurisdiction shall be treated as having Additional Current Multinational Top-up Tax for the jurisdiction under section 181 arising in the current Financial Year equal to the difference between these amounts.

Subsection
Subsection

(4)  For the purposes of subsection (3) the Expected Adjusted Covered Taxes Amount is equal to the GloBE Income or Loss for a jurisdiction multiplied by the Minimum Rate.

Subsection
Subsection

(5)  For the purposes of paragraph 1(a), “Additions to Covered Taxes” means the sum of—

Paragraph
Paragraph

(a) any amount of Covered Taxes of a Constituent Entity for the Financial Year accrued as an expense in the profit before taxation in the financial accounts;

Paragraph
Paragraph

(b) any amount of GloBE Loss Deferred Tax Asset of a Constituent Entity for the Financial Year used under subsection 172(6);

Paragraph
Paragraph

(c) any amount of Covered Taxes of a Constituent Entity for the Financial Year that is paid in the Financial Year and that relates to an uncertain tax position where that amount has been treated for a previous Financial Year as a Reduction to Covered Taxes under paragraph (6)(d) of the definition of “Reductions to Covered Taxes”; and Finance (No. 2)

Paragraph
Paragraph

(d) any amount of credit or refund of a Constituent Entity for the Financial Year in respect of a Qualified Refundable Tax Credit that is recorded as a reduction to the current tax expense.

Subsection
Subsection

(6)  In this section, “Reductions to Covered Taxes” means the sum of—

Paragraph
Paragraph

(a) the amount of current tax expense with respect to income excluded from the computation of GloBE Income or Loss under Chapter 5 of this Part;

Paragraph
Paragraph

(b) any amount of credit or refund in respect of a Non-Qualified Refundable Tax Credit that is not recorded as a reduction to the current tax expense;

Paragraph
Paragraph

(c) any amount of Covered Taxes refunded or credited, except for any Qualified Refundable Tax Credit, to a Constituent Entity that was not treated as an adjustment to current tax expense in the financial accounts;

Paragraph
Paragraph

(d) the amount of current tax expense which relates to an uncertain tax position; and

Paragraph
Paragraph

(e) any amount of current tax expense that is not expected to be paid within three years of the last day of the Financial Year. Allocation of Covered Taxes from one Constituent Entity to another Constituent Entity

Section 170

The Covered Taxes are allocated from one Constituent

Entity to another Constituent Entity in the following manner:

Paragraph
Paragraph

(a) the amount of any Covered Taxes included in the financial accounts of a Constituent Entity with respect to GloBE Income or Loss of a Permanent Establishment is allocated to the Permanent Establishment; Laws of Malaysia 88 Act 851

Paragraph
Paragraph

(b) the amount of any Covered Taxes included in the financial accounts of a Tax Transparent Entity with respect to GloBE Income or Loss allocated to a Constituent Entity-owner pursuant to paragraph 168(1)(b) is allocated to that Constituent Entity-owner;

Paragraph
Paragraph

(c) in the case of a Constituent Entity whose Constituent Entity-owners are subject to a Controlled Foreign Company Tax Regime, the amount of any Covered Taxes included in the financial accounts of its direct or indirect Constituent Entity-owners under a Controlled Foreign Company Tax Regime on their share of the controlled foreign company’s income are allocated to the Constituent Entity;

Paragraph
Paragraph

(d) in the case of a Constituent Entity that is a Hybrid Entity, the amount of any Covered Taxes included in the financial accounts of a Constituent Entity-owner on income of the Hybrid Entity is allocated to the Hybrid Entity; and

Paragraph
Paragraph

(e) the amount of any Covered Taxes accrued in the financial accounts of a Constituent Entity’s direct Constituent Entity-owners on distributions from the Constituent Entity during the Financial Year are allocated to the distributing Constituent Entity.

Subsection
Subsection

(2)  The Covered Taxes allocated to a Constituent Entity pursuant to paragraphs (1)(c) and (d) in respect of Passive Income are included in such Constituent Entity’s Adjusted Covered Taxes in an amount equal to the lesser of—

Paragraph
Paragraph

(a) the Covered Taxes allocated in respect of such Passive Income; or

Paragraph
Paragraph

(b) the Multinational Top-up Tax Percentage for the Constituent Entity’s jurisdiction, determined without regard to the Covered Taxes incurred with respect to such Passive Income by the Constituent Entity-owner, multiplied by the amount of the Constituent Entity’s Passive Income that can be included under any Controlled Foreign Company Tax Regime or fiscal transparency rule. Finance (No. 2)

Subsection
Subsection

(3)  Any Covered Taxes of the Constituent Entity-owner incurred with respect to such Passive Income that remain after the application of subsection (2) shall not be allocated under paragraph (1)(c) or (d).

Subsection
Subsection

(4)  Where the GloBE Income of a Permanent Establishment is treated as GloBE Income of the Main Entity pursuant to subsections 167(6) and (7), any Covered Taxes arising in the location of the Permanent Establishment and associated with such income are treated as Covered Taxes of the Main Entity up to an amount not exceeding such income multiplied by the highest corporate tax rate on ordinary income in the jurisdiction where the Main Entity is located.

Subsection
Subsection

(5)  For the purposes of this section, “Passive Income” means income included in GloBE Income that is—

Paragraph
Paragraph

(a) a dividend or dividend equivalents;

Paragraph
Paragraph

(b) interest or interest equivalent;

Paragraph
Paragraph

(c) rent;

Paragraph
Paragraph

(d) royalty;

Paragraph
Paragraph

(e) annuity; or

Paragraph
Paragraph

(f) net gains from property of a type that produces income described in paragraphs (a) to (e), but only to the extent a Constituent Entity-owner is subject to tax on such income under a Controlled Foreign Company Tax Regime or as a result of an Ownership Interest in a Hybrid Entity. Mechanism to address temporary differences

Section 171

The Total Deferred Tax Adjustment Amount for a Constituent Entity for the Financial Year is...

Laws of Malaysia 90 Act 851 other case, such deferred tax expense recast at the Minimum Rate, with respect to Covered Taxes for the Financial Year subject to the adjustments provided in subsections (2) and (3) and excluding—

Paragraph
Paragraph

(a) the amount of deferred tax expense with respect to items excluded from the computation of GloBE Income or Loss under Chapter 5 of this Part;

Paragraph
Paragraph

(b) the amount of deferred tax expense with respect to Disallowed Accruals and Unclaimed Accruals;

Paragraph
Paragraph

(c) the impact of a valuation adjustment or accounting recognition adjustment with respect to a deferred tax asset;

Paragraph
Paragraph

(d) the amount of deferred tax expense arising from a re-measurement with respect to a change in the applicable domestic tax rate; and

Paragraph
Paragraph

(e) the amount of deferred tax expense with respect to the generation and use of tax credits.

Subsection
Subsection

(2)  The Total Deferred Tax Adjustment Amount is adjusted by—

Paragraph
Paragraph

(a) increasing it by the amount of any Disallowed Accrual or Unclaimed Accrual paid during the Financial Year;

Paragraph
Paragraph

(b) increasing it by the amount of any Recaptured Deferred Tax Liability determined in a preceding Financial Year which has been paid during the Financial Year; and

Paragraph
Paragraph

(c) reducing it by the amount that would be a reduction to the Total Deferred Tax Adjustment Amount due to recognition of a loss deferred tax asset for a current year tax loss, where a loss deferred tax asset has not been recognised because the recognition criteria are not met. Finance (No. 2)

Subsection
Subsection

(3)  A deferred tax asset that has been recorded at a rate lower than the Minimum Rate may be recast at the Minimum Rate in the Financial Year such deferred tax asset becomes a GloBE Loss, if the taxpayer can demonstrate that the deferred tax asset is attributable to a GloBE Loss and the Total Deferred Tax Adjustment Amount in subsection (2) is reduced by the amount that a deferred tax asset is increased due to being recast under this subsection.

Subsection
Subsection

(4)  To the extent a deferred tax liability, that is not a Recapture Exception Accrual, is taken into account under this section and such amount is not paid within the five subsequent Financial Years, the amount must be recaptured pursuant to this section.

Subsection
Subsection

(5)  The Amount of the Recaptured Deferred Tax Liability determined for the current Financial Year shall be treated as a reduction to Covered Taxes in the fifth preceding Financial Year and the Effective Tax Rate and Multinational Top-up Tax of such Financial Year shall be recalculated under the rules of subsection 181(1).

Subsection
Subsection

(6)  The Recaptured Deferred Tax Liability for the current Financial Year is the amount of the increase in a category of deferred tax liability that was included in the Total Deferred Tax Adjustment Amount in the fifth preceding Financial Year that has not reversed by the end of the last day of the current Financial Year, unless such amount relates to a Recapture Exception Accrual.

Subsection
Subsection

(7)  For the purposes of this section— “Disallowed Accrual” means—

Paragraph
Paragraph

(a) any movement in deferred tax expense accrued in the financial accounts of a Constituent Entity which relates to an uncertain tax position; and

Paragraph
Paragraph

(b) any movement in deferred tax expense accrued in the financial accounts of a Constituent Entity which relates to distributions from a Constituent Entity; Laws of Malaysia 92 Act 851 “Recapture Exception Accrual” means the tax expense accrued attributable to changes in associated deferred tax liabilities, in respect of—

Paragraph
Paragraph

(a) cost recovery allowances on tangible assets;

Paragraph
Paragraph

(b) the cost of a licence or similar arrangement from the government for the use of immovable property or exploitation of natural resources that entails significant investment in tangible assets;

Paragraph
Paragraph

(c) research and development expenses;

Paragraph
Paragraph

(d) de-commissioning and remediation expenses;

Paragraph
Paragraph

(e) fair value accounting on unrealised net gains;

Paragraph
Paragraph

(f) foreign currency exchange net gains;

Paragraph
Paragraph

(g) insurance reserves and insurance policy deferred acquisition costs;

Paragraph
Paragraph

(h) gains from the sale of tangible property located in the same jurisdiction as the Constituent Entity that are reinvested in tangible property in the same jurisdiction; and

Paragraph
Paragraph

(i) additional amounts accrued as a result of accounting principle changes with respect to categories under paragraphs (a) to (h); “Unclaimed Accrual” means any increase in a deferred tax liability recorded in the financial accounts of a Constituent Entity for a Financial Year that is not expected to be paid within the time period set forth in subsections (4) to (6) and for which the Filing Constituent Entity makes an Annual Election not to include in Total Deferred Tax Adjustment Amount for such Financial Year. Finance (No. 2) 93 The GloBE Loss Election

Section 172

A Filing Constituent Entity may make a GloBE

Loss Election for a jurisdiction in lieu of applying the rules provided under section 171.

Subsection
Subsection

(2)  Where a GloBE Loss Election is made for a jurisdiction, a GloBE Loss Deferred Tax Asset is established in each Financial Year in which there is a Net GloBE Loss for the jurisdiction.

Subsection
Subsection

(3)  The Net GloBE Loss of a jurisdiction is the nil or negative amount, if any, computed in accordance with the following formula: A - B where A is the GloBE Income of all Constituent Entities; and B is the GloBE Losses of all Constituent Entities.

Subsection
Subsection

(4)  The GloBE Loss Deferred Tax Asset is an amount equal to the Net GloBE Loss in a Financial Year for the jurisdiction multiplied by the Minimum Rate.

Subsection
Subsection

(5)  The balance of the GloBE Loss Deferred Tax Asset is carried forward to subsequent Financial Years, reduced by the amount of GloBE Loss Deferred Tax Asset used in a Financial Year.

Subsection
Subsection

(6)  The GloBE Loss Deferred Tax Asset must be used in any subsequent Financial Year in which there is Net GloBE Income for the jurisdiction in an amount equal to the lower of the Net GloBE Income multiplied by the Minimum Rate or the amount of available GloBE Loss Deferred Tax Asset. Laws of Malaysia 94 Act 851

Subsection
Subsection

(7)  Where the GloBE Loss Election is subsequently revoked, any remaining GloBE Loss Deferred Tax Asset is reduced to zero, effective as of the first day of the first Financial Year in which the GloBE Loss Election is no longer applicable and subsequently, the deferred tax assets and liabilities for the jurisdiction, if any, will be taken into account as if they had been calculated under sections 171 and 196 for the prior Financial Year.

Subsection
Subsection

(8)  The GloBE Loss Election must be filed with the first information return of the Multinational Enterprise Group for the first Financial Year in which the Multinational Enterprise Group has a Constituent Entity located in the jurisdiction for which the election is made.

Subsection
Subsection

(9)  GloBE Loss Election shall not be made for a jurisdiction with an Eligible Distribution Tax System under section 191.

Subsection
Subsection

(10)  A Flow-through Entity that is an Ultimate Parent Entity of a Multinational Enterprise Group may make a GloBE Loss Election under this section and when such an election is made, the GloBE Loss Deferred Tax Asset shall be calculated in accordance with subsections (1) to (9).

Subsection
Subsection

(11)  Notwithstanding subsection (10), the GloBE Loss Deferred Tax Asset shall be calculated with reference to the GloBE Loss of the Flow-through Entity after reduction in accordance with subsection 189(2). Post-filing Adjustments and Tax Rate Changes

Section 173

An adjustment to a Constituent Entity’s liability for

Covered Taxes for a previous Financial Year recorded in the financial accounts shall be treated as an adjustment to Covered Taxes in the Financial Year in which the adjustment is made, unless the adjustment relates to a Financial Year in which there is a decrease in Covered Taxes for the jurisdiction.

Subsection
Subsection

(2)  In the case of a decrease in Covered Taxes included in the Constituent Entity’s Adjusted Covered Taxes for a previous Financial Year, the Effective Tax Rate and Multinational Top-up Tax for such Financial Year shall be recalculated under subsection 181(1). Finance (No. 2)

Subsection
Subsection

(3)  Subject to the recalculations provided under subsection 181(1), the Adjusted Covered Taxes determined for the Financial Year shall be reduced by the amount of the decrease in Covered Taxes and GloBE Income determined for the Financial Year and any intervening Financial Years shall be adjusted as necessary and appropriate.

Subsection
Subsection

(4)  A Filing Constituent Entity may make an Annual Election to treat an immaterial decrease in Covered Taxes as an adjustment to Covered Taxes in the Financial Year in which the adjustment is made.

Subsection
Subsection

(5)  An immaterial decrease in Covered Taxes is an aggregate decrease of less than one million euro in the Adjusted Covered Taxes determined for the jurisdiction for a Financial Year.

Subsection
Subsection

(6)  The amount of deferred tax expense resulting from a reduction to the applicable domestic tax rate shall be treated as an adjustment to a Constituent Entity’s liability for Covered Taxes claimed under section 169 for a previous Financial Year when such reduction results in the application of a rate that is less than the Minimum Rate.

Subsection
Subsection

(7)  The amount of deferred tax expense, when paid, that has resulted from an increase to the applicable domestic tax rate shall be treated as an adjustment under subsections (1) to (5) to a Constituent Entity’s liability for Covered Taxes claimed under section 169 for a previous Financial Year when such amount was originally recorded at a rate less than the Minimum Rate.

Subsection
Subsection

(8)  The adjustment under subsection (7) is limited to an amount that is equal to an increase of deferred tax expense up to such deferred tax expense recast at the Minimum Rate.

Subsection
Subsection

(9)  Where more than one million euro of the amount accrued by a Constituent Entity as current tax expense and included in Adjusted Covered Taxes for a Financial Year is not paid within three years of the last day of such year, the Effective Tax Rate and Multinational Top-up Tax for the Financial Year in which the unpaid amount was claimed as a Covered Tax must be recalculated in accordance with subsection 181(1) by excluding such unpaid amount from Adjusted Covered Taxes. Laws of Malaysia 96 Act 851

Chapter

Chapter 7

Text

Computation of Effective Tax Rate and Top-up Tax

Determination of Effective Tax Rate

Section 174

The Effective Tax Rate of the Multinational Enterprise

Group for a jurisdiction with Net GloBE Income shall be calculated for each Financial Year.

Subsection
Subsection

(2)  The Effective Tax Rate of the Multinational Enterprise Group for a jurisdiction is an amount determined in accordance with the following formula: A B where A is the sum of the Adjusted Covered Taxes of each Constituent Entity located in the jurisdiction for the Financial Year; and B is the Net GloBE Income of the jurisdiction for the Financial Year.

Subsection
Subsection

(3)  For the purposes of this Chapter, each Stateless Constituent Entity shall be treated as a single Constituent Entity located in a separate jurisdiction.

Subsection
Subsection

(4)  The Net GloBE Income of a jurisdiction for a Financial Year is the positive amount, if any, computed in accordance with the following formula: A – B where A is the GloBE Income of all Constituent Entities, being the sum of the GloBE Income of all Constituent Entities located in the jurisdiction determined in accordance with Chapter 5 of this Part for the Financial Year; and Finance (No. 2) 97 B is the GloBE Losses of all Constituent Entities, being the sum of the GloBE Losses of all Constituent Entities located in the jurisdiction determined in accordance with

Chapter

Chapter 5 of this Part for the Financial Year.

Subsection
Subsection

(5)  The adjusted Covered Taxes and GloBE Income or Loss of Constituent Entities that are Investment Entities and Insurance Investment Entities are excluded from the determination of the Effective Tax Rate in subsections (1) to (3) and the determination of Net GloBE Income in subsection (4). Multinational Top-up Tax Percentage

Section 175

Multinational Top-up Tax Percentage for a jurisdiction for a Financial Year shall be the po...

A – B where A is the Minimum Rate; and B is the Effective Tax Rate determined in accordance with section 174 for the jurisdiction for the Financial Year. Excess Profit

Section 176

The Excess Profit for the jurisdiction for the Financial

Year is the positive amount, if any, computed in accordance with the following formula: A – B where A is the Net GloBE Income as determined under subsection 174(4) for the jurisdiction for the Financial Year; and B is the Substance-based Income Exclusion as determined under section 180 for the jurisdiction for the Financial Year, if any. Laws of Malaysia 98 Act 851

Subsection
Subsection

(2)  Notwithstanding subsection (1), for the purposes of Domestic Top-up Tax, Excess Profits may be computed based on an Acceptable Financial Accounting Standard permitted by an Authorised Accounting Body or an Authorised Financial Accounting Standard adjusted to prevent any Material Competitive Distortions, rather than the financial accounting standard used in the Consolidated Financial Statements. Jurisdictional Top-up Tax

Section 177

For the purposes of a Multinational Top-up Tax, the Jurisdictional Top-up Tax for a jurisdi...

Year is equal to the positive amount, if any, computed in accordance with the following formula: (A x B) + C – D where A is the Top-up Tax Percentage, being percentage point difference determined in accordance with section 175 for the jurisdiction for the Financial Year; B is the Excess Profit as determined in accordance with section 176 for the jurisdiction for the Financial Year; C is the Additional Current Multinational Top-up Tax, being the amount determined, or treated as Additional Current Multinational Top-up Tax, under subsection 169(3) or 181(1) for the jurisdiction for the Financial Year; and D is the Domestic Top-up Tax, being the amount payable under a Qualified Domestic Top-up Tax of the jurisdiction for the Financial Year. Finance (No. 2)

Subsection
Subsection

(2)  Notwithstanding subsection (1), for the purposes of Domestic Top-up Tax, the Jurisdictional Top-up Tax for a jurisdiction for a Financial Year is equal to the positive amount, if any, computed in accordance with the following formula: (A x B) + C where A is the Top-up Tax Percentage, being percentage point difference determined in accordance with section 175 for the jurisdiction for the Financial Year; B is the Excess Profit as determined in accordance with section 176 for the jurisdiction for the Financial Year; and C is the Additional Current Multinational Top-up Tax, being the amount determined, or treated as Additional Current Multinational Top-up Tax, under subsections 169(3) to (4) or subsection 181(1) for the jurisdiction for the Financial Year. Multinational Top-up Tax of a Constituent Entity

Section 178

Except as provided in subsections 181(3) to (5), the

Multinational Top-up Tax of a Constituent Entity shall be determined for each Constituent Entity of a jurisdiction that has GloBE Income determined in accordance with Chapter 5 of this Part for the Financial Year included in the computation of Net GloBE Income of that jurisdiction in accordance with the following formula: A x B C where A is the jurisdictional Top-up Tax as determined in accordance with subsection 177(1) or (2), as the case may be, for the jurisdiction for the Financial Year; Laws of Malaysia 100 Act 851 B is the GloBE Income of the Constituent Entity, being the GloBE Income of the Constituent Entity determined in accordance with section 165 for the jurisdiction for the Financial Year; and C is the aggregate GloBE Income of all Constituent Entities that have GloBE Income for the Financial Year included in the computation of Net GloBE Income in accordance with subsection 174(4) for the jurisdiction for the Financial Year. Allocation of tax for jurisdiction with no Net GloBE Income

Section 179

Where the jurisdictional Multinational Top-up Tax is attributable to a recalculation under...

Financial Year, Multinational Top-up Tax shall be allocated using the formula in section 178 based on the GloBE Income of the Constituent Entities in the Financial Years for which the recalculations under subsection 181(1) were made. Substance-based Income Exclusion

Section 180

The Net GloBE Income for the jurisdiction shall be reduced by the Substance-based Income Ex...

No text is available for this node.

Subsection
Subsection

(2)  A Filing Constituent Entity of a Multinational Enterprise Group may make an Annual Election not to apply the Substance-based Income Exclusion for a jurisdiction by not computing the exclusion or claiming it in the computation of Multinational Top-up Tax for the jurisdiction in the information return filed for the Financial Year. Finance (No. 2)

Subsection
Subsection

(3)  The Substance-based Income Exclusion amount for a jurisdiction is the sum of the payroll carve-out and the tangible asset carve-out for each Constituent Entity, except for Constituent Entities that are Investment Entities, in that jurisdiction.

Subsection
Subsection

(4)  The payroll carve-out for a Constituent Entity located in a jurisdiction is equal to five per cent of its Eligible Payroll Costs of Eligible Employees that perform activities for the Multinational Enterprise Group in such jurisdiction, except Eligible Payroll costs that are—

Paragraph
Paragraph

(a) capitalised and included in the carrying value of Eligible Tangible Assets;

Paragraph
Paragraph

(b) attributable to a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income under subsections 166(4) to (6) that is excluded from the computation of GloBE Income or Loss for the Financial Year.

Subsection
Subsection

(5)  The tangible asset carve-out for a Constituent Entity located in a jurisdiction is equal to five per cent of the carrying value of Eligible Tangible Assets located in such jurisdiction.

Subsection
Subsection

(6)  For this purpose, the tangible asset carve-out computation shall not include the carrying value of property including land or buildings that is held for sale, lease or investment.

Subsection
Subsection

(7)  The tangible asset carve-out computation shall not include the carrying value of tangible assets used in the generation of a Constituent Entity’s International Shipping Income and Qualified Ancillary International Shipping Income such as ships and other maritime equipment and infrastructure.

Subsection
Subsection

(8)  The carrying value of tangible assets attributable to a Constituent Entity’s excess income over the limit for Qualified Ancillary International Shipping Income under subsection 166(3) shall be included in the tangible asset carve-out computation. Laws of Malaysia 102 Act 851

Subsection
Subsection

(9)  The computation of carrying value of Eligible Tangible Assets for the purposes of subsections (5) to (8) shall be based on the average of the carrying value after deducting any accumulated depreciation, amortisation, or depletion and including any amount attributable to capitalisation of payroll expense at the beginning and ending of the Reporting Financial Year as recorded for the purpose of preparing the Consolidated Financial Statements of the Ultimate Parent Entity.

Subsection
Subsection

(10)  For the purposes of subsections (4) to (8), the Eligible Payroll Costs and Eligible Tangible Assets of a Constituent Entity that is a Permanent Establishment are those included in its separate financial accounts as determined by subsections 167(1) and (2) and adjusted in accordance with subsection 167(3), provided that the Eligible Employees and Eligible Tangible Assets are located in the jurisdiction where the Permanent Establishment is located.

Subsection
Subsection

(11)  The Eligible Payroll Costs and Eligible Tangible Assets of a Permanent Establishment are not taken into account for the Eligible Payroll Costs and Eligible Tangible Assets of the Main Entity.

Subsection
Subsection

(12)  The Eligible Payroll Costs and Eligible Tangible Assets of a Permanent Establishment whose income has been wholly or partly excluded in accordance with subsections 168(3) and 189(4) are excluded from the Substance-based Income Exclusion computations of the Multinational Enterprise Group in the same proportion.

Subsection
Subsection

(13)  For the purposes of subsections (4) to (8), Eligible Payroll Costs and Eligible Tangible Assets of a Flow-through Entity that are not allocated under subsections (10) to (12) are allocated in the following manner:

Paragraph
Paragraph

(a) if the Financial Accounting Net Income or Loss of the Flow-through Entity has been allocated to the Constituent Entity-owner under paragraph 168(1)(b), then the Entity’s Eligible Payroll Costs and Eligible Tangible Assets are allocated in the same proportion to the Constituent Entity-owner provided it is located in the jurisdiction where the Eligible Employees and Eligible Tangible Assets are located; Finance (No. 2)

Paragraph
Paragraph

(b) if the Flow-through Entity is the Ultimate Parent Entity, then Eligible Payroll Costs and Eligible Tangible Assets located in the jurisdiction where the Ultimate Parent Entity is located are allocated to it and reduced in proportion to the income that is excluded under subsection 189(1); and

Paragraph
Paragraph

(c) all other Eligible Payroll Costs and Eligible Tangible Assets of the Flow-through Entity are excluded from the Substance-based Income Exclusion computations of the Multinational Enterprise Group. Additional Current Multinational Top-up Tax

Section 181

If the Effective Tax Rate and Multinational Top-up

Tax for a prior Financial Year is required or permitted to be recalculated pursuant to the Effective Tax Rate Adjustment Provisions—

Paragraph
Paragraph

(a) the Effective Tax Rate and Multinational Top-up Tax for the prior Financial Year shall be recalculated in accordance with the rules of sections 174 to 180 after taking into account the adjustments to Adjusted Covered Taxes and GloBE Income or Loss required by the relevant Effective Tax Rate Adjustment Provisions; and

Paragraph
Paragraph

(b) any amount of incremental Multinational Top-up Tax resulting from such recalculation shall be treated as Additional Current Multinational Top-up Tax under section 177 arising in the current Financial Year.

Subsection
Subsection

(2)  If there is Additional Current Multinational Top-up Tax attributable to a recalculation under subsection (1) and the jurisdiction does not have Net GloBE Income for the current Financial Year, the GloBE Income of each Constituent Entity located in the jurisdiction for the purposes of subsection 162(2) shall be equal to the result of the Multinational Top-up Tax allocated to such Entity under sections 178 and 179 divided by the Minimum Rate. Laws of Malaysia 104 Act 851

Subsection
Subsection

(3)  If there is Additional Current Multinational Top-up Tax attributable to the operation of subsections 169(3) and (4), the GloBE Income of each Constituent Entity located in the jurisdiction for the purposes of subsection 162(2) shall be equal to the result of the Multinational Top-up Tax allocated to such Entity under this paragraph divided by the Minimum Rate.

Subsection
Subsection

(4)  The amount of Additional Current Multinational Top-up Tax allocated to each Constituent Entity for the purposes of this section shall be allocated only to Constituent Entities that record an Adjusted Covered Taxes amount that is less than zero and less than the GloBE Income or Loss of such Constituent Entity multiplied by the Minimum Rate.

Subsection
Subsection

(5)  The allocation shall be made pro rata based upon an amount determined for each of those Constituent Entities according to the following formula: (A x B) – C where A is the GloBE Income or Loss; B is the Minimum Rate; and C is the Adjusted Covered Taxes.

Subsection
Subsection

(6)  If a Constituent Entity is allocated Additional Current Multinational Top-up Tax pursuant to this section and section 178, such Constituent Entity shall be treated as a Low-Taxed Constituent Entity for the purposes of

Chapter

Chapter 4 of this Part.

Subsection
Subsection

(7)  For the purposes of this section, “Effective Tax Rate Adjustment Provisions” means the adjustment provisions under—

Paragraph
Paragraph

(a) subsections 165(16) to (19);

Paragraph
Paragraph

(b) subsections 171(4) to (6);

Paragraph
Paragraph

(c) subsections 173(1) to (5) and (9); and

Paragraph
Paragraph

(d) section 191. Finance (No. 2) 105 De minimis exclusion

Section 182

Notwithstanding the requirements provided in this

Chapter, at the election of the Filing Constituent Entity, the Multinational Top-up Tax for the Constituent Entities located in a jurisdiction shall be deemed to be zero for a Financial Year if for such Financial Year—

Paragraph
Paragraph

(a) the Average GloBE Revenue of such jurisdiction is less than ten million euro; and

Paragraph
Paragraph

(b) the Average GloBE Income or Loss of such jurisdiction is a loss or is less than one million euro.

Subsection
Subsection

(2)  The election under subsection (1) is an Annual Election.

Subsection
Subsection

(3)  If there were no Constituent Entities with GloBE Revenue or GloBE Losses that were located in the jurisdiction in the first or second preceding Financial Year, such year or years shall be excluded from the calculation of the Average GloBE Revenue and the Average GloBE Income or Loss of the relevant jurisdiction.

Subsection
Subsection

(4)  For the purposes of subsection (3)—

Paragraph
Paragraph

(a) the GloBE Revenue of a jurisdiction for a Financial Year is the sum of the revenue of all Constituent Entities located in the jurisdiction for such Financial Year, taking into account the adjustments calculated in accordance with Chapter 5 of this Part; and

Paragraph
Paragraph

(b) the GloBE Income or Loss of a jurisdiction for a Financial Year is the Net GloBE Income of that jurisdiction, if any, or the Net GloBE Loss of that jurisdiction.

Subsection
Subsection

(5)  An election under this section shall not apply to a Constituent Entity that is a Stateless Constituent Entity or an Investment Entity and the revenue and GloBE Income or Loss of a Stateless Constituent Entity and of an Investment Entity shall be excluded from the computations in subsection (4). Laws of Malaysia 106 Act 851

Subsection
Subsection

(6)  For the purposes of this section— “Average GloBE Income or Loss” means an average of the GloBE Income or Loss of a jurisdiction for the current and the two preceding Financial Years; “Average GloBE Revenue” means the average of the GloBE Revenue of a jurisdiction for the current and the two preceding Financial Years. Minority-Owned Constituent Entity

Section 183

The computation of the Effective Tax Rate and

Multinational Top-up Tax for a jurisdiction in accordance with Chapters 5 to 10 of this Part with respect to members of a Minority-Owned Subgroup shall apply as if they were a separate Multinational Enterprise Group.

Subsection
Subsection

(2)  The Adjusted Covered Taxes and GloBE Income or Loss of members of a Minority-Owned Subgroup are excluded from the determination of the remainder of the Effective Tax Rate of the Multinational Enterprise Group in subsections 174(1) to (3) and Net GloBE Income in subsection 174(4).

Subsection
Subsection

(3)  The Effective Tax Rate and Multinational Top-up Tax of a Minority-Owned Constituent Entity that is not a member of a Minority-Owned Subgroup is computed on an entity basis in accordance with Chapters 5 to 10 of this Part.

Subsection
Subsection

(4)  The Adjusted Covered Taxes and GloBE Income or Loss of the Minority-Owned Constituent Entity are excluded from the determination of the remainder of the Multinational Enterprise Group’s Effective Tax Rate in subsections 174(1) to (3) and Net GloBE Income in subsection 174(4).

Subsection
Subsection

(5)  Subsection (4) does not apply if the Minority-Owned Constituent Entity is an Investment Entity.

Subsection
Subsection

(6)  A Minority-Owned Constituent Entity whose Controlling Interests are held, directly or indirectly, by a Minority-Owned Parent Entity is a Minority-Owned Subsidiary. Finance (No. 2)

Subsection
Subsection

(7)  For the purposes of this section— “Minority-Owned Parent Entity” means a Minority-Owned Constituent Entity that holds, directly or indirectly, the Controlling Interests of another Minority-Owned Constituent Entity, except where the Controlling Interests of the first-mentioned Entity are held, directly or indirectly, by another Minority-Owned Constituent Entity; “Minority-Owned Subgroup” means a Minority-Owned Parent Entity and its Minority-Owned Subsidiaries.

Chapter

Chapter 8

Text

Corporate restructurings and holding structures

Application of consolidated revenue threshold to group mergers and demergers

Section 184

For the purposes of section 158—

No text is available for this node.

Paragraph
Paragraph

(a) if two or more Groups merge to form a single Group in any of the four Financial Years prior to the tested Financial Year, then the consolidated revenue threshold of the Multinational Enterprise Group for any Financial Year prior to the merger is deemed to be met for that year if the sum of the revenue included in each of their Consolidated Financial Statements for that year is equal to or greater than seven hundred and fifty million euro;

Paragraph
Paragraph

(b) where an Entity that is not a member of any Group (hereinafter referred to as “acquirer”) acquires or merges with an Entity or Group (hereinafter referred to as “target”) in the tested Financial Year and the target or acquirer does not have Consolidated Financial Statements in any of the four Financial Years prior to the tested Financial Year because it was not a member of any Group in that year, the consolidated revenue threshold of the Multinational Enterprise Group is deemed to be met for that year if the sum of the revenue included in each of their Financial Statements or Consolidated Financial Statements for that year is equal to or greater than seven hundred and fifty million euro; Laws of Malaysia 108 Act 851

Paragraph
Paragraph

(c) where a single Multinational Enterprise Group within the scope of this Part demerges into two or more Groups (hereinafter referred to as “demerged Group”), the consolidated revenue threshold is deemed to be met by a demerged Group—

Paragraph
Paragraph

(i) with respect to the first tested Financial Year ending after the demerger, if the demerged Group has annual revenues of seven hundred and fifty million euro or more in that year;

Subparagraph
Subparagraph

(ii) with respect to the second to fourth tested Financial Years ending after the demerger, if the demerged Group has annual revenues of seven hundred and fifty million euro or more in at least two of the Financial Years following the year of the demerger.

Subsection
Subsection

(2)  For the purposes of subsection (1)—

Paragraph
Paragraph

(a) a merger is any arrangement where—

Paragraph
Paragraph

(i) all or substantially all of the Group Entities of two or more separate Groups are brought under common control such that they constitute Group Entities of a combined Group; or

Subparagraph
Subparagraph

(ii) an Entity that is not a member of any Group is brought under common control with another Entity or Group such that they constitute Group Entities of a combined Group;

Paragraph
Paragraph

(b) a demerger is any arrangement where the Group Entities of a single Group are separated into two or more Groups that are no longer consolidated by the same Ultimate Parent Entity. Finance (No. 2) 109 Constituent Entities joining and leaving a Multinational Enterprise Group

Section 185

Except to the extent provided in subsection (2), the following provisions apply where an En...

No text is available for this node.

Paragraph
Paragraph

(a) where the target Entity joins or leaves a Group or the target Entity becomes the Ultimate Parent Entity of a new Group, the target Entity will be treated as a member of the Group for the purposes of this Part if any portion of its assets, liabilities, income, expenses or cash flows are included on a line-by-line basis in the Consolidated Financial Statements of the Ultimate Parent Entity in the acquisition year;

Paragraph
Paragraph

(b) in the acquisition year, a Multinational Enterprise Group shall take into account only the Financial Accounting Net Income or Loss and Adjusted Covered Taxes of the target Entity that are taken into account in the Consolidated Financial Statements of the Ultimate Parent Entity for the purposes of applying this Part;

Paragraph
Paragraph

(c) in the acquisition year and each succeeding year, the target Entity shall determine its GloBE Income or Loss and Adjusted Covered Taxes using its historical carrying value of the assets and liabilities;

Paragraph
Paragraph

(d) the computation of the Eligible Payroll Costs of the target Entity under subsection 180(4) shall take into account only those costs reflected in the Consolidated Financial Statements of the Ultimate Parent Entity;

Paragraph
Paragraph

(e) the computation of carrying value of the Eligible Tangible Assets of the target entity for the purposes of subsections 180(5) to (8) shall be adjusted proportionally to correspond with the length of the relevant Financial Year that the target Entity was a member of the Multinational Enterprise Group; Laws of Malaysia 110 Act 851

Paragraph
Paragraph

(f) with the exception of the GloBE Loss Deferred Tax Asset, the deferred tax assets and deferred tax liabilities of a Constituent Entity that are transferred between Multinational Enterprise Groups shall be taken into account under this Part by the acquiring Multinational Enterprise Group in the same manner and to the same extent as if the acquiring Multinational Enterprise Group controlled the Constituent Entity when such assets and liabilities arose;

Paragraph
Paragraph

(g) deferred tax liabilities of a target Entity that have previously been included in its Total Deferred Tax Adjustment Amount shall be treated as reversed for the purpose of applying subsections 171(4) to (6) by the disposing Multinational Enterprise Group and treated as arising in the acquisition year for the purpose of applying subsections 171(4) to (6) by the acquiring Multinational Enterprise Group, except that in such cases any subsequent reduction to Covered Taxes under subsections 171(4) to (6) shall have effect in the year in which the amount is recaptured; and

Paragraph
Paragraph

(h) if the target Entity is a Parent Entity and it is a Group Entity of two or more Multinational Enterprise Groups during the acquisition year, it shall apply separately the provisions of the Income Inclusion Rule to its Allocable Shares of the Multinational Top-up Tax of Low-Taxed Constituent Entities determined for each Multinational Enterprise Group.

Subsection
Subsection

(2)  For the purposes of this Part, the acquisition or disposal of a Controlling Interest in a Constituent Entity will be treated as an acquisition or disposal of the assets and liabilities if the jurisdiction in which the target Constituent Entity is located, or in the case of a Tax Transparent Entity, the jurisdiction in which the assets are located, treats the acquisition or disposal of that Controlling Interest in the same or similar manner as an acquisition or disposition of the assets and liabilities and imposes a Covered Tax on the seller based on the difference between their tax basis and the consideration paid in exchange for the Controlling Interest or the fair value of the assets and liabilities. Finance (No. 2) 111 Transfer of assets and liabilities

Section 186

In the case of a disposition or acquisition of assets and liabilities, a disposing Constitu...

Income or Loss and an acquiring Constituent Entity will determine its GloBE Income or Loss using the acquiring Constituent Entity’s carrying value of the acquired assets and liabilities determined under the accounting standard used in preparing Consolidated Financial Statements of the Ultimate Parent Entity.

Subsection
Subsection

(2)  If the disposition or acquisition of assets and liabilities is part of a GloBE Reorganisation, subsection (1) shall not apply and—

Paragraph
Paragraph

(a) a disposing Constituent Entity will exclude any gain or loss on the disposition from the computation of its GloBE Income or Loss; and

Paragraph
Paragraph

(b) an acquiring Constituent Entity will determine its GloBE Income or Loss after the acquisition using the disposing Entity’s carrying values of the acquired assets and liabilities upon disposition.

Subsection
Subsection

(3)  If a disposition or acquisition of assets and liabilities is part of a GloBE Reorganisation in which a disposing Constituent Entity recognises Non-qualifying Gain or Loss, subsections (1) and (2) shall not apply and—

Paragraph
Paragraph

(a) the disposing Constituent Entity will include gain or loss on the disposition in its GloBE Income or Loss computation to the extent of the Non-qualifying Gain or Loss; and

Paragraph
Paragraph

(b) an acquiring Constituent Entity will determine its GloBE Income or Loss after the acquisition using the disposing Entity’s carrying value of the acquired assets and liabilities upon disposition adjusted consistent with local tax rules to account for the Non-qualifying Gain or Loss. Laws of Malaysia 112 Act 851

Subsection
Subsection

(4)  At the election of the Filing Constituent Entity, a Constituent Entity of a Multinational Enterprise Group that is required or permitted to adjust the basis of its assets and the amount of its liabilities to fair value for tax purposes in the jurisdiction in which it is located, shall—

Paragraph
Paragraph

(a) include in the computation of its GloBE Income or Loss an amount of gain or loss in respect of each of its assets and liabilities that is equal to the difference between the carrying value for financial accounting purposes of the asset or liability immediately before and the fair value of the asset or liability immediately after the date of the event that triggered the tax adjustment (hereinafter referred to as “the triggering event”) and decreased or increased by the Non-qualifying Gain or Loss, if any, arising in connection with the triggering event;

Paragraph
Paragraph

(b) use the fair value for financial accounting purposes of the asset or liability immediately after the triggering event to determine GloBE Income or Loss in Financial Years ending after the triggering event; and

Paragraph
Paragraph

(c) include the net total of the amounts determined in paragraph (a) in the Constituent Entity’s GloBE Income or Loss in one of the following manner:

Paragraph
Paragraph

(i) the net total of the amounts is included in the Financial Year in which the triggering event occurs; or

Subparagraph
Subparagraph

(ii) an amount equal to the net total of the amounts divided by five is included in the Financial Year in which the triggering event occurs and in each of the immediate four subsequent Financial Years, unless the Constituent Entity leaves the Multinational Enterprise Group in a Financial Year within this period, in which case the remaining amount will be wholly included in that Financial Year. Finance (No. 2) 113 Joint Ventures

Section 187

For each Financial Year, this Part shall apply to a Joint Venture and its Joint Venture Sub...

No text is available for this node.

Paragraph
Paragraph

(a) Chapters 5 to 10 of this Part shall apply for the purpose of computing any Multinational Top-up Tax of the Joint Venture and its Joint Venture Subsidiaries as if they were Constituent Entities of a separate Multinational Enterprise Group and as if the Joint Venture was the Ultimate Parent Entity of that Group;

Paragraph
Paragraph

(b) a Parent Entity that holds directly or indirectly Ownership Interests in the Joint Venture or a Joint Venture Subsidiary shall apply the Income Inclusion Rule with respect to its Allocable Share of the Multinational Top-up Tax of a member of the Joint Venture Group in accordance with Chapter 4 of this Part; and

Paragraph
Paragraph

(c) the Joint Venture Group Top-up Tax shall be reduced by each Parent Entity’s Allocable Share of the Multinational Top-up Tax of each member of the Joint Venture Group that is brought into charge under a Qualified Income Inclusion Rule under paragraph (b).

Subsection
Subsection

(2)  A Permanent Establishment whose Main Entity is the Joint Venture or a Joint Venture Subsidiary shall be treated as a separate Joint Venture Subsidiary.

Subsection
Subsection

(3)  For the purposes of this section, “Joint Venture Group Top-up Tax” means the Ultimate Parent Entity’s Allocable Share of the Multinational Top-up Tax of all members of the Joint Venture Group. Laws of Malaysia 114 Act 851 Multi-Parented Multinational Enterprise Groups

Section 188

The following provisions shall apply to Multi-Parented

Multinational Enterprise Groups:

Paragraph
Paragraph

(a) the Entities and Constituent Entities of each Group are treated as members of a single Multinational Enterprise Group for the purposes of this Part;

Paragraph
Paragraph

(b) an Entity other than an Excluded Entity shall be treated as a Constituent Entity if it is consolidated on a line-by-line basis by the Multi-Parented Multinational Enterprise Group or its Controlling Interests are held by Entities in the Multi-Parented Multinational Enterprise Group;

Paragraph
Paragraph

(c) the Consolidated Financial Statements of the Multi-Parented Multinational Enterprise Group shall be the Consolidated Financial Statements referred to in the definition of Stapled Structure or Dual-listed Arrangement as relevant prepared under an Acceptable Financial Accounting Standard, which is deemed to be the accounting standard of the Ultimate Parent Entity;

Paragraph
Paragraph

(d) the Ultimate Parent Entities of the separate Groups that comprise the Multi-Parented Multinational Enterprise Group shall be the Ultimate Parent Entities of the Multi-Parented Multinational Enterprise Group;

Paragraph
Paragraph

(e) the Parent Entities of the Multi-Parented Multinational Enterprise Group including each Ultimate Parent Entity located in Malaysia shall apply the Income Inclusion Rule in accordance with Chapter 4 of this Part with respect to their Allocable Share of the Top-up Tax of the Low-Taxed Constituent Entity; and

Paragraph
Paragraph

(f) the Ultimate Parent Entities are required to submit the information return in accordance with section 201, unless they appoint a single Designated Filing Entity and that return shall include the information concerning each of the Groups that comprise the Multi-Parented Multinational Enterprise Group. Finance (No. 2)

Subsection
Subsection

(2)  When applying this Part in respect of a Multi-Parented Multinational Enterprise Group, references to an Ultimate Parent Entity shall apply as if they were references to multiple Ultimate Parent Entities.

Subsection
Subsection

(3)  For the purposes of this section— “Dual-listed Arrangement” means an arrangement entered into by two or more Ultimate Parent Entities of separate Groups, under which—

Paragraph
Paragraph

(a) the Ultimate Parent Entities agree to combine their business by contract alone;

Paragraph
Paragraph

(b) pursuant to contractual arrangements the Ultimate Parent Entities will make distributions with respect to dividends and in liquidation to their shareholders based on a fixed ratio;

Paragraph
Paragraph

(c) their activities are managed as a single economic entity under contractual arrangements while retaining their separate legal identities;

Paragraph
Paragraph

(d) the Ownership Interests in the Ultimate Parent Entities comprising the agreement are quoted, traded or transferred independently in different capital markets; and

Paragraph
Paragraph

(e) the Ultimate Parent Entities prepare Consolidated Financial Statements in which the assets, liabilities, income, expenses and cash flows of all the Entities of the Groups are presented together as those of a single economic unit and that are required by a regulatory regime to be externally audited; “Multi-Parented Multinational Enterprise Group” means two or more Groups where—

Paragraph
Paragraph

(a) the Ultimate Parent Entities of those Groups enter into an arrangement that is a Stapled Structure or a Dual-listed Arrangement; and

Paragraph
Paragraph

(b) at least one Entity or Permanent Establishment of the combined Group is located in a different jurisdiction with respect to the location of the other Entities of the combined Group; Laws of Malaysia 116 Act 851 “Stapled Structure” means an arrangement entered into by two or more Ultimate Parent Entities of separate Groups, under which—

Paragraph
Paragraph

(a) fifty per cent or more of the Ownership Interests in the Ultimate Parent Entities of the separate Groups are by reason of form of ownership, restrictions on transfer, or other terms or conditions combined with each other, and cannot be transferred or traded independently and if the combined Ownership Interests are listed, they are quoted at a single price; and

Paragraph
Paragraph

(b) one of those Ultimate Parent Entities prepares Consolidated Financial Statements in which the assets, liabilities, income, expenses and cash flows of all the Entities of the Groups are presented together as those of a single economic unit and that are required by a regulatory regime to be externally audited.

Chapter

Chapter 9

Text

Tax neutrality and distribution regimes

Ultimate Parent Entity that is a Flow-through Entity

Section 189

The GloBE Income for a Financial Year of a

Flow-through Entity that is the Ultimate Parent Entity of a Multinational Enterprise Group shall be reduced by the amount of GloBE Income attributable to each Ownership Interest if—

Paragraph
Paragraph

(a) the holder of the Ownership Interest is subject to tax on such income for a taxable period that ends within twelve months of the end of the Financial Year of the Multinational Enterprise Group and—

Paragraph
Paragraph

(i) the holder of the Ownership Interest is subject to tax on the full amount of such income at a nominal rate that equals or exceeds the Minimum Rate; or Finance (No. 2)

Subparagraph
Subparagraph

(ii) it can be reasonably expected that the aggregate amount of Covered Taxes paid by the Ultimate Parent Entity and other Entities that are part of the Tax Transparent Structure and Taxes of the holder of the Ownership Interest on such income equals or exceeds the amount that results from multiplying the full amount of such income by the Minimum Rate; or

Paragraph
Paragraph

(b) the holder is a natural person that—

Paragraph
Paragraph

(i) is a tax resident in the Ultimate Parent Entity Jurisdiction; and

Subparagraph
Subparagraph

(ii) holds Ownership Interests that, in the aggregate, are a right to five per cent or less of the profits and assets of the Ultimate Parent Entity; or

Paragraph
Paragraph

(c) the holder is a Governmental Entity, an International Organisation, a Non-profit Organisation, or a Pension Fund that—

Paragraph
Paragraph

(i) is resident in the Ultimate Parent Entity Jurisdiction; and

Subparagraph
Subparagraph

(ii) holds Ownership Interests that, in the aggregate, are a right to five per cent or less of the profits and assets of the Ultimate Parent Entity.

Subsection
Subsection

(2)  In computing its GloBE Loss for a Financial Year, a Flow-through Entity that is the Ultimate Parent Entity of a Multinational Enterprise Group shall reduce its GloBE Loss for such Financial Year by the amount of GloBE Loss attributable to each Ownership Interest, except to the extent that the holders of Ownership Interests are not allowed to use the loss in computing their separate taxable income.

Subsection
Subsection

(3)  A Flow-through Entity that reduces its GloBE Income pursuant to subsection (1) shall reduce its Covered Taxes proportionally. Laws of Malaysia 118 Act 851

Subsection
Subsection

(4)  Subsections (1) to (3) shall apply to a Permanent Establishment through which—

Paragraph
Paragraph

(a) a Flow-through Entity that is the Ultimate Parent Entity of a Multinational Enterprise Group wholly or partly carries out its business; or

Paragraph
Paragraph

(b) the business of a Tax Transparent Entity is wholly or partly carried out if the Ultimate Parent Entity’s Ownership Interest in that Tax Transparent Entity is held directly or through a Tax Transparent Structure. Ultimate Parent Entity subject to Deductible Dividend Regime

Section 190

For the purpose of computing its GloBE Income or Loss for a Financial Year, an Ultimate Par...

No text is available for this node.

Paragraph
Paragraph

(a) the dividend is subject to tax in the hands of the dividend recipient for a taxable period that ends within twelve months of the end of the Ultimate Parent Entity’s Financial Year, and—

Paragraph
Paragraph

(i) the dividend recipient is subject to tax on such dividend at a nominal rate that equals or exceeds the Minimum Rate;

Subparagraph
Subparagraph

(ii) it can be reasonably expected that the aggregate amount of Covered Taxes paid by the Ultimate Parent Entity and Taxes paid by the dividend recipient on the dividend income equals or exceeds the amount that results from multiplying the full amount of such income by the Minimum Rate; or Finance (No. 2)

Subparagraph
Subparagraph

(iii) the dividend recipient is a natural person and the dividend is a patronage dividend from a supply Cooperative; or

Paragraph
Paragraph

(b) the dividend recipient is a natural person that—

Paragraph
Paragraph

(i) is a tax resident in the Ultimate Parent Entity Jurisdiction; and

Subparagraph
Subparagraph

(ii) holds Ownership Interests that, in the aggregate, are a right to five per cent or less of the profits and assets of the Ultimate Parent Entity; or

Paragraph
Paragraph

(c) the dividend recipient is resident in the Ultimate Parent Entity Jurisdiction and is—

Paragraph
Paragraph

(i) a Governmental Entity;

Subparagraph
Subparagraph

(ii) an International Organisation;

Subparagraph
Subparagraph

(iii) a Non-profit Organisation; or

Subparagraph
Subparagraph

(iv) a Pension Fund that is not a Pension Services Entity.

Subsection
Subsection

(2)  An Ultimate Parent Entity that reduces its GloBE Income pursuant to subsection (1) shall reduce its Covered Taxes other than the Taxes for which the dividend deduction was allowed proportionally and shall reduce its GloBE Income by the same amount.

Subsection
Subsection

(3)  If the Ultimate Parent Entity holds an Ownership Interest in another Constituent Entity subject to the Deductible Dividend Regime directly or through a chain of such Constituent Entities, subsections (1) and (2) shall apply to each other Constituent Entity in the Ultimate Parent Entity Jurisdiction that is subject to the Deductible Dividend Regime to the extent that its GloBE Income is further distributed by the Ultimate Parent Entity to recipients that meet the requirements of subsection (1). Laws of Malaysia 120 Act 851

Subsection
Subsection

(4)  The patronage dividends from a supply Cooperative are subject to tax to the extent they reduce an expense or cost that is deductible in the computation of the taxable income of the recipient.

Subsection
Subsection

(5)  For the purposes of this section— “Cooperative” means an Entity that collectively markets or acquires goods or services on behalf of its members and that is subject to a tax regime in the jurisdiction in which it is located that is designed to ensure tax neutrality in respect of members’ property or services sold through the Cooperative and property or services acquired by members through the Cooperative; “Deductible Dividend” means, with respect to a Constituent Entity that is subject to a Deductible Dividend Regime—

Paragraph
Paragraph

(a) a distribution of profits to the holder of an Ownership Interest that is deductible from taxable income of the Constituent Entity under the laws of the jurisdiction in which it is located; or

Paragraph
Paragraph

(b) a patronage dividend to a member of a Cooperative; “Deductible Dividend Regime” means—

Paragraph
Paragraph

(a) a tax regime designed to yield a single level of taxation on the owners of an Entity through a deduction from the income of the Entity for distributions of profits to the owners (for this purpose, patronage dividends of a Cooperative are treated as distributions to owners); or

Paragraph
Paragraph

(b) a regime applicable to Cooperatives that exempts the Cooperative from taxation. Finance (No. 2) 121 Eligible Distribution Tax Systems

Section 191

A Filing Constituent Entity may make an Annual

Election with respect to a Constituent Entity that is subject to an Eligible Distribution Tax System to add the amount of Deemed Distribution Tax to Adjusted Covered Taxes for the Financial Year.

Subsection
Subsection

(2)  An election under this section shall apply to all Constituent Entities located in the jurisdiction.

Subsection
Subsection

(3)  An annual Deemed Distribution Tax Recapture Account is established for each Financial Year in which the election in this section applies.

Subsection
Subsection

(4)  A Deemed Distribution Tax Recapture Account is increased by the amount of the Deemed Distribution Tax as determined in accordance with the definition of “Deemed Distribution Tax” for the jurisdiction for the Financial Year for which it was established.

Subsection
Subsection

(5)  At the end of each succeeding Financial Year, the outstanding balances of Deemed Distribution Tax Recapture Accounts established for prior Financial Years are reduced in chronological order and to the extent thereof, but not below zero—

Paragraph
Paragraph

(a) first by Taxes paid by the Constituent Entities during the Financial Year in relation to actual or deemed distributions;

Paragraph
Paragraph

(b) then by the amount of any Net GloBE Loss of the jurisdiction multiplied by the Minimum Rate; and

Paragraph
Paragraph

(c) then by any amount of Recapture Account Loss Carry-forward applied to the current Financial Year pursuant to subsections (6) to (8).

Subsection
Subsection

(6)  A Recapture Account Loss Carry-forward shall be established for the jurisdiction when the amount described in paragraph (5)(b) exceeds the outstanding balance of the Deemed Distribution Tax Recapture Accounts. Laws of Malaysia 122 Act 851

Subsection
Subsection

(7)  The Recapture Account Loss Carry-forward shall be in an amount equal to such excess and shall be taken into account in subsequent Financial Years as a reduction to Deemed Distribution Tax Recapture Accounts in such Financial Years.

Subsection
Subsection

(8)  When such amount is taken into account in a subsequent Financial Year, the Recapture Account Loss Carry-forward must be reduced by that amount.

Subsection
Subsection

(9)  If there is an outstanding balance of a Deemed Distribution Tax Recapture Account maintained in accordance with subsections (3) to (5) on the last day of the fourth Financial Year after the Financial Year for which such account was established, the Effective Tax Rate and Multinational Top-up Tax for the Financial Year for which the account was established must be recalculated under subsection 181(1) by treating the balance of the Deemed Distribution Tax Recapture Account as a reduction to the Adjusted Covered Taxes previously determined for such year.

Subsection
Subsection

(10)  Taxes paid during the Financial Year in relation to actual or deemed distributions are not included in Adjusted Covered Taxes to the extent they reduce a Deemed Distribution Tax Recapture Account under subsections (3) to (5).

Subsection
Subsection

(11)  In the Financial Year that a Departing Constituent Entity leaves the Multinational Enterprise Group or transfers substantially all of its assets outside the Multinational Enterprise Group or outside the jurisdiction—

Paragraph
Paragraph

(a) the Effective Tax Rate and Multinational Top-up Tax for each preceding year for which a Deemed Distribution Tax Recapture Account is outstanding is re-calculated in accordance with the principles of subsection 181(1) by treating the balance of the Deemed Distribution Tax Recapture Account as a reduction to the Adjusted Covered Taxes previously determined for such year; and

Paragraph
Paragraph

(b) any amount of incremental Multinational Top-up Tax resulting from such recalculation shall be multiplied by the Disposition Recapture Ratio to determine the Additional Current Multinational Top-up Tax for the purposes of subsection 177(1). Finance (No. 2)

Subsection
Subsection

(12)  The Disposition Recapture Ratio is determined for each Departing Constituent Entity in accordance with the following formula: A B where A is the GloBE Income of the Constituent Entity, being the sum of GloBE Income of the Departing Constituent Entity determined in accordance with Chapter 5 of this Part for each Financial Year corresponding to the Deemed Distribution Tax Recapture Accounts for the jurisdiction; and B is the Net Income of the Jurisdiction as determined in accordance with subsection 174(4) for each Financial Year corresponding to the Deemed Distribution Tax Recapture Accounts for the jurisdiction.

Subsection
Subsection

(13)  For the purposes of this section— “Deemed Distribution Tax” means the lesser of—

Paragraph
Paragraph

(a) the amount necessary to increase the Effective Tax Rate computed under section 175 for the jurisdiction for the Financial Year to the Minimum Rate; or

Paragraph
Paragraph

(b) the amount of distribution tax that would have been due if the Constituent Entities located in the jurisdiction had distributed all of their income that is subject to the Eligible Distribution Tax Regime during such year; “Deemed Distribution Tax Recapture Account” means an account maintained in accordance with subsections (3) to (5); Laws of Malaysia 124 Act 851 “Departing Constituent Entity” means a Constituent Entity that is subject to an election under subsections 191(1) and (2) and that leaves the Multinational Enterprise Group or transfers substantially all of its assets to a person that is not a Constituent Entity of the same Multinational Enterprise Group located in the same jurisdiction; “Disposition Recapture Ratio” means a ratio as determined in subsection (12). Effective Tax Rate Computation for Investment Entities

Section 192

This section shall apply to Constituent Entities that meet the definition of an Investment...

Entities that are Tax Transparent Entities or subject to an election under section 193 or 194.

Subsection
Subsection

(2)  The Effective Tax Rate for an Investment Entity that is a Constituent Entity shall be calculated separately from the Effective Tax Rate of the jurisdiction in which it is located.

Subsection
Subsection

(3)  The Effective Tax Rate for each such Investment Entity is equal to the Investment Entity’s Adjusted Covered Taxes divided by the Multinational Enterprise Group’s Allocable Share of the Investment Entity’s GloBE Income determined under Chapter 5 of this Part.

Subsection
Subsection

(4)  If there is more than one Investment Entity located in the jurisdiction, the Adjusted Covered Taxes and the Multinational Enterprise Group’s Allocable Share of each Investment Entity’s GloBE Income or Loss determined for each such Investment Entity are combined to compute the Effective Tax Rate of all such Investment Entities.

Subsection
Subsection

(5)  An Investment Entity’s Adjusted Covered Taxes is the sum of the Adjusted Covered Taxes determined for the Investment Entity under section 169 attributable to the Multinational Enterprise Group’s Allocable Share of the Investment Entity’s GloBE Income and the Covered Taxes allocated to the Investment Entity under section 170.

Subsection
Subsection

(6)  The Investment Entity’s Adjusted Covered Taxes does not include any Covered Taxes accrued by the Investment Entity attributable to income that is not part of the Multinational Enterprise Group’s Allocable Share of the Investment Entity’s GloBE Income. Finance (No. 2)

Subsection
Subsection

(7)  The Multinational Enterprise Group’s Allocable Share of the Investment Entity’s GloBE Income is equal to the Allocable Share of the Investment Entity’s GloBE Income or Loss that would be determined for the Ultimate Parent Entity in accordance with the rules of subsection 162(2) taking into account only interests that are not subject to an election under section 193 or 194.

Subsection
Subsection

(8)  The Multinational Top-up Tax of a Constituent Entity that is an Investment Entity shall be an amount determined in accordance with the following formula: A x (B – C) where A is the Multinational Top-up Tax Percentage for the Investment Entity; B is the Investment Entity’s GloBE Income; and C is the Substance-based Income Exclusion for the Investment Entity.

Subsection
Subsection

(9)  The Multinational Top-up Tax Percentage for an Investment Entity shall be the percentage point excess, if any, determined in accordance with the following formula: (A – B) where A is the Minimum Rate; and B is the Effective Tax Rate of the Investment Entity.

Subsection
Subsection

(10)  If there is more than one Investment Entity located in the jurisdiction, the Investment Entity’s GloBE Income and the Substance-based Income Exclusion determined for each such Investment Entity are combined to compute the Multinational Top-up Tax Percentage of all such Investment Entities. Laws of Malaysia 126 Act 851

Subsection
Subsection

(11)  Notwithstanding subsection 180(3), the Substance-based Income Exclusion for an Investment Entity shall be determined in accordance with section 180, and by taking into account only Eligible Tangible Assets and Eligible Payroll Costs of Eligible Employees of the Investment Entities.

Subsection
Subsection

(12)  For the purposes of this section, “Multinational Enterprise Group’s Allocable Share of the Investment Entity’s GloBE Income” means an amount equal to the Allocable Share of the Investment Entity’s GloBE Income or Loss that would be determined for the Ultimate Parent Entity in accordance with the rules of subsection 162(2) taking into account only interests that are not subject to an election under section 193 or 194. Investment Entity Tax Transparency Election

Section 193

A Filing Constituent Entity may elect to treat a Constituent Entity that is an Investment E...

Insurance Investment Entity as a Tax Transparent Entity if the Constituent Entity-owner is subject to tax in its location under a mark-to-market or similar regime based on the annual changes in the fair value of its Ownership Interest in the Entity and the tax rate applicable to the Constituent Entity-owner with respect to such income equals or exceeds the Minimum Rate.

Subsection
Subsection

(2)  For the purposes of subsection (1), a Constituent Entity that indirectly owns an Ownership Interest in an Investment Entity or Insurance Investment Entity through a direct Ownership Interest in another Investment Entity or Insurance Investment Entity is considered to be subject to tax under a mark-to-market or similar regime with respect to the indirect Ownership Interest in the first-mentioned Entity if it is subject to a mark-to-market or similar regime with respect to the direct Ownership Interest in the second-mentioned Entity.

Subsection
Subsection

(3)  The election under this section is a Five-Year Election.

Subsection
Subsection

(4)  If the election is revoked, gain or loss from the disposition of an asset or liability held by the Investment Entity shall be determined based on the fair value of the assets or liabilities on the first day of the revocation year. Finance (No. 2) 127 Taxable Distribution Method Election

Section 194

At the election of the Filing Constituent Entity, a Constituent Entity-owner that is not an...

Investment Entity if the Constituent Entity-owner can be reasonably expected to be subject to tax on distributions from the Investment Entity at a tax rate that equals or exceeds the Minimum Rate.

Subsection
Subsection

(2)  Under the Taxable Distribution Method—

Paragraph
Paragraph

(a) distributions and deemed distributions of the Investment Entity’s GloBE Income are included in the GloBE Income of the Constituent Entity-owner other than an Investment Entity that received the distribution;

Paragraph
Paragraph

(b) the Local Creditable Tax Gross-up is included in the GloBE Income and Adjusted Covered Taxes of the Constituent Entity-owner other than an Investment Entity that received the distribution;

Paragraph
Paragraph

(c) the Constituent Entity-owner’s proportionate share of the Investment Entity’s Undistributed Net GloBE Income for the Tested Year is treated as GloBE Income of the Investment Entity for the Reporting Financial Year and the result of multiplying the Minimum Rate by such GloBE Income is treated as Multinational Top-up Tax of a Low-Tax Constituent Entity in the Financial Year for the purposes of Chapter 4 of this Part; and

Paragraph
Paragraph

(d) the Investment Entity’s GloBE Income or Loss for the Financial Year and any Adjusted Covered Taxes attributable to such income are excluded from all Effective Tax Rate computations under Chapter 7 of this Part and subsections 192(2) to (10), except as provided in paragraph (b).

Subsection
Subsection

(3)  The Undistributed Net GloBE Income for the Tested Year cannot be reduced by distributions or deemed distributions to the extent that such distributions were treated as a reduction to Undistributed Net GloBE Income of a previous Tested Year. Laws of Malaysia 128 Act 851

Subsection
Subsection

(4)  For the purpose of computing Undistributed Net GloBE Income, a GloBE Loss is reduced to the extent it reduced Undistributed Net GloBE Income at the end of a previous Financial Year.

Subsection
Subsection

(5)  If a GloBE Loss for a Financial Year is not reduced to zero before the end of the end of the last Tested Period that includes such Financial Year, the remainder becomes an Investment Loss Carry-forward and is reduced in the same manner as a GloBE Loss in subsequent Financial Years.

Subsection
Subsection

(6)  For the purposes of this section—

Paragraph
Paragraph

(a) the Tested Year is the third year preceding the Reporting Financial Year;

Paragraph
Paragraph

(b) the Testing Period is the period beginning with the first day of the Tested Year and ending with the last day of the Reporting Financial Year that the Ownership Interest was held by a Group Entity;

Paragraph
Paragraph

(c) a deemed distribution arises when a direct or indirect Ownership Interest in the Investment Entity is transferred to a non-Group Entity and is equal to the proportionate share of the Undistributed Net GloBE Income attributable to such Ownership Interest on the date of such transfer determined without regard to the deemed distribution; and

Paragraph
Paragraph

(d) the Local Creditable Tax Gross-up is the amount of Covered Taxes incurred by the Investment Entity that is allowed as a credit against the tax liability of the owner of the Constituent Entity arising in connection with a distribution from the Investment Entity.

Subsection
Subsection

(7)  The election under this section is a Five-Year Election.

Subsection
Subsection

(8)  If the election is revoked, the proportionate share of the owner of the Constituent Entity in the Undistributed Net GloBE Income of the Investment Entity for the Tested Year at the end of the Financial Year preceding the revocation Finance (No. 2) 129 year is treated as GloBE Income of the Investment Entity for the revocation year and the result of multiplying the Minimum Rate by such GloBE Income is treated as Multinational Top-up Tax of a Low-Tax Constituent Entity in the revocation year for the purposes of Chapter 4 of this Part.

Subsection
Subsection

(9)  For the purposes of this section, “Undistributed Net GloBE Income” means the amount of the Investment Entity’s GloBE Income, if any, for the Tested Year reduced but not below zero by—

Paragraph
Paragraph

(a) any Covered Taxes of the Investment Entity;

Paragraph
Paragraph

(b) distributions and deemed distributions to shareholders other than Constituent Entities that are Investment Entities in the Testing Period;

Paragraph
Paragraph

(c) GloBE Losses arising in the Testing Period; and

Paragraph
Paragraph

(d) Investment Loss Carry-forwards.

Chapter

Chapter 10

Text

Safe Harbour

GloBE Safe Harbour

Section 195

At the election of the Filing Constituent Entity, and notwithstanding Chapter 7 of this Par...

Top-up Tax for a jurisdiction (hereinafter referred to as “the safe harbour jurisdiction”) shall be deemed to be zero for a Financial Year when the Constituent Entities located in this jurisdiction are eligible for a GloBE Safe Harbour, pursuant to the conditions provided under the GloBE Implementation Framework and applicable for that Financial Year.

Subsection
Subsection

(2)  An election made for a jurisdiction under subsection (1) shall not apply in circumstances where—

Paragraph
Paragraph

(a) Malaysia could be allocated Multinational Top-up Tax under this Part if the Effective Tax Rate for the safe harbour jurisdiction computed in accordance with Chapter 7 of this Part was below the Minimum Rate; Laws of Malaysia 130 Act 851

Paragraph
Paragraph

(b) the Director General notifies the Liable Constituent Entity within thirty-six months after the filing of the information return of specific facts and circumstances that may have materially affected the eligibility of the Constituent Entities located in the safe harbour jurisdiction for the relevant safe harbour and invites the Liable Constituent Entity to clarify within six months the effect of those facts and circumstances on the eligibility of those Constituent Entities for that safe harbour; and

Paragraph
Paragraph

(c) the Liable Constituent Entity fails to demonstrate within the response period that those facts and circumstances did not materially affect the eligibility of the Constituent Entities for the relevant safe harbour.

Subsection
Subsection

(3)  For the purposes of this section, “Liable Constituent Entity” means one or several Constituent Entities located in Malaysia that could be liable for Multinational Top-up Tax or subject to an adjustment under Chapter 4 of this Part if the GloBE Safe Harbour in subsection (1) did not apply.

Chapter

Chapter 11

Text

Transition rules

Transitional Tax Attributes

Section 196

When determining the Effective Tax Rate for a jurisdiction in a Transition Year, and for ea...

Year.

Subsection
Subsection

(2)  Such deferred tax assets and liabilities must be taken into account at the lower of the Minimum Rate or the applicable domestic tax rate.

Subsection
Subsection

(3)  A deferred tax asset that has been recorded at a rate lower than the Minimum Rate may be taken into account at the Minimum Rate if the taxpayer can demonstrate that the deferred tax asset is attributable to a GloBE Loss. Finance (No. 2)

Subsection
Subsection

(4)  For the purposes of this section, the impact of any valuation adjustment, or accounting recognition adjustment with respect to a deferred tax asset shall be disregarded.

Subsection
Subsection

(5)  The Deferred tax assets arising from items excluded from the computation of GloBE Income or Loss under

Chapter

Chapter 5 of this Part must be excluded from the computation under subsections (1) to (4) w...

Chapter 5 of this Part must be excluded from the computation under subsections (1) to (4) when such deferred tax assets are generated in a transaction that takes place after 30 November 2021.

Subsection
Subsection

(6)  In the case of a transfer of assets between Constituent Entities after 30 November 2021 and before the commencement of a Transition Year, the basis in the acquired assets other than inventory shall be based upon the disposing Entity’s carrying value of the transferred assets upon disposition with the deferred tax assets and liabilities brought into GloBE Rules determined on that basis.

Subsection
Subsection

(7)  For the purposes of this section, “Transition Year” means, for a jurisdiction, the first Financial Year that the Multinational Enterprise Group comes within the scope of this Part in respect of that jurisdiction. Transitional relief for the Substance-based Income Exclusion

Section 197

For the purpose of applying subsection 180(4), the value of five per cent shall be replaced...

Financial Year Beginning In Subsection 180(4) Rate 2025 9.6% 2026 9.4% 2027 9.2% 2028 9.0% 2029 8.2% 2030 7.4% 2031 6.6% 2032 5.8% Laws of Malaysia 132 Act 851

Subsection
Subsection

(2)  For the purpose of applying subsection 180(5), the value of five per cent shall be replaced with the value set out in the table set out below for each Financial Year beginning in each of the following calendar years: Financial Year Beginning In Subsection 180(5) Rate 2025 7.6% 2026 7.4% 2027 7.2% 2028 7.0% 2029 6.6% 2030 6.2% 2031 5.8% 2032 5.4%

Chapter

Chapter 12

Text

Person Chargeable

Personal chargeability: Domestic Top-up Tax or Multinational Top-up Tax

Section 198

Where under this Part a Constituent Entity is assessable and chargeable to Domestic Top-up...

Top-up Tax, that Constituent Entity shall, subject to this Part, be the Constituent Entity assessable and chargeable to that tax. Responsibilities for doing all acts and things of Constituent Entity

Section 199

For the purposes of this Part, the responsibility for doing all acts and things required to...

No text is available for this node.

Paragraph
Paragraph

(a) in the case of a Constituent Entity that is a company, with—

Paragraph
Paragraph

(i) the manager or other principal officer in Malaysia; Finance (No. 2)

Subparagraph
Subparagraph

(ii) the directors;

Subparagraph
Subparagraph

(iii) the secretary; and

Subparagraph
Subparagraph

(iv) any natural person (however styled) exercising the functions of any of the natural person mentioned in the foregoing paragraphs; and

Paragraph
Paragraph

(b) in the case of a Constituent Entity that is an arrangement that prepares separate financial accounts, such as a partnership or trust, with—

Paragraph
Paragraph

(i) the manager;

Subparagraph
Subparagraph

(ii) the treasurer;

Subparagraph
Subparagraph

(iii) the secretary; and

Subparagraph
Subparagraph

(iv) the members of its controlling authority.

Subsection
Subsection

(2)  The liquidator of a Constituent Entity that is a company which is being wound up shall not distribute any of the assets of the Constituent Entity to its shareholders unless he has made provision (in so far as he is able to do so out of the assets of the Constituent Entity) for the payment in full of any tax which he knows or might reasonably expect to be payable by the Constituent Entity under this Part.

Subsection
Subsection

(3)  Any liquidator who fails to comply with subsection (2) shall be liable to pay a penalty equal to the amount of the tax to which the failure relates.

Subsection
Subsection

(4)  Subsection 235(2) shall apply to a penalty imposed by subsection (3) of this section as it applies to a penalty imposed by subsection 225(5) or 227(2). Laws of Malaysia 134 Act 851 Responsibilities for doing all acts and things of limited liability partnership and business trust

Section 200

The responsibility for doing all acts and things required to be done—

No text is available for this node.

Paragraph
Paragraph

(a) by or on behalf of a Constituent Entity that is a limited liability partnership for the purposes of this Part shall lie jointly and severally—

Paragraph
Paragraph

(i) with the compliance officer who is appointed amongst the partners of the limited liability partnership or natural persons qualified to act as secretaries under the Companies Act 2016 who is a citizen or permanent resident of Malaysia and ordinarily resides in Malaysia; or

Subparagraph
Subparagraph

(ii) if no compliance officer is appointed as such, any one or all of the partners thereof; and

Paragraph
Paragraph

(b) by or on behalf of a Constituent Entity that is a business trust for the purposes of this Part shall lie jointly and severally with the trustee manager of such business trust.

Subsection
Subsection

(2)  For the purposes of this section, “compliance officer” has the meaning assigned to it in section 27 of the Limited Liability Partnerships Act 2012.

Subsection
Subsection

(3)  Where in a Financial Year, a Constituent Entity that is a partnership or a company has converted into a limited liability partnership in accordance with the Limited Liability Partnerships Act 2012—

Paragraph
Paragraph

(a) every partner of the partnership shall continue to be personally assessable and chargeable to tax for that Financial Year and for any previous Financial Year before the conversion; and

Paragraph
Paragraph

(b) the limited liability partnership shall be assessable and chargeable to tax for that Financial Year and for any previous Financial Year before the conversion. Finance (No. 2)

Subsection
Subsection

(4)  Where the limited liability partnership is so assessable and chargeable under paragraph (3)(b), it shall be assessable and chargeable to tax in like manner and to the like amount as the company would have been assessed and charged to tax prior to the conversion.

Chapter

Chapter 13

Text

Returns

Information return by Constituent Entity

Section 201

Except as provided in this section, a Constituent Entity of a Multinational Enterprise Grou...

Financial Year furnish to the Director General an information return in the prescribed form not later than fifteen months from the last day of the Reporting Financial Year.

Subsection
Subsection

(2)  A Constituent Entity located in Malaysia of that Multinational Enterprise Group may elect to appoint a Designated Local Entity to furnish to the Director General the information return referred to in subsection (1), on its behalf.

Subsection
Subsection

(3)  Subsections (1) and (2) shall not apply if the information return in the prescribed form has been filed not later than fifteen months from the last day of the Reporting Financial Year by—

Paragraph
Paragraph

(a) the Ultimate Parent Entity of that Multinational Enterprise Group that is located in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with the Government for the Reporting Financial Year; or

Paragraph
Paragraph

(b) a Designated Filing Entity that is located in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with the Government for the Reporting Financial Year and the Multinational Enterprise Group has elected to appoint that Designated Filing Entity to furnish to the Director General the information return referred to in subsection (1), on its behalf. Laws of Malaysia 136 Act 851

Subsection
Subsection

(4)  The election in subsection (2) or (3) shall be made by a notice in writing in the prescribed form and furnished to the Director General not later than fifteen months from the last day of the Reporting Financial Year by a Constituent Entity or by a Designated Local Entity on behalf of that Constituent Entity.

Subsection
Subsection

(5)  For the purposes of this section, an information return or a notice in writing shall be furnished to the Director General in a prescribed form on an electronic medium or by way of electronic transmission in accordance with section 152a.

Subsection
Subsection

(6)  For the purposes of this section—

Paragraph
Paragraph

(a) an information return concerning the Multinational Enterprise Group for a Reporting Financial Year shall contain—

Paragraph
Paragraph

(i) identification of the Constituent Entities, including their tax identification numbers, the jurisdiction in which they are located and their status as a Partially-Owned Parent Entity, Joint Venture, Joint Venture subsidiary, Investment Entity, Flow-through Entity, or Permanent Establishment under this Part;

Subparagraph
Subparagraph

(ii) information on the overall corporate structure of the Multinational Enterprise Group including the Controlling Interests in the Constituent Entities held by other Constituent Entities;

Subparagraph
Subparagraph

(iii) the information necessary to compute—

Paragraph
Paragraph

(A) the Effective Tax Rate for each jurisdiction and the Domestic Top-up Tax or Multinational Top-up Tax of each Constituent Entity under Chapter 7 of this Part;

Paragraph
Paragraph

(B) the Domestic Top-up Tax or Multinational Top-up Tax of a member of the Joint Venture Group under

Chapter

Chapter 8 of this Part;

Text

Finance (No. 2)

No text is available for this node.

Paragraph
Paragraph

(C) the allocation of Multinational Top-up Tax under the Income Inclusion Rule to each jurisdiction under Chapter 4 of this Part;

Subparagraph
Subparagraph

(iv) a record of the elections made in accordance with the relevant provisions of this Part;

Paragraph
Paragraph

(v) other information that is agreed as part of the GloBE Implementation Framework and is necessary to carry out the administration of this Part; and

Subparagraph
Subparagraph

(vi) such particulars as may be required by the Director General;

Paragraph
Paragraph

(b) a notice in writing shall contain such particulars as may be required by the Director General.

Subsection
Subsection

(7)  In this section— “Designated Local Entity” means the Constituent Entity of a Multinational Enterprise Group that is located in Malaysia throughout the relevant Reporting Financial Year and that has been appointed by another Constituent Entity located in Malaysia of that Multinational Enterprise Group; “Qualifying Competent Authority Agreement” means a bilateral or multilateral agreement or arrangement between Competent Authorities that provides for the automatic exchange of annual information returns. Top-up Tax return by Constituent Entity

Section 202

Every Constituent Entity of a Multinational Enterprise

Group shall for each Reporting Financial Year furnish to the Director General a Top-up Tax return in the prescribed form not later than fifteen months from the last day of the Reporting Financial Year.

Subsection
Subsection

(2)  For the purposes of this section, a Constituent Entity shall furnish to the Director General a Top-up Tax return in the prescribed form on an electronic medium or by way of electronic transmission in accordance with section 152a. Laws of Malaysia 138 Act 851

Subsection
Subsection

(3)  For the purposes of this section, the Top-up Tax return for a Reporting Financial Year shall—

Paragraph
Paragraph

(a) specify the amount of tax payable, if any, for that year; and

Paragraph
Paragraph

(b) contain such particulars as may be required by the Director General. Amendment of Top-up Tax return

Section 203

Where for a Reporting Financial Year a Constituent

Entity has furnished a return in accordance with section 202, that Constituent Entity may make amendment to such return in an amended return as prescribed by the Director General in respect of the amount of tax or additional tax payable by that Constituent Entity or on the amount of tax which has been or would have been wrongly repaid to him.

Subsection
Subsection

(2)  An amended return under subsection (1) shall only be made after the due date for the furnishing of the return in accordance with section 202, but not later than six months from that date.

Subsection
Subsection

(3)  For the purposes of this section, the amended return shall—

Paragraph
Paragraph

(a) specify the amount of tax or additional tax payable;

Paragraph
Paragraph

(b) specify the amount of tax payable on the tax which has or would have been wrongly repaid to him;

Paragraph
Paragraph

(c) specify the increased sum ascertained in accordance with subsection (4); or

Paragraph
Paragraph

(d) contain such particulars as may be required by the Director General.

Subsection
Subsection

(4)  The tax or additional tax payable under subsection (1) shall be increased by a sum equal to ten per cent of the amount of such tax or additional tax. Finance (No. 2)

Subsection
Subsection

(5)  The amendment under subsection (1) shall only be made once.

Subsection
Subsection

(6)  Where—

Paragraph
Paragraph

(a) a return for a Reporting Financial Year has been furnished in accordance with section 202; and

Paragraph
Paragraph

(b) the Director General has made an assessment for that Reporting Financial Year under section 212, no amendment shall be allowed under this section. Power to call for specific returns and production of books under Part XI

Section 204

For the purpose of obtaining full information for ascertaining whether or not a Constituent...

No text is available for this node.

Paragraph
Paragraph

(a) to complete and deliver to the Director General within a time specified in the notice (not being less than thirty days from the date of service of the notice) any return specified in the notice;

Paragraph
Paragraph

(b) to attend personally before the Director General and produce for examination all books, accounts, returns and other documents which the Director General thinks necessary;

Paragraph
Paragraph

(c) to make a return in accordance with paragraph (a) and also to attend in accordance with paragraph (b); or

Paragraph
Paragraph

(d) to provide in writing such information or particulars which the Director General thinks necessary. Laws of Malaysia 140 Act 851 Power of access to buildings and documents, etc., under Part XI

Section 205

For the purposes of this Part, the Director General shall at all times have full and free a...

No text is available for this node.

Subsection
Subsection

(2)  Where the Director General exercises his powers under subsection (1), the occupiers of such lands, buildings and places shall provide the Director General or an authorized officer with all reasonable facilities and assistance for the exercise of his powers under this section.

Subsection
Subsection

(3)  The Director General may take possession of any books, documents, objects, articles, materials and things to which he has access under subsection (1) where in his opinion—

Paragraph
Paragraph

(a) the inspection of them, the copying of them or the making of extracts from them cannot reasonably be undertaken without taking possession of them;

Paragraph
Paragraph

(b) they may be interfered with or destroyed unless he takes possession of them; or

Paragraph
Paragraph

(c) they may be needed as evidence in any legal proceedings instituted under or in connection with this Part.

Subsection
Subsection

(4)  Where in the opinion of the Director General it is necessary for the purpose of implementing the provisions of this Part to examine any books, accounts or records kept otherwise than in the national language or English, he may by notice under his hand require any Constituent Entity to furnish within a time specified in the notice (not being less than thirty days from the date of service of the notice) a translation in the national language or English of the books, accounts or records in question. Finance (No. 2) 141 Power to call for information under Part XI

Section 206

For the purposes of this Part, the Director General may require any natural person or Const...

No text is available for this node.

Subsection
Subsection

(2)  Where that natural person is a public officer or an officer in the employment of a local authority or statutory authority, he shall not by virtue of this section be obliged to disclose any particulars as to which he is under a statutory obligation to observe secrecy. Duty of Constituent Entity to keep documents for ascertaining tax payable

Section 207

Subject to this section, every Constituent Entity which is required to furnish a return as...

Domestic Top-up Tax or Multinational Top-up Tax.

Subsection
Subsection

(2)  Where a Constituent Entity referred to in subsection (1) has not furnished a return as required under this Part for a Reporting Financial Year, that Constituent Entity shall keep and retain the documents referred to in subsection (1) that relate to that Financial Year for a period of seven years after the end of the year in which the return is furnished.

Subsection
Subsection

(3)  The Director General may specify by statutory order in respect of any class or description of business (or by notice under his hand in respect of the business of any particular Constituent Entity) the form of records to be kept under subsection (1) and the manner in which they shall be kept and retained. Laws of Malaysia 142 Act 851

Subsection
Subsection

(4)  The Director General may waive all or any of the provisions of subsection (1) in respect of any particulars in an information return or Top-up Tax return furnished by a Constituent Entity.

Subsection
Subsection

(5)  Any Constituent Entity who is required by this section to keep documents and—

Paragraph
Paragraph

(a) does so electronically shall retain them in an electronically readable form and shall keep the documents in such a manner as to enable the documents to be readily accessible and convertible into writing; or

Paragraph
Paragraph

(b) has originally kept documents in a manual form and subsequently converts those documents into an electronic form shall retain those documents prior to the conversion in their original form.

Subsection
Subsection

(6)  All documents for the purpose of administering and determining liability to Domestic Top-up Tax and Multinational Top-up Tax in Malaysia shall be kept and retained in Malaysia.

Subsection
Subsection

(7)  For the purposes of this section, “documents” means—

Paragraph
Paragraph

(a) any documents as are necessary to verify the particulars in an information return or Top-up Tax return furnished by a Constituent Entity; or

Paragraph
Paragraph

(b) any other records as may be specified by the Director General under subsection (3). Power to call for further return under Part XI

Section 208

The Director General may give notice in writing to any Constituent Entity whenever he think...

(to be specified in the notice) fuller or further returns respecting any matter as to which a return is required by or under this Part. Finance (No. 2) 143 Returns deemed to be made with due authority under

Part

Part XI

Section 209

A return purporting to be made pursuant to this Part by or on behalf of any Constituent Ent...

Change of address of Constituent Entity

Section 210

Every Constituent Entity chargeable to tax who changes his address in Malaysia (being an ad...

No text is available for this node.

Chapter

Chapter 14

Text

Assessment

Domestic Top-up Tax or Multinational Top-up Tax assessments

Section 211

Where a Constituent Entity has furnished a Top-up Tax return in accordance with section 202...

Top-up Tax return is furnished, an assessment in respect of that Constituent Entity in the amount of Domestic Top-up Tax or Multinational Top-up Tax being the amounts as specified in the Top-up Tax return.

Subsection
Subsection

(2)  For the purposes of this Part, where the Director General is deemed to have made an assessment under subsection (1)—

Paragraph
Paragraph

(a) the Top-up Tax return referred to in that subsection shall be deemed to be a notice of assessment; and

Paragraph
Paragraph

(b) the deemed notice of assessment shall be deemed to have been served on the Constituent Entity on the day on which the Director General is deemed to have made the assessment. Laws of Malaysia 144 Act 851

Subsection
Subsection

(3)  Where a Constituent Entity for a Financial Year has not furnished a Top-up Tax return in accordance with section 202, the Director General may according to the best of his judgment determine the amount of the Domestic Top-up Tax or Multinational Top-up Tax, of that Constituent Entity for the Financial Year and make an assessment accordingly.

Subsection
Subsection

(4)  The making of an assessment in respect of a Constituent Entity under this section shall not affect any liability otherwise incurred by that Constituent Entity by reason of its failure to deliver the Top-up Tax return. Assessments and additional assessments in certain cases under Part XI

Section 212

Where for any Financial Year it appears to him that no or no sufficient assessment has been...

Constituent Entity chargeable to tax, the Director General may in that year or within five years after its expiration make an assessment or additional assessment, as the case may be, in respect of that Constituent Entity in the amount of Domestic Top-up Tax or Multinational Top-up Tax in which, according to the best of the Director General’s judgment, the assessment with respect to that Constituent Entity ought to have been made for that year.

Subsection
Subsection

(2)  Where the Director General discovers that the whole or part of any tax repaid to a Constituent Entity (otherwise than in consequence of an agreement come to with respect to an assessment pursuant to subsection 101(2) or in consequence of an assessment having been determined on appeal) has been repaid by mistake whether of fact or law, the Director General may make an assessment in respect of that Constituent Entity in the amount of that tax or that part of that tax, as the case may be.

Subsection
Subsection

(3)  An assessment under subsection (2) shall not be made—

Paragraph
Paragraph

(a) if the repayment was in fact made on the basis of, or in accordance with, the practice of the Director General generally prevailing at the time when the repayment was made; or Finance (No. 2)

Paragraph
Paragraph

(b) in respect of any tax, more than five years after the tax has been repaid.

Subsection
Subsection

(4)  Where it appears to the Director General that—

Paragraph
Paragraph

(a) any form of fraud or wilful default has been committed by or on behalf of any Constituent Entity; or

Paragraph
Paragraph

(b) any Constituent Entity has been negligent, in connection with or in relation to tax, he may at any time make an assessment in respect of that Constituent Entity for any Financial Year for the purpose of making good any loss of tax attributable to the fraud, wilful default or negligence in question. Deemed assessment on amended return of Constituent Entity

Section 213

Where a Constituent Entity has furnished an amended return in accordance with section 203 f...

Top-up Tax—

Paragraph
Paragraph

(a) in the amount of tax or additional tax payable; or

Paragraph
Paragraph

(b) in the amount of tax which has been or would have been wrongly repaid, the tax or additional tax being the amounts as specified in the amended return.

Subsection
Subsection

(2)  For the purposes of this Act, where the Director General is deemed to have made an assessment or additional assessment under subsection (1)—

Paragraph
Paragraph

(a) the amended return referred to in that subsection shall be deemed to be a notice of assessment or additional assessment; and Laws of Malaysia 146 Act 851

Paragraph
Paragraph

(b) the deemed notice of assessment or additional assessment shall be deemed to have been served on the Constituent Entity on the day on which the Director General is deemed to have made the assessment or additional assessment. Form and making of Domestic Top-up Tax or Multinational Top-up Tax assessments

Section 214

An assessment, other than an assessment under subsection 211(1) and section 213 in respect...

Entity shall—

Paragraph
Paragraph

(a) be made in the appropriate prescribed form;

Paragraph
Paragraph

(b) indicate, in addition to any other material included therein, the appropriate Financial Year and the amount of tax or additional tax, as the case may be; and

Paragraph
Paragraph

(c) specify in the appropriate space in that form the date on which that form was duly completed, and, where that form appears to have been duly completed the assessment shall, until the contrary is proved, be presumed to have been made on the date so specified. Record of Domestic Top-up Tax or Multinational Top-up Tax assessments

Section 215

The Director General shall cause to be maintained in such manner as he thinks fit a record...

Notice of Domestic Top-up Tax or Multinational Top-up Tax assessment

Section 216

As soon as may be after an assessment, other than an assessment under subsection 211(1) and...

Finance (No. 2)

Subsection
Subsection

(2)  Where the tax charged under an assessment is increased on appeal to the Special Commissioners or a court, then, so soon as may be after the appeal has been decided there shall be served on the Constituent Entity in respect of whom the assessment was made a notice of increased assessment.

Subsection
Subsection

(3)  Where section 219 applies as regards an agent and another Constituent Entity, any notice to be served under subsection (1) or (2) shall be served both on the agent and on the other Constituent Entity.

Subsection
Subsection

(4)  A notice served under subsection (1) or (2) shall be in the prescribed form and shall indicate, in addition to any other material included therein—

Paragraph
Paragraph

(a) in the case of a notice served under subsection (1), the Financial Year, the tax or additional tax, as the case may be;

Paragraph
Paragraph

(b) in the case of a notice served under subsection (2), the Financial Year and the amount of the increase in the tax charged; and

Paragraph
Paragraph

(c) in either case—

Paragraph
Paragraph

(i) the place at which payment is to be made;

Subparagraph
Subparagraph

(ii) the increase for late payment imposed by subsection 220(5) or (6); and

Subparagraph
Subparagraph

(iii) any right of appeal which may exist under this Part. Composite assessment for Domestic Top-up Tax or Multinational Top-up Tax

Section 217

Without prejudice to section 212 where a Constituent Entity—

No text is available for this node.

Paragraph
Paragraph

(a) has defaulted in furnishing a return in accordance with subsection 201(1) or 202(1); Laws of Malaysia 148 Act 851

Paragraph
Paragraph

(b) makes an incorrect return by omitting or understating any tax of which he is required by this Part to make a return on behalf of himself or another Constituent Entity; or

Paragraph
Paragraph

(c) gives any incorrect information in relation to any matter affecting his own chargeability to tax or the chargeability to tax of any other Constituent Entity, for any Financial Year or Financial Years (that year or those years being referred to in this section as the relevant year or relevant years), the Director General and that Constituent Entity may come to an agreement in writing as to the payment by that Constituent Entity of a sum of money (in this section referred to as the total amount) being—

Paragraph
Paragraph

(i) the amount of tax which has been undercharged or not charged for that relevant year or those relevant years in consequence of such default in furnishing a return or making an incorrect return or giving any incorrect information; and

Subparagraph
Subparagraph

(ii) the amount of any penalty or penalties which that Constituent Entity may be required to pay for that relevant year or those relevant years pursuant to subsection 225(5) or 227(2) or both (or where such penalty is abated or remitted under section 234 so much, if any, of the penalty which has not been abated or remitted).

Subsection
Subsection

(2)  Where the Director General and a Constituent Entity have come to an agreement pursuant to subsection (1), the Director General may make a composite assessment of the Domestic Top-up Tax or Multinational Top-up Tax as the case may be in respect of that Constituent Entity in the total amount.

Subsection
Subsection

(3)  As soon as may be after a composite assessment of the Domestic Top-up Tax or Multinational Top-up Tax as the case may be has been made, the Director General shall cause a notice of composite assessment to be served on the Constituent Entity in respect of whom the composite assessment was made. Finance (No. 2)

Subsection
Subsection

(4)  A notice served under subsection (3) shall be in the prescribed form and shall indicate in addition to any other material included therein—

Paragraph
Paragraph

(a) the relevant year or relevant years;

Paragraph
Paragraph

(b) the amount or aggregate amount of tax undercharged or not charged in the relevant year or relevant years;

Paragraph
Paragraph

(c) the amount or aggregate amount of any penalty imposed by virtue of subsection 225(5) or 227(2) or both (or where such penalty is abated or remitted under section 234 so much, if any, of the penalty which has not been abated or remitted); and

Paragraph
Paragraph

(d) the place at which payment of the total amount is to be made.

Subsection
Subsection

(5)  The total amount shall be collected as if it were part of the tax payable by the Constituent Entity in respect of whom the composite assessment of the Domestic Top-up Tax or Multinational Top-up Tax as the case may be has been made but shall not be treated as tax so payable for the purposes of the provisions of this Part other than sections 220 to 222.

Subsection
Subsection

(6)  Notwithstanding any other provision of this Act—

Paragraph
Paragraph

(a) a composite assessment of the Domestic Top-up Tax or Multinational Top-up Tax as the case may be made under this section shall be final and conclusive for the purposes of this Act; and

Paragraph
Paragraph

(b) no appeal shall lie against a composite assessment. Finality of Domestic Top-up Tax or Multinational Top-up Tax assessment

Section 218

Where—

No text is available for this node.

Paragraph
Paragraph

(a) no valid notice of appeal against an assessment of the Domestic Top-up Tax or Multinational Top-up Tax has been given under section 219 within the time specified by that section (or any extension thereof); Laws of Malaysia 150 Act 851

Paragraph
Paragraph

(b) an agreement has been reached with respect to an assessment of the Domestic Top-up Tax or Multinational Top-up Tax pursuant to subsection 101(2);

Paragraph
Paragraph

(c) an assessment of the Domestic Top-up Tax or Multinational Top-up Tax has been determined on appeal and there is no right of further appeal; or

Paragraph
Paragraph

(d) a valid notice of appeal against an assessment of the Domestic Top-up Tax or Multinational Top-up Tax has been given but the appellant dies before the hearing of the appeal by the Special Commissioners is commenced or completed and no personal representatives of the estate of the deceased appellant applies to the Special Commissioners within two years after his death to proceed with or complete the hearing, the assessment as made, agreed to or determined shall be final and conclusive for the purposes of this Act.

Subsection
Subsection

(2)  Nothing in subsection (1) shall prejudice the exercise of any power conferred on the Director General by section 212 and subsection 143(3).

Chapter

Chapter 15

Text

Appeal against Domestic Top-up Tax or

Multinational Top-up Tax Right of appeal under Part XI

Section 219

A Constituent Entity aggrieved by an assessment or additional assessment made on him under...

Act, and sections 99, 100, 101 and 102 of this Act, as far as they are applicable and with the necessary modifications, shall apply to an appeal against an assessment or additional assessment made under this Part as if every reference in those sections to income tax or to tax were a reference to Domestic Top-up Tax or Multinational Top-up Tax. Finance (No. 2)

Subsection
Subsection

(2)  Schedule 5 shall apply with necessary modifications in relation to the procedures of hearing of appeals to the Special Commissioners and to the procedures of hearing of further appeals.

Chapter

Chapter 16

Text

Collection and Recovery of Domestic Top-up Tax or Multinational Top-up Tax

Payment of Domestic Top-up Tax or Multinational Top-up Tax

Section 220

Except as provided in subsection (2), tax payable under an assessment for a Financial Year...

No text is available for this node.

Subsection
Subsection

(2)  Where an assessment or additional assessment has been made under section 213, the tax or additional tax payable under the assessment shall be due and payable on the day the amended return is furnished whether or not that Constituent Entity appeals against the assessment or additional assessment.

Subsection
Subsection

(3)  Where an assessment is made under subsection 211(3), section 212 or 217, or where an assessment is increased under subsection 101(2), the tax payable under the assessment or increased assessment shall, on the service of the notice of assessment or composite assessment or increased assessment, as the case may be, be due and payable on the Constituent Entity assessed at the place specified in that notice whether or not that Constituent Entity appeals against the assessment or increased assessment.

Subsection
Subsection

(4)  Where any tax due and payable under subsection (1) has not been paid by the due date, so much of the tax as is unpaid upon the expiration of that date shall without any further notice being served be increased by a sum equal to ten per cent of the tax so unpaid, and that sum shall be recoverable as if it were tax due and payable under this Part. Laws of Malaysia 152 Act 851

Subsection
Subsection

(5)  Subject to subsection (7), where any tax due and payable under subsection (3) has not been paid within thirty days after the service of the notice, so much of the tax as is unpaid upon the expiration of that period shall without any further notice being served be increased by a sum equal to ten per cent of the tax so unpaid, and that sum shall be recoverable as if it were tax due and payable under this Part.

Subsection
Subsection

(6)  Where any tax is payable in accordance with subsection (1) or (3), the Director General may allow the tax to be paid by instalments in such amounts and on such dates as he may determine and in the event of default in payment of any one instalment on the date specified for payment the balance of the tax then outstanding shall be due and payable on that date and shall without any further notice being served be increased by a sum equal to ten per cent of that balance, and that sum shall be recoverable as if it were tax due and payable under this Part.

Subsection
Subsection

(7)  Notwithstanding the foregoing subsections, where tax due and payable is increased by a sum under subsection (4),

Subsection
Subsection

(5) or (6), the Director General may in his discretion for any good cause shown remit the whole or any part of that sum and, where the amount remitted has been paid, the Director General shall repay that amount.

Subsection
Subsection

(8)  For the purposes of this section, “due date” means the last day of the fifteenth month from the close of the Reporting Financial Year. Domestic Top-up Tax or Multinational Top-up Tax payable notwithstanding institution of proceedings under any other written law

Section 221

The institution of any proceedings under any other written law against the Government or th...

Finance (No. 2) 153 Recovery by suit under Part XI

Section 222

The tax due and payable under this Part may be recovered by the Government by civil proceed...

Refund of over-payments under Part XI

Section 223

Subject to this section, where it is proved to the satisfaction of the Director General tha...

Constituent Entity has paid tax for any Financial Year in excess of the amount payable under this Part, that Constituent Entity shall be entitled to have the excess refunded by the Government and, where that Constituent Entity is dissatisfied with the amount to be refunded to it, the Constituent Entity may within thirty days of being notified of that amount appeal to the Special Commissioners as if the notification were a notice of assessment, the provisions of this Act relating to appeals applying accordingly with any necessary modifications.

Subsection
Subsection

(2)  Where a Constituent Entity has furnished a return in accordance with section 202 to the Director General for a Financial Year and that Constituent Entity has paid tax in excess of the amount payable—

Paragraph
Paragraph

(a) that return shall be deemed to be a notification under subsection (1); and

Paragraph
Paragraph

(b) that Constituent Entity is deemed to have been notified of the excess amount on the day that return is furnished.

Subsection
Subsection

(3)  No claim for repayment under this section shall be valid unless it is made within five Financial Years after the end of the Financial Year to which the claim relates or, where the claim relates to repayment of tax charged by an assessment, within five Financial Years after the end of the Financial Year within which that assessment was made. Laws of Malaysia 154 Act 851

Subsection
Subsection

(4)  Nothing in this section shall operate—

Paragraph
Paragraph

(a) to extend any time limit for appeal, validate any appeal which is otherwise invalid or authorize the revision of any assessment or other matter which has become final and conclusive; or

Paragraph
Paragraph

(b) to compel the Government to refund the excess amount of tax paid (by deduction or otherwise) in respect of an assessment unless the assessment has been finally determined.

Subsection
Subsection

(5)  Any amount of excess in respect of tax payable for a Financial Year which is to be refunded to a Constituent Entity under subsection (1) may be utilized by the Director General for the payment of any other amount of tax which is due and payable (including any amount of instalments which are due and payable) by that Constituent Entity under this Act.

Subsection
Subsection

(6)  Where amount of excess in respect of a Constituent Entity is ascertained in accordance with subsection 111(4a) of this Act such excess shall be applied for the payment of tax which is due and payable (including any amount of instalments which are due and payable) by that Constituent Entity under this Part.

Subsection
Subsection

(7)  For the avoidance of doubt, sections 111b and 111c shall apply accordingly.

Chapter

Chapter 17

Text

Offences and Penalties

Failure of Constituent Entity to furnish information return

Section 224

Any Constituent Entity who has defaulted in furnishing an information return in accordance...

Finance (No. 2)

Subsection
Subsection

(2)  In any prosecution under subsection (1), the burden of proving that an information return has been furnished shall be upon the Constituent Entity.

Subsection
Subsection

(3)  Where a Constituent Entity has been convicted of an offence under subsection (1), the court may make a further order that the Constituent Entity shall comply with the relevant provision of this Act under which the offence has been committed within thirty days, or such other period as the court thinks fit, from the date the order is made. Failure of Constituent Entity to furnish Top-up Tax return

Section 225

Any Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance wi...

No text is available for this node.

Subsection
Subsection

(2)  Any Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance with section 202 in respect of any Reporting Financial Year for two years or more shall be guilty of an offence and shall, on conviction, be liable to—

Paragraph
Paragraph

(a) a fine of not less than one thousand ringgit and not more than twenty thousand ringgit or to imprisonment for a term not exceeding six months or to both; and

Paragraph
Paragraph

(b) a special penalty equal to treble the amount which the Director General may, according to the best of his judgment, determine as the tax charged on that Constituent Entity for those Reporting Financial Years.

Subsection
Subsection

(3)  In any prosecution under subsection (1) or (2) the burden of proving that a Top-up Tax return has been furnished shall be upon the Constituent Entity. Laws of Malaysia 156 Act 851

Subsection
Subsection

(4)  Where a Constituent Entity has been convicted of an offence under subsection (1) or (2), the court may make a further order that the Constituent Entity shall comply with the relevant provision of this Act under which the offence has been committed within thirty days, or such other period as the court thinks fit, from the date the order is made.

Subsection
Subsection

(5)  Where in relation to a Financial Year a Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance with section 202 and no prosecution under subsection (1) or (2) has been instituted in relation to that default—

Paragraph
Paragraph

(a) the Director General may require that Constituent Entity to pay a penalty equal to treble the amount of that tax which, before any set-off, repayment or relief under this Act, is payable for that year; and

Paragraph
Paragraph

(b) if that Constituent Entity pays that penalty, or, where the penalty is abated or remitted under section 234, so much, if any, of the penalty as has not been abated or remitted, the Constituent Entity shall not be liable to be charged on the same facts with an offence under subsection (1) or (2).

Subsection
Subsection

(6)  The Director General may require the Constituent Entity to pay an additional amount of penalty in accordance with subsection (5) in respect of any additional tax which is payable by that Constituent Entity for a Financial Year. Incorrect information return of Constituent Entity

Section 226

Any Constituent Entity that makes an incorrect information return by omitting the informati...

Finance (No. 2)

Subsection
Subsection

(2)  Any Constituent Entity that gives any incorrect information in relation to any information required to be provided in accordance with section 201 on behalf of itself or another Constituent Entity, or any natural person who gives incorrect information in relation to any information required to be provided in accordance with section 201 on behalf of a Constituent Entity shall, be guilty of an offence and shall, on conviction be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both. Incorrect Top-up Tax return of Constituent Entity

Section 227

Any—

No text is available for this node.

Paragraph
Paragraph

(a) Constituent Entity that makes an incorrect Top-up Tax return by omitting or understating any tax of which the Constituent Entity is required under section 202 to make a Top-up Tax return on behalf of itself or another Constituent Entity, or any natural person who makes an incorrect Top-up Tax return of a Constituent Entity by omitting or understating any tax of which he is required under section 202 to make a Top-up Tax return on behalf of that Constituent Entity; or

Paragraph
Paragraph

(b) Constituent Entity or any natural person that gives any incorrect information in relation to any matter affecting the chargeability to tax of that Constituent Entity or the chargeability to tax of another Constituent Entity, shall, be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit and shall pay a special penalty of double the amount of tax which has been undercharged in consequence of the incorrect Top-up Tax return or incorrect information or which would have been undercharged if the return or information had been accepted as correct. Laws of Malaysia 158 Act 851

Subsection
Subsection

(2)  Where any—

Paragraph
Paragraph

(a) Constituent Entity makes an incorrect Top-up Tax return by omitting or understating any tax of which the Constituent Entity is required by this Part to make a Top-up Tax return on behalf of itself or another Constituent Entity, or any natural person makes an incorrect Top-up Tax return of a Constituent Entity by omitting or understating any tax of which he is required by this Part to make a Top-up Tax return on behalf of that Constituent Entity; or

Paragraph
Paragraph

(b) Constituent Entity or any natural person gives any incorrect information in relation to any matter affecting the chargeability to tax of that Constituent Entity or the chargeability to tax of another Constituent Entity, then, if no prosecution under subsection (1) has been instituted in respect of the incorrect Top-up Tax return or incorrect information, the Director General may require the Constituent Entity or the natural person to pay a penalty equal to the amount of tax which has been undercharged in consequence of the incorrect Top-up Tax return or incorrect information or which would have been undercharged if the return or information had been accepted as correct and, if that Constituent Entity or that natural person pays that penalty (or, where the penalty is abated or remitted under section 234, so much, if any, of the penalty as has not been abated or remitted), the Constituent Entity or the natural person shall not be liable to be charged on the same facts with an offence under subsection (1). Wilful evasion of Multinational Top-up Tax or Domestic Top-up Tax

Section 228

Any natural person or Constituent Entity who wilfully and with intent to evade or assist an...

No text is available for this node.

Paragraph
Paragraph

(a) omits from a return made under section 201 or 202 any tax which should be included; Finance (No. 2)

Paragraph
Paragraph

(b) makes a false statement or entry in a return made under section 201 or 202;

Paragraph
Paragraph

(c) gives a false answer (orally or in writing) to a question asked or request for information made in pursuance of this Part;

Paragraph
Paragraph

(d) prepares or maintains or authorizes the preparation or maintenance of false books of account or other false records;

Paragraph
Paragraph

(e) falsifies or authorizes the falsification of books of account or other records; or

Paragraph
Paragraph

(f) makes use or authorizes the use of any fraud, art or contrivance, shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding three years or to both, and shall pay a special penalty of treble the amount of tax which has been undercharged in consequence of the offence or which would have been undercharged if the offence had not been detected.

Subsection
Subsection

(2)  Any natural person or Constituent Entity who assists in, or advises with respect to, the preparation of any return under section 201 or 202 where the return results in an understatement of the liability for tax of a Constituent Entity shall, unless he satisfies the court that the assistance or advice was given with reasonable care, be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding three years or to both.

Subsection
Subsection

(3)  Where in any proceedings under this section it is proved that a false statement or false entry (whether by omission or otherwise) has been made in a return furnished under section 201 or 202 by or on behalf of any Constituent Entity or in any books of account or other records maintained by or on behalf of any Constituent Entity, that natural person or Constituent Entity shall be presumed until the contrary is proved to have made that false statement or entry with intent to evade tax. Laws of Malaysia 160 Act 851 Obstruction of officers

Section 229

Any natural person who—

No text is available for this node.

Paragraph
Paragraph

(a) obstructs or refuses to permit the entry of the Director General or an authorized officer into any land, building or place in pursuance of section 205;

Paragraph
Paragraph

(b) obstructs the Director General or an authorized officer in the exercise of his functions under this Part;

Paragraph
Paragraph

(c) refuses to produce any book or other document in his custody or under his control on being required to do so by the Director General or an authorized officer for the purposes of this Part;

Paragraph
Paragraph

(d) fails to provide reasonable facilities or assistance or both to the Director General or an authorized officer in the exercise of his powers under this Part; or

Paragraph
Paragraph

(e) refuses to answer any question relating to any of those purposes lawfully asked of him by the Director General or an authorized officer, shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding one year or to both. Offences by officials under Part XI

Section 230

Any natural person having an official function under this Act who—

No text is available for this node.

Paragraph
Paragraph

(a) otherwise than in good faith, demands from any Constituent Entity an amount in excess of the Domestic Top-up Tax or Multinational Top-up Tax or penalties due under this Part;

Paragraph
Paragraph

(b) withholds for his own use or otherwise any portion of any such Domestic Top-up Tax or Multinational Top-up Tax or penalty collected or received by him; Finance (No. 2)

Paragraph
Paragraph

(c) otherwise than in good faith, makes a false report or return (orally or in writing) of the amount of any such Domestic Top-up Tax or Multinational Top-up Tax or penalty collected or received by him;

Paragraph
Paragraph

(d) defrauds any natural person, embezzles any money or otherwise uses his position to deal wrongfully with the Director General or any other natural person, shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding twenty thousand ringgit or to imprisonment for a term not exceeding three years or to both. Other offences in relation to Domestic Top-up Tax or Multinational Top-up Tax

Section 231

For the purposes of Domestic Top-up Tax and

Multinational Top-up Tax, any natural person or Constituent Entity who without reasonable excuse—

Paragraph
Paragraph

(a) fails to comply with a notice given under subsection 106a(1), section 204, subsection 205(4), section 206 or section 208;

Paragraph
Paragraph

(b) contravenes subsection 106a(2) or section 210; or

Paragraph
Paragraph

(c) fails to furnish the correct particulars as required by the Director General under subparagraph 201(6)(a)(vi) or paragraph 202(3)(b), shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both.

Subsection
Subsection

(2)  Where a natural person or Constituent Entity has been convicted of an offence under subsection (1), the court may make a further order that the natural person or Constituent Entity shall comply with the relevant provision of this Act under which the offence has been committed within thirty days, or such other period as the court thinks fit, from the date the order is made. Laws of Malaysia 162 Act 851 Additional provisions as to offences under section 227, 229, 230 or 231

Section 232

No proceedings for an offence under section 227, 229, 230

or 231 shall be instituted more than twelve years after the offence was committed.

Subsection
Subsection

(2)  Any natural person or Constituent Entity who aids, abets or incites another natural person or Constituent Entity to commit an offence under section 227, 229, 230 or 231 shall be deemed to have committed the same offence and shall be liable to the same penalty. Domestic Top-up Tax and Multinational Top-up Tax, etc., payable notwithstanding institution of proceedings

Section 233

The institution of proceedings or the imposition of a penalty, special penalty, fine or ter...

Entity from liability for the payment of any Domestic Top-up Tax or Multinational Top-up Tax (or any penalty deemed under this Part to be tax payable) or any debt or other sum for which the natural person or Constituent Entity is or may be liable or from liability to make any return which the natural person or Constituent Entity is required by this Part to make. Power to compound offences under Part XI

Section 234

Where any natural person or Constituent Entity has committed any offence under this Part, t...

Recovery of penalties imposed under Part XI

Section 235

Special penalties imposed under subsection 225(2), 227(1)

or 228(1) shall be recoverable in the same way as fines imposed on conviction. Finance (No. 2)

Subsection
Subsection

(2)  Any penalty imposed on any natural person or Constituent Entity under subsection 225(5) or 227(2) shall be collected as if it were part of the tax payable by that natural person or Constituent Entity, but shall not be treated as tax so payable for the purposes of any provision of this Act other than sections 220 to 222. Jurisdiction of subordinate court under Part XI

Section 236

Notwithstanding any other written law, a subordinate court (as defined in Schedule 5) shall...

Remission of tax

Section 237

The tax paid or payable by any Constituent Entity may be remitted wholly or in part—

No text is available for this node.

Paragraph
Paragraph

(a) on grounds of poverty, by the Director General; or

Paragraph
Paragraph

(b) on grounds of justice and equity, by the Minister, and any tax so remitted shall not be regarded as tax payable for the purposes of any other provision of this Act.

Subsection
Subsection

(2)  Where a Constituent Entity granted remission under subsection (1) has paid any of the tax to which the remission relates, the Constituent Entity shall be entitled to have the amount which the Constituent Entity has paid refunded to it as if the amount were an overpayment to which section 223 applies.

Chapter

Chapter 18

Text

Relief

Relief in respect of error or mistake under Part XI

Section 238

If any Constituent Entity who has paid tax for any

Financial Year alleges that an assessment relating to that Financial Year is excessive by reason of some error or mistake in a return or statement made by it for the purposes of this Part and furnished by it to the Director General prior to the Laws of Malaysia 164 Act 851 assessment becoming final and conclusive, the Constituent Entity may within five Financial Years after the end of the Financial Year within which the assessment was made make an application in writing to the Director General for relief and section 131 of this Act as far as it is applicable and with the necessary modifications, shall apply.

Chapter

Chapter 19

Text

Supplemental

Application of certain provisions of Part X to matters regarding Multinational Top-up Tax

Section 239

For the avoidance of doubt—

No text is available for this node.

Paragraph
Paragraph

(a) sections 134, 135, 136, 137, 138a, 142a, 144, 145, 146, 147, 148, 149, 151, 152, 152a and 153 shall apply to this Part;

Paragraph
Paragraph

(b) section 138 shall apply to this Part and subsection 138(4) shall apply to this Part as if reference to “the income of any person” were a reference to “the tax of the Constituent Entity”; and

Paragraph
Paragraph

(c) section 143 shall apply to this Part and subsection 143(3) shall apply to this Part as if reference to “the amount of the chargeable income and the appropriate rate of tax applicable thereto” were a reference to “the tax payable”.”. Amendment of Schedule 1

Section 31

Schedule 1 to the principal Act is amended by inserting after

No text is available for this node.

Part

Part XX the following part:

Text

“Part XXI

Notwithstanding Part I, income tax shall be charged for a year of assessment on the income of a company, limited liability partnership, trust body or co-operative society from the disposal of capital asset referred to in paragraph 4(aa) at the following rates:

Paragraph
Paragraph

(a) in relation to a disposal of capital asset situated in Malaysia which was acquired before 1 January 2024—

Paragraph
Paragraph

(i) at the rate of 10 per cent on every ringgit of the chargeable income from the disposal of the capital asset; or Finance (No. 2)

Subparagraph
Subparagraph

(ii) at the rate of 2 per cent of gross on the disposal price of the capital asset;

Paragraph
Paragraph

(b) in relation to a disposal of capital asset situated in Malaysia which was acquired on or after 1 January 2024 at the rate of 10 per cent on every ringgit of the chargeable income from the disposal of the capital asset;

Paragraph
Paragraph

(c) in relation to a disposal of capital asset other than a disposal under paragraphs (a) and (b), at the applicable rate to the company, limited liability partnership, trust body or co-operative society as specified under Part I or IV on every ringgit of the chargeable income from the disposal of the capital asset.”. Amendment of Schedule 3

Section 32

Subparagraph 19a(4) of Schedule 3 to the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsubparagraph (b), by deleting the word “or” at the end of the subsubparagraph;

Paragraph
Paragraph

(b) in subsubparagraph (c), by substituting for the full stop at the end of the subsubparagraph the words “; or”; and

Paragraph
Paragraph

(c) by inserting after subsubparagraph (c) the following subsubparagraph: “(d) twenty per cent of the paid-up capital in respect of ordinary shares of the company at the beginning of the basis period for a year of assessment is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia.”. Amendment of Schedule 6

Section 33

Schedule 6 to the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsubparagraph 13(1)(a), by substituting for the words “so long as the approval remains in force” the words “in the basis period for a year of assessment so long as the institution, organization or fund complies with the conditions of the approval in that basis period for that year of assessment”; and Laws of Malaysia 166 Act 851

Paragraph
Paragraph

(b) by inserting after paragraph 37 the following paragraph: “38.  (1)  Gains or profits from the disposal of a capital asset situated in Malaysia.

Subsection
Subsection

(2)  The exemption under subparagraph (1) shall not apply to—

Paragraph
Paragraph

(a) disposal of shares of a company incorporated in Malaysia not listed on the stock exchange; and

Paragraph
Paragraph

(b) disposal of shares under section 15c.”. Amendment of Schedule 7

Section 34

Paragraph 16 of Schedule 7 to the principal Act is amended by substituting for the definiti...

‘ “foreign income” means, in relation to—

Paragraph
Paragraph

(a) unilateral credit, income derived from outside Malaysia charged to foreign tax;

Paragraph
Paragraph

(b) bilateral credit, income derived from outside Malaysia and from Malaysia, charged to foreign tax.’.

Chapter

Chapter III

Text

AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976

Commencement of amendments to the Real Property Gains Tax Act 1976

Section 35

Sections 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48

and 49 come into operation on 1 January 2025.

Subsection
Subsection

(2) Section 50 comes into operation on 1 January 2024. Finance (No. 2) 167 Amendment of section 2

Section 36

The Real Property Gains Tax Act 1976, which is referred to as the “principal Act” in this C...

No text is available for this node.

Paragraph
Paragraph

(a) by inserting after the definition of “business” the following definition:   ‘ “business trust” has the meaning assigned to it in the Capital Markets and Services Act 2007 [Act 671];’; and

Paragraph
Paragraph

(b) in the definition of “company”, by inserting after the word “Malaysia” the words “and a business trust”. Amendment of section 13

Section 37

Section 13 of the principal Act is amended in subsection (1)—

No text is available for this node.

Paragraph
Paragraph

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

Paragraph
Paragraph

(b) in paragraph (c), by substituting for the words “submit a written valuation of the asset by a valuer.” the words “containing the market value of the asset based on a valuation made by a valuer;”; and

Paragraph
Paragraph

(c) by inserting after paragraph (c) the following paragraphs: “(d) specifying the chargeable gain and the amount of tax payable (if any) on that chargeable gain for that disposal; and

Paragraph
Paragraph

(e) containing such particulars as may be required by the Director General.”. Laws of Malaysia 168 Act 851 New section 13a

Section 38

The principal Act is amended by inserting after section 13

the following section: “Amendment of return 13a.  (1)  Where for a year of assessment a person has furnished a return in accordance with section 13, that person may make amendment to such return in an amended return as prescribed by the Director General in respect of the amount of tax or additional tax payable by that person on the chargeable gains or on the amount of tax which has been or would have been wrongly repaid to him.

Subsection
Subsection

(2)  An amended return under subsection (1) shall only be made after the due date for the furnishing of the return in accordance with section 13, but not later than six months from that date.

Subsection
Subsection

(3)  For the purposes of this section, the amended return shall—

Paragraph
Paragraph

(a) specify the amount or additional amount of chargeable gains and the amount of tax or additional tax payable on that chargeable gains;

Paragraph
Paragraph

(b) specify the amount of tax payable on the tax which has or would have been wrongly repaid to him;

Paragraph
Paragraph

(c) specify the increased sum ascertained in accordance with subsection (4); or

Paragraph
Paragraph

(d) contain such particulars as may be required by the Director General.

Subsection
Subsection

(4)  The tax or additional tax payable under subsection (1) shall be increased by a sum equal to ten per cent of the amount of such tax or additional tax.

Subsection
Subsection

(5)  The amendment under subsection (1) shall only be made once. Finance (No. 2)

Subsection
Subsection

(6)  Where—

Paragraph
Paragraph

(a) a return for a year of assessment has been furnished in accordance with section 13; and

Paragraph
Paragraph

(b) the Director General has made an assessment for that year of assessment under section 15, no amendment shall be allowed under this section.”. Amendment of section 14

Section 39

Section 14 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by substituting for subsection (1) the following subsection:   “(1)  Where a person has furnished a return in accordance with section 13, the Director General shall be deemed to have made, on the day on which the return is furnished, an assessment in respect of that person in the amount of tax on the chargeable gains, the tax and the chargeable gains being the respective amounts as specified in the return.”; and

Paragraph
Paragraph

(b) by inserting after subsection (1) the following subsection:   “(1a)  For the purposes of this Act, where the Director General is deemed to have made an assessment under subsection (1)—

Paragraph
Paragraph

(a) the return referred to in that subsection shall be deemed to be a notice of assessment; and

Paragraph
Paragraph

(b) the deemed notice of assessment shall be deemed to have been served on the person on the day on which the Director General is deemed to have made the assessment.”. Laws of Malaysia 170 Act 851 Amendment of section 15

Section 40

Section 15 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by inserting after subsection (1) the following subsection:   “(1a)  Where the Director General discovers that the whole or part of any tax repaid to a person, otherwise than in consequence of an agreement with respect to an assessment pursuant to subsection 101(2) of the Income Tax Act 1967 or in consequence of an assessment having been determined on appeal, has been repaid by mistake whether of fact or law, the Director General may make an assessment in respect of that person in the amount of that tax or that part of that tax, as the case may be:   Provided that no such assessment shall be made—

Paragraph
Paragraph

(a) if the repayment was in fact made on the basis of, or in accordance with, the practice of the Director General generally prevailing at the time when the repayment was made; or

Paragraph
Paragraph

(b) in respect of any tax, more than five years after the tax has been repaid.”; and

Paragraph
Paragraph

(b) in subsection (2), by substituting for the words “or wilful default” wherever appearing the words “, wilful default or negligence”. New section 15a

Section 41

The principal Act is amended by inserting after section 15 the following section:

“Deemed assessment on the amended return 15a.  (1)  Where a person has furnished an amended return in accordance with section 13a for a year of assessment, the Director General shall be deemed to have made, on the day on which the amended return is furnished, an assessment or additional assessment in respect of that person—

Paragraph
Paragraph

(a) in the amount of tax or additional tax payable on the chargeable gains; or Finance (No. 2)

Paragraph
Paragraph

(b) in the amount of tax which has been or would have been wrongly repaid, the tax or additional tax and the chargeable gains being respective amounts as specified in the amended return.

Subsection
Subsection

(2)  For the purposes of this Act, where the Director General is deemed to have made an assessment or additional assessment under subsection (1)—

Paragraph
Paragraph

(a) the amended return referred to in that subsection shall be deemed to be a notice of assessment or additional assessment; and

Paragraph
Paragraph

(b) the deemed notice of assessment or additional assessment shall be deemed to have been served on the person on the day on which the Director General is deemed to have made the assessment or additional assessment.”. New section 16a

Section 42

The principal Act is amended by inserting after section 16

the following section: “Discharge of double assessments 16a.  Where two or more assessments have been made with respect to a person on the same gain in respect of the same chargeable asset for a year of assessment, the Director General may discharge such assessments as need to be discharged in order to ensure that the gain is charged to tax only once for that year.”. Amendment of section 17

Section 43

Section 17 of the principal Act is amended by inserting after the words “The Director Gener...

Laws of Malaysia 172 Act 851 Amendment of section 19

Section 44

The principal Act is amended by substituting for section 19

the following section: “Relief in respect of error or mistake

Section 19

If any person who has paid tax for any year of assessment alleges that an assessment relati...

No text is available for this node.

Subsection
Subsection

(2)  Upon receiving an application under subsection (1), the Director General shall inquire into the matter and, subject to this section, shall give such relief by way of repayment of tax in respect of the alleged error or mistake which appears to him to be just and reasonable.

Subsection
Subsection

(3)  In determining any application under this section, the Director General shall have regard to all the relevant circumstances of the case and specifically—

Paragraph
Paragraph

(a) shall consider whether the granting of relief would result in the exclusion from charge to tax of income of the applicant; and

Paragraph
Paragraph

(b) for that purpose may take into consideration the chargeability of the applicant for years of assessment other than the year to which the application relates and assessment made upon him for those years.

Subsection
Subsection

(4)  No relief shall be given under this section in respect of an error or mistake as to the basis on which the chargeability of the applicant ought to have been computed where the return or statement containing the error or mistake was in fact made on the basis of, or in accordance with, the practice of the Director General generally prevailing at the time when the return or statement was made. Finance (No. 2)

Subsection
Subsection

(5)  An application under subsection (1) shall be as nearly as may be in the same form as a notice of appeal under section 18, and, where the applicant is aggrieved by the Director General’s decision—

Paragraph
Paragraph

(a) the applicant may, within six months after the decision is being informed, request in the prescribed form for the Director General to forward the application to the Special Commissioners;

Paragraph
Paragraph

(b) the Director General shall within three months after receiving the request send the application forward as if he were sending an appeal forward pursuant to section 102 of the Income Tax Act 1967; and

Paragraph
Paragraph

(c) the application shall thereupon be deemed to be an appeal and shall be disposed of accordingly.”. New section 19a

Section 45

The principal Act is amended by inserting after section 19

the following section: “Relief other than in respect of error or mistake 19a.  (1)  Where any person, who has furnished to the Director General a return in respect of a chargeable asset disposed of in a year of assessment in accordance with section 13 and has paid tax for that disposal, alleges that the assessment relating to that year of assessment is excessive by reason of—

Paragraph
Paragraph

(a) any exemption, relief, remission, allowance or deduction granted for that year of assessment under this Act or any other written law is published in the Gazette after the year of assessment in which the return is furnished; or

Paragraph
Paragraph

(b) the approval for any exemption, relief, remission, allowance or deduction is granted after the year of assessment in which the return is furnished, Laws of Malaysia 174 Act 851 that person may make an application in writing to the Director General for relief.

Subsection
Subsection

(2)  The application under subsection (1) shall be made within five years after the end of the year the exemption, relief, remission, allowance or deduction is published in the Gazette or the approval is granted, whichever is the later.

Subsection
Subsection

(3)  Upon receiving an application under subsection (1), the Director General shall inquire into the matter and may give such relief by way of repayment of tax which appears to the Director General to be just and reasonable.

Subsection
Subsection

(4)  An application under subsection (1) shall be made as nearly as may be in the same form as a notice of appeal under section 99 of the Income Tax Act 1967.

Subsection
Subsection

(5)  Where the applicant is aggrieved by the Director General’s decision on the application under subsection (1)—

Paragraph
Paragraph

(a) the applicant may within six months after being informed of the decision, request in writing to the Director General to forward the application to the Special Commissioners;

Paragraph
Paragraph

(b) the Director General shall within three months after receiving the request send the application forward as if he were sending an appeal forward pursuant to section 102 of the Income Tax Act 1967; and

Paragraph
Paragraph

(c) the application shall thereupon be deemed to be an appeal and shall be disposed of accordingly.”. Amendment of section 20

Section 46

The principal Act is amended by substituting for section 20

the following section: “Finality of assessment

Section 20

Where—

No text is available for this node.

Paragraph
Paragraph

(a) no valid notice of appeal against an assessment has been given under section 18 within the time specified by that section (or any extension thereof); Finance (No. 2)

Paragraph
Paragraph

(b) an agreement has been reached with respect to an assessment pursuant to subsection 101(2) of the Income Tax Act 1967;

Paragraph
Paragraph

(c) an assessment has been determined on appeal and there is no right of further appeal; or

Paragraph
Paragraph

(d) a valid notice of appeal against an assessment has been given but the appellant dies before the hearing of the appeal by the Special Commissioners is commenced or completed and no personal representatives of the estate of the deceased appellant applies to the Special Commissioners within two years after his death to proceed with or complete the hearing, the assessment as made, agreed to or determined shall be final and conclusive for the purposes of this Act.

Subsection
Subsection

(2)  Nothing in subsection (1) shall prejudice the exercise of any power conferred on the Director General by section 15 or 16a.”. Amendment of section 21

Section 47

Section 21 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (1), by substituting for the words “Subject to this section” the words “Except as provided in subsections (1a) and (1b)”; and

Paragraph
Paragraph

(b) by inserting after subsection (1) the following subsections:   “(1a)  Where an assessment on a return has been made under subsection 14(1), the tax or additional tax payable under the assessment shall be due and payable within the period of sixty days from the date of disposal whether or not that person appeals against the assessment or additional assessment.

Subsection
Subsection

(1b)  Where an assessment on an amended return has been made under section 15a, the tax or additional tax payable under the assessment shall be due and payable on the day the amended return is furnished whether or not that person appeals against the assessment or additional assessment.”. Laws of Malaysia 176 Act 851 New sections 28a, 28b and 28c

Section 48

The principal Act is amended by inserting after section 28

the following sections: “Power to call for specific returns and production of books 28a.  For the purpose of obtaining full information for ascertaining whether or not a person is chargeable to tax or for determining his liability, the Director General may by notice under his hand require that or any other person—

Paragraph
Paragraph

(a) to complete and deliver to the Director General within a time specified in the notice, not being less than thirty days from the date of service of the notice, any return specified in the notice;

Paragraph
Paragraph

(b) to attend personally before the Director General and produce for examination all books, accounts, returns and other documents which the Director General thinks necessary;

Paragraph
Paragraph

(c) to make a return in accordance with paragraph (a) and also to attend in accordance with paragraph (b); or

Paragraph
Paragraph

(d) to provide in writing such information or particulars which the Director General thinks necessary. Power to call for statement of bank accounts, etc.

Section 28b

The Director General may by notice under his hand require any person to furnish within a ti...

No text is available for this node.

Paragraph
Paragraph

(a) all banking accounts—

Paragraph
Paragraph

(i) in his own name or in the name of a wife or dependent child of his or jointly in any such names; Finance (No. 2)

Subparagraph
Subparagraph

(ii) in which he is or has been interested jointly or solely; or

Subparagraph
Subparagraph

(iii) on which he has or has had power to operate jointly or solely, being accounts which are in existence or have been in existence at any time during a period to be specified in the notice;

Paragraph
Paragraph

(b) all savings and loan accounts, deposits, building society accounts and co-operative society accounts in regard to which he has or has had any interest or power to operate jointly or solely during that period;

Paragraph
Paragraph

(c) all assets which he and any wife or dependent child of his possess or have possessed during that period;

Paragraph
Paragraph

(d) all disposals of his and the chargeable gain from those disposals; and

Paragraph
Paragraph

(e) all facts bearing upon his present or past chargeability to tax. Duty to keep documents for ascertaining chargeable gain and tax payable 28c.  (1)  Subject to this section, every person who is required to furnish a return of his disposals for a year of assessment under this Act shall keep and retain in safe custody sufficient documents for a period of seven years from the end of that year of assessment for the purpose of ascertaining his chargeable gain and tax payable.

Subsection
Subsection

(2)  Where a person referred to in subsection (1) has not furnished a return as required under this Act for a year of assessment, that person shall keep and retain the documents referred to in subsection (1) which relate to that year of assessment for a period of seven years after the end of the year in which the return is furnished. Laws of Malaysia 178 Act 851

Subsection
Subsection

(3)  The Director General may waive all or any of the provisions under subsection (1) in respect of any disposal.

Subsection
Subsection

(4)  Any person who is required by this section to keep documents and—

Paragraph
Paragraph

(a) does so electronically, shall retain the documents in an electronically readable form and shall keep the documents in such a manner as to enable the documents to be readily accessible and convertible into writing; or

Paragraph
Paragraph

(b) has originally kept documents in a manual form and subsequently converts those documents into an electronic form, shall retain those documents prior to the conversion in their original form.

Subsection
Subsection

(5)  All documents that relate to any disposal of chargeable assets situated in Malaysia shall be kept and retained in Malaysia.

Subsection
Subsection

(6)  For the purposes of this section, “documents” includes—

Paragraph
Paragraph

(a) statement of chargeable gains;

Paragraph
Paragraph

(b) statement of income and incidental cost; and

Paragraph
Paragraph

(c) invoices, vouchers, receipts and such other documents as are necessary to verify the particulars in a return.”. Amendment of section 57a

Section 49

Subsection 57a(3) of the principal Act is amended by inserting after the words “in writing...

Amendment of Schedule 2

Section 50

Schedule 2 to the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subparagraph 1(1)—

Paragraph
Paragraph

(i) by inserting after the definition of “connected person” the following definition:   ‘ “co-operative society” means any co-operative society registered under the Co-operative Societies Act 1993 [Act 502];’; Finance (No. 2)

Subparagraph
Subparagraph

(ii) in the English language text, in the definition of “relative”, by substituting for the full stop at the end of that definition a semi colon; and

Subparagraph
Subparagraph

(iii) by inserting after the definition of “relative” the following definition:   ‘ “trust body” has the meaning assigned to it under the Income Tax Act 1967.’; and

Paragraph
Paragraph

(b) in paragraph 34a, by inserting after subparagraph (5) the following subparagraph:   “(5a)  This paragraph shall not apply to an acquisition or a disposal of any shares by a company, limited liability partnership, trust body or co-operative society, other than a Labuan entity as provided under section 2b of the Labuan Business Activity Tax Act 1990, on or after 1 January 2024.”.

Chapter

Chapter IV

Text

AMENDMENTS TO THE STAMP ACT 1949

Commencement of amendments to the Stamp Act 1949

Section 51

This Chapter comes into operation on 1 January 2024.

Amendment of section 2

Section 52

The Stamp Act 1949, which is referred to as the

“principal Act” in this Chapter, is amended in section 2—

Paragraph
Paragraph

(a) by substituting for the full stop at the end of the definition of “stock” a semi colon; and

Paragraph
Paragraph

(b) by inserting after the definition of “stock” the following definition:   ‘ “writing” or “written” includes any handwriting, typewriting, printing, electronic record or transmission which is in an electronically readable form.”. Laws of Malaysia 180 Act 851 Amendment of section 7

Section 53

Section 7 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (1)—

Paragraph
Paragraph

(i) by deleting paragraph (a); and

Subparagraph
Subparagraph

(ii) by deleting paragraph (aa); and

Paragraph
Paragraph

(b) by deleting subsections (2), (3), (4), (5), (6), (7) and (8). Deletion of section 8

Section 54

The principal Act is amended by deleting section 8.

Amendment of section 15

Section 55

Subsection 15(6) of the principal Act is amended by substituting for the words “which the d...

“which the duty has been paid”. Amendment of section 39

Section 56

Section 39 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (1), by substituting for the words “by filing a notice of appeal with the High Court” the words “in accordance with the procedure and practice for the time being in force in the High Court”;

Paragraph
Paragraph

(b) by substituting for subsection (1a) the following subsection: “(1a)  Where an appeal has been filed under subsection (1), the cause papers of the appeal shall be served on the Collector within the time stipulated for the filing of the appeal.”; and Finance (No. 2)

Paragraph
Paragraph

(c) by inserting after subsection (5) the following subsection: “(6)  Unless it is otherwise provided by rules of court, the rules of court for the time being in force in relation to appeals in civil matters from the High Court in its original jurisdiction to the Court of Appeal and the Federal Court shall apply with the necessary modifications to appeals under this section to the High Court, the Court of Appeal and the Federal Court respectively.”. Amendment of section 42

Section 57

Section 42 of the principal Act is amended by inserting after subsection (2) the following...

“(2a)  For the purposes of subsection (2), where the instrument is received by way of electronic transmission, the date of receipt thereof shall be verified by the production of a copy or print-out of the electronic transmission.”. Amendment of section 43

Section 58

The principal Act is amended by substituting for section 43

the following section: “Bills, cheques or notes drawn out of Malaysia

Section 43

Every person into whose hands any cheque or promissory note drawn or made out of Malaysia c...

Laws of Malaysia 182 Act 851 Amendment of section 45

Section 59

Subsection 45(1) of the principal Act is amended by substituting for the words “affix there...

“bring the cheque to the Collector for assessment of duty in accordance with section 36, and”. Amendment of section 48

Section 60

Section 48 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by deleting the words “43 or”; and

Paragraph
Paragraph

(b) by deleting paragraphs (a) and (b). Amendment of section 57

Section 61

Section 57 of the principal Act is amended by deleting paragraph (b).

Deletion of section 60

Section 62

The principal Act is amended by deleting section 60.

Deletion of section 60a

Section 63

The principal Act is amended by deleting section 60a.

Deletion of section 71

Section 64

The principal Act is amended by deleting section 71.

Deletion of section 72

Section 65

The principal Act is amended by deleting section 72.

Finance (No. 2) 183 Deletion of section 73

Section 66

The principal Act is amended by deleting section 73.

Amendment of section 82

Section 67

Section 82 of the principal Act is amended by deleting paragraphs (a) and (b).

Amendment of First Schedule

Section 68

The First Schedule to the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subparagraph 27(a)(ii), in the column “Proper Stamp Duty” by deleting the words “but the total duty payable shall not exceed RM2,000”; and

Paragraph
Paragraph

(b) in Item 32—

Paragraph
Paragraph

(i) by inserting after paragraph (a) and the particulars relating to it the following paragraph and particulars: “(aa) On sale of any property (except stock, shares, marketable securities and accounts receivables or book debts of the kind mentioned in paragraph (c)) to a foreign company or a person who is not a citizen and not a permanent resident RM4.00 for every RM100 or fractional part of RM100 of the amount of the money value of the consideration or the market value of the p r o p e r t y , whichever is the greater. ”; and Laws of Malaysia 184 Act 851

Subparagraph
Subparagraph

(ii) by substituting for paragraph (h) and the particulars relating to it the following paragraph and particulars: “(h) Of any property—

Paragraph
Paragraph

(i) by way of gift (whether by way of voluntary disposition or otherwise)

Subparagraph
Subparagraph

(ii) by way of release or renunciation by a beneficiary of a deceased estate to another beneficiary entitled under the same estate See Gift and subsection 16(1) RM10.00 Deletion of Second Schedule

Section 69

The principal Act is amended by deleting the Second Schedule.

Deletion of Fifth Schedule

Section 70

The principal Act is amended by deleting the Fifth Schedule.

No text is available for this node.

Chapter

Chapter V

Text

AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967

Commencement of amendments to the Petroleum (Income Tax) Act 1967

Section 71

Subparagraph 72(a)(i) and sections 75, 76 and 77 come into operation on 1 January 2024.

No text is available for this node.

Subsection
Subsection

(2) Subparagraph 72(a)(ii), paragraph 72(b) and section 74 have effect for the year of assessment 2024 and subsequent years of assessment. ”. Finance (No. 2)

Subsection
Subsection

(3) Section 73 has effect for the Financial Year beginning on 1 January 2025 and subsequent Financial Years.

Subsection
Subsection

(4) Section 78 comes into operation on the coming into operation of this Act. Amendment of section 2

Section 72

The Petroleum (Income Tax) Act 1967, which is referred to as the “principal Act” in this Ch...

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (1)—

Paragraph
Paragraph

(i) by inserting after the definition of ‘ “disposal” and “disposed of” ’ the following definition: ‘ “electronic invoice” has the meaning assigned to it in the Income Tax Act 1967 [Act 53];’; and

Subparagraph
Subparagraph

(ii) by substituting for the definition of “secondary recovery” the following definition:   ‘ “secondary recovery” means a method or process which has as its object the production of quantities of hydrocarbons by the application of external energy to the underground reservoir which is carried out—

Paragraph
Paragraph

(a) subsequent to the earlier recovery process for the purposes of additional and accelerated recovery of those hydrocarbons; or

Paragraph
Paragraph

(b) for the initial recovery or extraction of those hydrocarbons;’; and

Paragraph
Paragraph

(b) in subsection (4), by substituting for subparagraph (a)(i) the following subparagraph: “(a)(i) notwithstanding subsection (3), where a partnership carries on petroleum operations under two or more petroleum agreements and the areas under Laws of Malaysia 186 Act 851 those agreements are contiguous, the petroleum operations in those areas shall be treated as being carried on under one petroleum agreement if all the members of that partnership are the same original parties to the petroleum agreements and approved by the Director General:   Provided that where a partnership is succeeded under subsection (3), this paragraph shall apply to an area under the petroleum agreement, including any expansion thereof which are contiguous prior to the succession of the partnership:   Provided further that where an area under a petroleum agreement is contiguous with agreement areas which are contiguous under existing petroleum agreements, that first mentioned area shall be treated as contiguous with the existing petroleum agreements areas for the purposes of this paragraph if the members of the partnership of the first mentioned petroleum agreement are the same as the original parties to the existing petroleum agreements; and”. Amendment of section 3

Section 73

Section 3 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by renumbering the existing section as subsection (1); and

Paragraph
Paragraph

(b) by inserting after the renumbered subsection (1) the following subsections: “(2)  Notwithstanding any other provisions of this Act and for the purposes of the imposition of Domestic Top-up Tax or Multinational Top-up Tax and the implementation of the GloBE Rules, Part XI of the Income Tax Act 1967 shall also apply to a chargeable person who is a Constituent Entity that is a member of a Multinational Enterprise Group that has annual revenue of seven hundred and fifty million euro or more in the Consolidated Financial Statements of Finance (No. 2) 187 the Ultimate Parent Entity in at least two of the four consecutive Financial Years immediately preceding the tested Financial Year.

Subsection
Subsection

(3)  Where one or more of the Financial Years of the Multinational Enterprise Group taken into account for the purposes of subsection (2) is of a period other than twelve months, for each of those Financial Years the seven hundred and fifty million euro annual revenue is adjusted proportionally to correspond with the length of the relevant Financial Year.

Subsection
Subsection

(4)  For the purposes of subsections (2) and (3), “Consolidated Financial Statement”, “Constituent Entity”, “Financial Year”, “GloBE Rules”, “Multinational Enterprise Group” and “Ultimate Parent Entity” have the meaning assigned to them in Part XI of the Income Tax Act 1967.”. Amendment of section 4

Section 74

Subsection 4(3) of the principal Act is amended by substituting for the words “For the avoi...

“Except where subsection 2(4) applies, for the avoidance of doubt”. New section 34b

Section 75

The principal Act is amended by inserting after section 34a the following section:

“Duty to issue electronic invoice 34b.  (1)  Subject to this section, a person shall, in a year of assessment, issue an electronic invoice for each transaction in respect of any goods sold or services performed from petroleum operations by the person in that year of assessment.

Subsection
Subsection

(2)  For the purposes of subsection (1)—

Paragraph
Paragraph

(a) the persons who shall issue the electronic invoice and the particulars to be included in the electronic invoice are as prescribed by the Minister under section 82c of the Income Tax Act 1967; and Laws of Malaysia 188 Act 851

Paragraph
Paragraph

(b) the conditions and specifications under which an electronic invoice is to be issued shall be as determined by the Director General under the guidelines issued in accordance with section 134a of the Income Tax Act 1967.

Subsection
Subsection

(3)  Any electronic invoice issued by a person in respect of goods sold or services performed under subsection (1) shall be transmitted electronically to and validated by the Director General.

Subsection
Subsection

(4)  Where for any year of assessment a person is required to issue an invoice under any other written law in respect of goods sold or services performed from petroleum operations, the electronic invoice issued in accordance with subsection (1) including any other particulars as may be required shall be construed as an invoice issued under that law, provided that where the particulars of electronic invoice are inconsistent with the requirements for the issuance of invoice under that law, the electronic invoice shall only be valid and enforceable for the purposes of this Act.

Subsection
Subsection

(5)  Where for any year of assessment an electronic invoice is issued in accordance with subsection (1), the Director General shall not be liable for any loss or damage suffered by any person due to any error or omission arising, appearing in an electronic invoice provided that the error or omission was made in good faith and in the ordinary course of the discharge of the duties of the Director General or occurred or arose as a result of any defect or breakdown in the service or in the equipment used for the issuance of the electronic invoice.

Subsection
Subsection

(6)  Subject to the conditions as may be determined by the Director General, where for any year of assessment a person acquires any goods sold or enjoys any services performed, the person shall for that year of assessment issue a self-billed invoice in accordance with the conditions as may be imposed by the Director General and the invoice shall be treated as an electronic invoice. Finance (No. 2)

Subsection
Subsection

(7)  Where for any year of assessment a person makes an error or mistake in respect of any electronic invoice issued in accordance with this section, the person may for the purpose of rectifying the error or mistake issue a substitute electronic invoice within three days from the date of issuance of the defective electronic invoice.

Subsection
Subsection

(8)  Where for any year of assessment any goods sold or services performed by a person from petroleum operations involves the issuance of credit note or debit note, the person issuing the credit note or debit note shall make adjustments in ascertaining his chargeable income for that year of assessment accordingly.

Subsection
Subsection

(9)  A person may, in respect of any goods sold or services performed by him in any year of assessment, add any additional particulars to the electronic invoice under this section.

Subsection
Subsection

(10)  The provisions of the Personal Data Protection Act 2010 [Act 709] shall not apply to any personal data processed for electronic invoice issued or transmitted to the Director General under this section and any other related provisions of this Act.”. New section 57b

Section 76

The principal Act is amended by inserting after section 57a the following section:

“Failure to issue electronic invoice 57b.  Any person who, without reasonable excuse, contravenes subsection 34b(1) or (6), shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than two hundred ringgit and not more than twenty thousand ringgit or to imprisonment for a term not exceeding six months or to both.”. Laws of Malaysia 190 Act 851 Amendment of section 71

Section 77

Section 71 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (4), by inserting after paragraph (a) the following paragraph: “(aa) the production or disclosure of classified material in relation to electronic invoice to the Director General of Customs and Excise (or to the public officers under his direction and control) or the use of classified material in relation to electronic invoice by the Director General of Customs and Excise, to such an extent as is necessary or expedient for the exercise of his function;”; and

Paragraph
Paragraph

(b) in subsection (5), in the definition of “classified person”—

Paragraph
Paragraph

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

Subparagraph
Subparagraph

(ii) in paragraph (d), by inserting after the words “Malaysia;” the word “or”; and

Subparagraph
Subparagraph

(iii) by inserting after paragraph (d) the following paragraph: “(e) any person who, for any reason, has by any means access to any information on an electronic invoice under this Act;”. Amendment of section 82a

Section 78

Section 82a of the principal Act is amended by inserting after subsection (3) the following...

“(3a)  For the purposes of subsection (1), a person referred to under subsection 27(2) may authorize in writing an employee to furnish on his behalf any form prescribed under this Act in the manner provided for in subsection (1).”. Finance (No. 2)

Chapter

Chapter VI

Text

AMENDMENTS TO THE LABUAN BUSINESS ACTIVITY

TAX ACT 1990 Commencement of amendments to the Labuan Business Activity Tax Act 1990

Section 79

Sections 80, 83, 84, 85 and 86 come into operation on 1 January 2024.

No text is available for this node.

Subsection
Subsection

(2) Sections 81 and 82 have effect for the Financial Year beginning on 1 January 2025 and subsequent Financial Years. Amendment of section 2

Section 80

The Labuan Business Activity Tax Act 1990, which is referred to as the “principal Act” in t...

‘ “electronic invoice” has the meaning assigned to it in the Income Tax Act 1967;’. Amendment of section 3

Section 81

Section 3 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by renumbering the existing section as subsection (1); and

Paragraph
Paragraph

(b) by inserting after the renumbered subsection (1) the following subsections:   “(2)  Notwithstanding any other provisions of this Act and for the purposes of the imposition of Domestic Top-up Tax or Multinational Top-up Tax and the implementation of the GloBE Rules, Part XI of the Income Tax Act 1967 shall also apply to a Labuan entity which is a Constituent Entity that is a member of a Multinational Enterprise Group that has annual Laws of Malaysia 192 Act 851 revenue of seven hundred and fifty million euro or more in the Consolidated Financial Statements of the Ultimate Parent Entity in at least two of the four consecutive Financial Years immediately preceding the tested Financial Year.

Subsection
Subsection

(3)  Where one or more of the Financial Years of the Multinational Enterprise Group taken into account for the purposes of subsection (2) is of a period other than twelve months, for each of those Financial Years the seven hundred and fifty million euro annual revenue is adjusted proportionally to correspond with the length of the relevant Financial Year.

Subsection
Subsection

(4)  For the purposes of subsections (2) and (3), “Consolidated Financial Statement”, “Constituent Entity”, “Financial Year”, “GloBE Rules”, “Multinational Enterprise Group” and “Ultimate Parent Entity” have the meaning assigned to them in Part XI of the Income Tax Act 1967.”. Amendment of section 9

Section 82

Subsection 9(1) of the principal Act is amended by substituting for the words “section 3” t...

New section 21b

Section 83

The principal Act is amended by inserting after section 21a the following section:

“Admissibility of electronic record 21b.  (1)  Notwithstanding any other written law, where in any proceedings under this Act an electronic record of any document is stored or received by or communicated to the Director General on an electronic medium or by way of electronic transmission, the electronic record or the copy or print-out of that electronic record shall be admissible as evidence of the facts stated or contained therein: Finance (No. 2) 193 Provided that the record or the copy or print-out is—

Paragraph
Paragraph

(a) certified by the Director General to contain all or any information furnished, stored, communicated or received on an electronic medium or by way of electronic transmission under this section; or

Paragraph
Paragraph

(b) otherwise authenticated in the manner provided in the Evidence Act 1950 [Act 56] for authentication of documents produced by computer.

Subsection
Subsection

(2)  Where the electronic record of any document, or a copy or print-out of that record is admissible under subsection (1), it shall be presumed, until the contrary is proved, that the record or the copy or print-out accurately reproduces the content of that document.

Subsection
Subsection

(3)  For the purposes of this Act, “electronic medium” includes a data, text, an image or any other information stored, received or communicated by means of electronic, magnetic, optical, imaging or any other data processing device.”. Amendment of section 22a

Section 84

Section 22a of the principal Act is amended in subsection (1)—

No text is available for this node.

Paragraph
Paragraph

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

Paragraph
Paragraph

(b) by inserting after paragraph (a) the following paragraph: “(aa) the disclosure of information in relation to electronic invoice to the Director General of Customs and Excise (or to the public officers under his direction and control) or the use of information in relation to electronic invoice by the Director General of Customs and Excise, to such an extent as is necessary or expedient for the exercise of his function; and”. Laws of Malaysia 194 Act 851 New section 22da

Section 85

The principal Act is amended by inserting after section 22d the following section:

“Duty to issue electronic invoice 22da.  (1)  Subject to this section, a person shall, in a year of assessment issue an electronic invoice for each transaction in respect of any goods sold or services performed by the person in that year of assessment.

Subsection
Subsection

(2)  For the purposes of subsection (1)—

Paragraph
Paragraph

(a) the persons who shall issue the electronic invoice and the particulars to be included in the electronic invoice are as prescribed by the Minister under section 82c of the Income Tax Act 1967; and

Paragraph
Paragraph

(b) the conditions and specifications under which an electronic invoice is to be issued shall be as determined by the Director General under the guidelines issued in accordance with section 17a of this Act.

Subsection
Subsection

(3)  Any electronic invoice issued by a person in respect of goods sold or services performed under subsection (1) shall be transmitted electronically to and validated by the Director General.

Subsection
Subsection

(4)  Where for any year of assessment a person is required to issue an invoice under any other written law in respect of goods sold or services performed, the electronic invoice issued in accordance with subsection (1) including any other particulars as may be required shall be construed as an invoice issued under that law, provided that where the particulars of electronic invoice are inconsistent with the requirements for the issuance of invoice under that law, the electronic invoice shall only be valid and enforceable for the purposes of this Act.

Subsection
Subsection

(5)  Where for any year of assessment an electronic invoice is issued in accordance with subsection (1), the Director General shall not be liable for any loss or damage suffered by any person due to any error or omission arising, appearing Finance (No. 2) 195 in an electronic invoice provided that the error or omission was made in good faith and in the ordinary course of the discharge of the duties of the Director General or occurred or arose as a result of any defect or breakdown in the service or in the equipment used for the issuance of the electronic invoice.

Subsection
Subsection

(6)  Subject to the conditions as may be determined by the Director General, where for any year of assessment a person acquires any goods sold or enjoys any services performed, the person shall for that year of assessment issue a self-billed invoice in accordance with the conditions as may be imposed by the Director General and the invoice shall be treated as an electronic invoice.

Subsection
Subsection

(7)  The Director General may, for any year of assessment in respect of any goods sold or services performed, determine a person to consolidate the number of transactions in respect of such goods sold or services performed in that year of assessment into a consolidated transaction invoice, and that person shall transmit the consolidated transaction invoice to the Director General within a specified time and in accordance with the conditions as determined by the Director General and such consolidated transaction invoice shall for the purposes of this section constitute an electronic invoice issued by that person.

Subsection
Subsection

(8)  Where for any year of assessment a person makes an error or mistake in respect of any electronic invoice issued in accordance with this section, the person may for the purpose of rectifying the error or mistake issue a substitute electronic invoice within three days from the date of issuance of the defective electronic invoice.

Subsection
Subsection

(9)  Where for any year of assessment any goods sold or services performed by a person involves the issuance of credit note or debit note, the person issuing the credit note or debit note shall make adjustments in ascertaining his chargeable profits for that year of assessment accordingly.

Subsection
Subsection

(10)  A person may, in respect of any goods sold or services performed by him in any year of assessment, add any additional particulars to the electronic invoice under this section. Laws of Malaysia 196 Act 851

Subsection
Subsection

(11)  The provisions of the Personal Data Protection Act 2010 [Act 709] shall not apply to any personal data processed for electronic invoice issued or transmitted to the Director General under this section and any other related provisions of this Act.”. New section 22ea

Section 86

The principal Act is amended by inserting after section 22e the following section:

“Failure to issue electronic invoice 22ea.  Any person who, without reasonable excuse, contravenes subsection 22da(1), (6) or (7), shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than two hundred ringgit and not exceeding twenty thousand ringgit or to imprisonment for a term not exceeding six months or to both.”.

Chapter

Chapter VII

Text

AMENDMENT TO THE ENTERTAINMENTS DUTY ACT 1953

Commencement of amendment to the Entertainments Duty Act 1953

Section 87

Section 88 comes into operation on the coming into operation of this Act.

Amendment of section 23

Section 88

Section 23 of the Entertainments Duty Act 1953 is amended by substituting for subsection (2...

“(2)  Any regulations made under this Act shall be laid before the Dewan Rakyat.”. Finance (No. 2)

Chapter

Chapter VIII

Text

AMENDMENT TO THE CUSTOMS ACT 1967

Commencement of amendment to the Customs Act 1967

Section 89

Section 90 comes into operation on the coming into operation of this Act.

Amendment of section 11

Section 90

Section 11 of the Customs Act 1967 is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in the shoulder note, by deleting the words “to be approved by the Dewan Rakyat”;

Paragraph
Paragraph

(b) by substituting for subsection (2) the following subsection:   “(2)  Any order made under subsection (1) shall be laid before the Dewan Rakyat.”; and

Paragraph
Paragraph

(c) by deleting subsections (3), (4) and (5).

Chapter

Chapter IX

Text

AMENDMENT TO THE EXCISE ACT 1976

Commencement of amendment to the Excise Act 1976

Section 91

Section 92 comes into operation on the coming into operation of this Act.

Amendment of section 6

Section 92

Section 6 of the Excise Act 1976 is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by substituting for subsection (2) the following subsection:   “(2)  Any order made under subsection (1) shall be laid before the Dewan Rakyat.”; and

Paragraph
Paragraph

(b) by deleting subsections (3), (4) and (5). Laws of Malaysia 198 Act 851

Chapter

Chapter X

Text

AMENDMENT TO THE GOODS VEHICLE LEVY ACT 1983

Commencement of amendment to the Goods Vehicle Levy Act 1983

Section 93

Section 94 comes into operation on the coming into operation of this Act.

Amendment of section 3

Section 94

Section 3 of the Goods Vehicle Levy Act 1983 is amended by substituting for subsection (3)...

“(3)  Any order made under subsection (2) shall be laid before the Dewan Rakyat.”.

Chapter

Chapter XI

Text

AMENDMENT TO THE WINDFALL PROFIT LEVY ACT 1998

Commencement of amendment to the Windfall Profit Levy Act 1998

Section 95

Section 96 comes into operation on the coming into operation of this Act.

Amendment of section 7

Section 96

The Windfall Profit Levy Act 1998 is amended by substituting for section 7 the following se...

“Order to be laid before Dewan Rakyat

Section 7

An order determining the amount of levy to be levied under this Act shall be laid before th...

Finance (No. 2)

Chapter

Chapter XII

Text

AMENDMENTS TO THE TOURISM TAX ACT 2017

Commencement of amendments to the Tourism Tax Act 2017 97.

Subsection
Subsection

(1) Section 98 comes into operation on the coming into operation of this Act.

Subsection
Subsection

(2) Sections 99, 100, 101, 102, 103, 104, 105, 106, 107, 108 and 109 come into operation on 1 January 2024. Amendment of section 8 98. The Tourism Tax Act 2017, which is referred to as the “principal Act” in this Chapter, is amended in section 8—

Paragraph
Paragraph

(a) by substituting for subsection (3) the following subsection:   “(3)  Any order made under subsection (1) shall be laid before the Dewan Rakyat.”; and

Paragraph
Paragraph

(b) by deleting subsections (4) and (5). Amendment of section 10 99. Subsection 10(1) of the principal Act is amended by substituting for the words “in the manner as may be prescribed” the words “in the form and manner as determined by the Director General”. Amendment of section 11

Section 100

Subsection 11(1) of the principal Act is amended by substituting for the words “in the mann...

the words “in the form and manner as determined by the Director General”. Laws of Malaysia 200 Act 851 Amendment of section 14

Section 101

Section 14 of the principal Act is amended by inserting after subsection (1) the following...

“(1a)  Notwithstanding subsection (1), the Director General may, upon request in writing and subject to such conditions as he thinks fit to impose, approve any one or more of the prescribed particulars not to be contained in an invoice.”. Amendment of section 19

Section 102

Section 19 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in subsection (1), by substituting for the words “as may be prescribed and the return shall be furnished to the Director General in the prescribed manner” the words “in the form and manner as determined by the Director General”; and

Paragraph
Paragraph

(b) in subsection (2), by substituting for the words “the return in the taxable period following after the end of that period of twelve calendar months and the return shall be furnished to the Director General in the prescribed manner” the words “a return in the form and manner as determined by the Director General in the taxable period following after the end of that period of twelve calendar months”. Amendment of section 20c

Section 103

Section 20c of the principal Act is amended by substituting for the words “in the manner as...

Amendment of section 20i

Section 104

Subsection 20i(1) of the principal Act is amended by substituting for the words “as may be...

Finance (No. 2) 201 Amendment of section 22

Section 105

Subsection 22(1) of the principal Act is amended by substituting for the words “in the pres...

General” the words “in the form and manner as determined by the Director General”. New Part VIa

Section 106

The principal Act is amended by inserting after Part VI the following part:

“Part VIa RULING Public ruling 31a.  (1)  The Director General may, at any time, make a public ruling on the application of any provision of this Act in relation to any person or class of persons, or any type of business activities.

Subsection
Subsection

(2)  The Director General may amend or withdraw, either wholly or partly, any public ruling made under this section.

Subsection
Subsection

(3)  Notwithstanding any provision of this Act, where a public ruling under subsection (1) applies to any person in relation to a business activity and the person applies the provision in the manner stated in the ruling, the Director General shall apply the provision in relation to the person and the business activities in accordance with the ruling.”. Amendment of section 65

Section 107

Subsection 65(2) of the principal Act is amended by substituting for paragraph (b) the foll...

“(b) produce any thing in the form and manner as determined by the Director General which is required to be submitted for the purposes of the matter being transacted.”. Laws of Malaysia 202 Act 851 Deletion of section 66

Section 108

The principal Act is amended by deleting section 66.

Amendment of section 70

Section 109

Section 70 of the principal Act is amended by deleting paragraph (2)(c).

No text is available for this node.

Chapter

Chapter XIII

Text

AMENDMENTS TO THE SALES TAX ACT 2018

Commencement of amendments to the Sales Tax Act 2018

Section 110

Sections 111, 112, 113, 114, 117 and 125 come into operation on the coming into operation o...

No text is available for this node.

Subsection
Subsection

(2) Sections 115, 116, 118, 119, 120, 121, 122, 123 and 124 come into operation on 1 January 2024. Amendment of section 10

Section 111

The Sales Tax Act 2018, which is referred to as the

“principal Act” in this Chapter, is amended in section 10—

Paragraph
Paragraph

(a) by substituting for subsection (3) the following subsection:   “(3)  Any order made under subsection (2) shall be laid before the Dewan Rakyat.”; and

Paragraph
Paragraph

(b) by deleting subsections (4), (5) and (6). Amendment of section 11a

Section 112

Section 11a of the principal Act is amended in the definition of “seller”, by substituting...

Finance (No. 2) 203 Amendment of section 11b

Section 113

Subsection 11b(2) of the principal Act is amended by substituting for the words “sections 3...

the words “sections 3, 14, 15, 16, 32”. New section 11e

Section 114

The principal Act is amended by inserting after section 11d the following section:

“Sales tax on importation is not applicable on low value goods 11e.  Notwithstanding paragraph 8(1)(b), no sales tax shall be levied on the low value goods if it is proven to the proper officer of sales tax that the sales tax has been charged by the registered seller and being paid on the low value goods.”. Amendment of section 13

Section 115

Subsection 13(1) of the principal Act is amended by substituting for the words “in the pres...

“in the form and manner as determined by the Director General”. Amendment of section 14

Section 116

Subsection 14(1) of the principal Act is amended by inserting after the words “registered m...

Amendment of section 23

Section 117

Section 23 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by renumbering the existing section as subsection (1); and Laws of Malaysia 204 Act 851

Paragraph
Paragraph

(b) by inserting after the renumbered subsection (1) the following subsection:   “(2)  Notwithstanding subsection (1), the Director General may, upon request in writing by the registered manufacturer and subject to such conditions as he thinks fit to impose, approve any one or more of the prescribed particulars not to be contained on a credit note or debit note.”. Amendment of section 26

Section 118

Subsection 26(1) of the principal Act is amended by substituting for the words “as may be p...

Amendment of section 39

Section 119

Subsection 39(1) of the principal Act is amended by substituting for the words “in the pres...

“in the form and manner as determined by the Director General”. Amendment of section 43

Section 120

Subsection 43(1) of the principal Act is amended by substituting for the words “Any person...

the words “Any person may apply to the Director General, in the form and manner as determined by the Director General together with the prescribed fee,”. Amendment of section 82

Section 121

Paragraph 82(4)(b) of the principal Act is amended by substituting for the words “in the pr...

Finance (No. 2) 205 Amendment of section 90

Section 122

Subsection 90(2) of the principal Act is amended by substituting for paragraph (b) the foll...

“(b) produce any thing in the form and manner as determined by the Director General which is required to be submitted for the purposes of the matter being transacted.”. Amendment of section 96

Section 123

Subsection 96(2) of the principal Act is amended by substituting for the words “in the pres...

Amendment of section 106

Section 124

The principal Act is amended by deleting paragraph 106(2)(k).

Amendment of Schedule

Section 125

The Schedule of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) in relation to section 25, in column (2), by substituting for paragraph 1 the following paragraph: “1.  In subsection (1), by substituting for the words “following month” the words “following two months”.”; and

Paragraph
Paragraph

(b) by inserting before the particulars in relation to section 35a the following particulars:

Subsection
Subsection

(1) Provision of this Act

Subsection
Subsection

(2) Modifications Section 35

Section 1

Substitute for the words “taxable goods manufactured or imported” wherever appearing the wo...

No text is available for this node.

Section 2

Substitute for the words “taxable goods” wherever appearing the words

“low value goods”.”. “ Laws of Malaysia 206 Act 851

Chapter

Chapter XIV

Text

AMENDMENTS TO THE SERVICE TAX ACT 2018

Commencement of amendments to the Service Tax Act 2018

Section 126

Section 127 comes into operation on the coming into operation of this Act.

No text is available for this node.

Subsection
Subsection

(2) Sections 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139 and 140 come into operation on 1 January 2024. Amendment of section 10

Section 127

The Service Tax Act 2018, which is referred to as the “principal Act” in this Chapter, is a...

No text is available for this node.

Paragraph
Paragraph

(a) by substituting for subsection (3) the following subsection:   “(3)  Any order made under subsection (2) shall be laid before the Dewan Rakyat.”; and

Paragraph
Paragraph

(b) by deleting subsections (4), (5) and (6). Amendment of section 13

Section 128

Subsection 13(1) of the principal Act is amended by substituting for the words “in the pres...

Amendment of section 14

Section 129

Subsection 14(1) of the principal Act is amended by inserting after the words “registered p...

Finance (No. 2) 207 Amendment of section 17

Section 130

Subsection 17(1) of the principal Act is amended by substituting for the words “in the pres...

“in the form and manner as determined by the Director General”. Amendment of section 26

Section 131

Subsection 26(1) of the principal Act is amended by substituting for the words “as may be p...

Amendment of section 26a

Section 132

Paragraph 26a(1)(a) of the principal Act is amended by substituting for the words “as may b...

Amendment of section 38

Section 133

Subsection 38(1) of the principal Act is amended by substituting for the words “in the pres...

Amendment of section 39

Section 134

Subsection 39(1) of the principal Act is amended by inserting after the words “his customer...

Amendment of section 42

Section 135

Subsection 42(1) of the principal Act is amended by substituting for the words “Any person...

the words “Any person may apply to the Director General, in the form and manner as determined by the Director General together with the prescribed fee,”. Laws of Malaysia 208 Act 851 Amendment of section 56c

Section 136

Subsection 56c(1) of the principal Act is amended by substituting for the words “prescribed...

Amendment of section 56h

Section 137

Section 56h of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by inserting after subsection (3) the following subsection:   “(3a)  The Director General may, as he thinks fit, re-determine any taxable period other than the period as determined under subsection (1) or (3) for the foreign registered person.”;

Paragraph
Paragraph

(b) by substituting for subsection (4) the following subsection:   “(4)  A foreign registered person shall, in respect of his taxable period, account for the service tax due, in a return, as may be determined by the Director General and the return shall be furnished to the Director General in the manner as determined by the Director General not later than the last day of the month following the end of his taxable period to which the return relates.”; and

Paragraph
Paragraph

(c) by inserting after subsection (4a) the following subsection:   “(4b)  Subject to subsections (4) and (4a), a return shall be deemed to be furnished upon receiving by the Director General in the form and manner as determined by the Director General.”. Amendment of section 75

Section 138

Subsection 75(2) of the principal Act is amended by substituting for paragraph (b) the foll...

“(b) produce any thing in the form and manner as determined by the Director General which is required to be submitted for the purposes of the matter being transacted.”. Finance (No. 2) 209 Amendment of section 81

Section 139

Subsection 81(2) of the principal Act is amended by substituting for the words “in the pres...

Amendment of section 91

Section 140

Section 91 of the principal Act is amended—

No text is available for this node.

Paragraph
Paragraph

(a) by deleting paragraph (2)(k); and

Paragraph
Paragraph

(b) by renumbering subsection (2) after the existing paragraph (2)(m) as subsection (3).

Chapter

Chapter XV

Text

AMENDMENT TO THE DEPARTURE LEVY ACT 2019

Commencement of amendment to the Departure Levy Act 2019

Section 141

Section 142 comes into operation on the coming into operation of this Act.

Amendment of section 11

Section 142

Section 11 of the Departure Levy Act 2019 is amended by substituting for subsection (2) the...

“(2)  Any order made under subsection (1) shall be laid before the Dewan Rakyat.”.