(1) Except for sections 7, 8, 13, 15 and 16 this Commence- Chapter shall have effect for the year of assessment 1990 ment of and subsequent years of assessment.
(2) Sections 7, 8 and 15 shall be deemed to have Tax Act effect for the year of assessment 1989 and shall have 1967. effect for subsequent years of assessment.
(3) Section 13 shall be deemed to have come into force on the 1st January 1989.
(4) Section 16 shall have effect for the year of assessment 1991 and subsequent years of assessment.
[Cap. II, S. 4-6]
Section 2 of the Income Tax Act 1967, which is of section 2. Act 53. referred to in this Chapter as the "principal Act", is amended by inserting, after the definition of "approved loan", the following definition: • "approved operational headquarters company" has the meaning assigned thereto by section 60E:'. Armondncat Inserition 3feof the prindsnder setendd the words "and that of a unit trust"
Section 6 of the principal Act is amended of section 6.
(a) in subsection (1), by substituting for the full stop at the end of paragraph (f) a semicolon;
(b) in subsection (1), by inserting, after paragraph
(f), the following paragraph: "(g) (i) subject to subparagraph (ii), income tax shall be charged for each year of assessment upon the chargeable income of an approved operational headquarters ompany in relation to the sourc onsisting of the provision ( qualifying services at the appropriate rate as specified under Part VII of Schedule 1;
(ii) the rate specified under Part VII of Schedule 1 shall apply only for a period of five years of assessment commencing from the year of assessment in the basis period in which the date of approval of the approved operational headquarters company falls: Provided that where the Minister is satisfied that the company has by the end of the period met such requirements as
[Cap. II, S. 6-9] may be specified by him at the time of approval, he may extend the period for a further period not exceeding five years of assessment.". 1. Section (1, oy she prinial An io amendand 4i daiees. the words "3, 4 and 4A".
Section 44 of the principal Act is amended, in Amendment subsection
(6), by substituting for the words of section 44. "subsection (2) or Schedule 4 or both" the words "subsection (2), Schedule 4 or Schedule 4A"
The principal Act is amended by inserting, after Now sedioe. section 6uc, the following sections: "Venture 60D. (1) Where a venture capital company capital receives an amount in respect of gains from companies. the disposal of shares in a venture company in the basis period for a year of assessment such amount shall be exempt from tax for that year of assessment: Provided that where the disposal of shares in a venture company takes place two years after the date on which the shares in the venture company are listed for quotation in the official list of a stock exchange in Malaysia, the gains from such disposal shall not be exempt from tax.
(2) Paragraphs 5 and 6 of Schedule 7A shall apply mutatis mutandis to the amount exempt under subsection (1).
(3) Where a venture capital company incurs a loss in respect of a disposal of shares in a venture company in the basis period for a year of assessment, there shall not be made any deduction under section 43 (2) or 44 (2) in respect of such loss in computing the aggregate income or total income of the venture capital company, as the case may be.
A X B 4C' where A is the total of the permitted expenses incurred for that basis period; B is the gross income consisting of dividend, interest and rent chargeable to tax for that basis period; and C is the aggregate of the gross income consisting of dividend (whether exempt or not), interest and rent, and gains made from the disposal of shares in a venture company (whether chargeable to tax or not) for that basis period: Provided that where, by reason of an absence or insufficiency of aggregate income for that year of assessment, effect cannot be given or cannot be given in full to any deduction falling to be made to the •venture capital company under this section for that year, that deduction which has not been so nade shall not be made to the company fo ıny subsequent vear of assessment
(5) In this section— "permitted expenses" means expenses incurred by the venture capital company in respect ot-
(a) directors' fees;
(b) wages, salary, allowances;
(c) management and advisory fees paid to fund managers;
(d) secretarial, audit and accounting fees, telephone charges, printing and stationery costs and postage; an
(e) rent and other expenses incidental to the maintenance of an office, which are not deductible under section 33 (1); "venture capital company" means a company, incorporated in Malaysia, which-
(a) is resident in Malaysia for the basis year for a year of assessment;
(b) holds shares exclusively in a venture Listed for quheationes ithe orficares tot a stock exchange in Malaysia at the time of acquisition of such shares by that venture capital company; and
(c) is approved by the Minister for the purposes of this section; "venture company" means a company incorporated in Malaysia which-
(a) is resident in Malaysia for the basis year for a year of assessment; and
(b) is involved in any high-risk venture o1 new technology in relation to a product or activity which the Minister is satisfied would promote or enhance the economic or technological development of Malaysia.
Approved 60E. (1) Where an approved operational hparational headquarters company carries on a business in quarters Malaysia of providing qualifying services, and company. a business or businesses in Malaysia other than that of providing qualifying services, the business of providing such qualifying services shall be treated as a separate and distinct business and source of that company.
(2) Thee harsiabie ofo the in relition to shall binhe statuto yoncome arof asatsuent reduced by any deduction falling to be made pursuant to section 43 (2) relating to that source.
(3) The chargeable income in relation to the source or sources other than the source consisting of the provision of qualitying services for a year of assessment shall be the statutory income from that source or the aggregate of the statutory income from each of those sources, as the case may be, reduced by any deductions falling to be made pursuant to sections 43 (2) and 44 (1): Provided that in so making the deductions under sections 43 (2) and 44 (1), no regard shall be had to the adjusted loss, if any, from the source consisting of the provision of aualifving services.
(4) Where it appears to the Director General that the chargeable income of an approved operational headquarters company in relation to a source consisting of the provision of qualifying services ought not to have been charged to tax at the rate specified under Part VII of Schedule 1 by reason of the withdrawal of the approval of the operational headquarters company, he may, at any time within twelve years after the expiration of the year of assessment for which that rate was
applied, make such additional assessments upon that company as appear to him to be necessary in order to counteract any benefit obtained under Part VII of Schedule 1.
(5) Dividends received by an approved Paltsd con pang detse Manyre sitl be exempt from tax for that year of assessment: Provided that the exemption—
(a) shall apply for a period of ten years of assessment commencing from the year of assessment in the basis period in which the date of approval of the operational headquarters company falls; and
(b) shall apply only to a company which is inminorate fore o ysis oe crotter the
(6) Paragraphs 5 and 6 of Schedule 7a shall apply mutatis mutandis to income exempt under subsection (5).
(7) For the purposes of this section— nyipreaed o porational headduarters com-
(a) th heldire issued share capital of which
(i) by a foreign company or companies; or
(ii) by an individual or individuals who are not citizens at any time in the basis year for a year of assessment; or
Act 125.
(iii) by a foreign company or companies, and an individual or individuals who are not citizens at any time in the basis year for a year of assessment;
(b) which carries on a business in Malaysia of providing qualifying services to its offices outside Malaysia or to its related companies outside Malaysia; and () he perpoes or tl ecete finiser for but does not include a company which carries on a finance business or which provides professional services; "foreign company" means a foreign company as defined under the Companies Act 1965; "qualifying services" means-
(a) services provided by an approved operational headquarters company to its offices outside Malaysia or to its related companies outside Malaysia in (() gencirastration; management and
(ii) business planning;
(iii) procurement of raw materials and components for use in the business of its offices outside Malaysia or its related companies outside Malaysia;
(iv) technical support;
(v) marketing control and sales promotion planning;
(vi) training and personnel management;
[Cap. II, S. 91
(b) provision of credit facilities to its offices outside Malaysia or its related companies outside Malaysia where the funds for providing such facilities are obtained from financial institutions in
(c) research and development work carried out in Malaysia on behalf of its offices outside Malaysia or its related companies outside Malaysia; "related company", in relation to an approved operational headquarters company neans a company-
(a) the operations of which are or can be controlled, either directly or indirectly, by the approved operational head-
(b) which controls or can control, either
(c) the operations of which are or can be controlled, either directly or indirectly, Ne opontng oralir aproed operational headquarters company: Provided that a company shall be deemed to be a related company in relation to an approved operational headduarters company
(1) at least twenty per cent of its issuec hare capita is beneticially owned ither directly or indirectly, by th company operational headquatters
[Cap. II, S. 9-10]
(ii) at least twenty per cent of the issued operational headquarters company is beneficially owned, either directly or by the first-mentioned Amendment 10. Section 61 of the principal Act is amendedsection 61.
(a) in subsection (1), by substituting for the semicolon at the end of paragraph (b) a colon;
(b) in subsection
(1), by inserting, below paragraph (b), the following proviso: "Provided that in the case of a unit trust, gains arising from the realisation of investments shall not be treated as income of the trust body of the trust;";
(c) by inserting, after subsection (1), the following subsection: "(1A) Notwithstanding subsection (1) (c) and (d), a unit holder of a unit trust shall be assessed and charged to tax in respect of income equivalent to an amount ascertained by reference to his share of the total income of the unit trust tor a year ot assessment, distributed to him by the unit trust in the basis year for that year of assessment: Provided that the unit holder shall not be assessed and charged to tax in respect of any amount distributed by the unit trust out of exempt income or the gains reterred to in the proviso to section 61 (1) (b).".
[Cap. II, S. 11]
The principal Act is amended by inserting, after Newsections section 63, the following sections: 63A and 63B. "Special deduction 63A. (1) In ascertaining the statutory income of a unit trust from a source consisting of the derivation of rent from the letting of real -. Be sediced from thre adisted ihome fom that source for that year of assessment an allowance made under subsection (2) in respect of qualifying capital expenditure.
(2) Where a unit trust has, for the purposes of deriving rent from the letting of real property, incurred qualitying capital expenditure ir • relation to an asset and at the end of the basis period for a year of assessment the unit trust was the owner of the asset and the asset was in use for that purpose, there shall be made to the unit trust in relation to that source for that year an allowance equal to one tenth of that expenditure: Provided that where, by reason of an absence or insufficiency of adjusted income from that source for the basis period for that year of assessment, effect cannot be given or annot be given in full to any allowance fallin ) be made for that vear in relation to th source, that allowance which has not been so made shall not be made to the unit trust for any subsequent year of assessment.
(3) Where at the end of the basis period for any year of assessment the residual expenditure in relation to an asset in respect of which qualifying capital expenditure has been incurred is zero, or the asset is no longer owned or in use by the unit trust, no allowance shall be made to the unit trust for that year of assessment and subsequent years of assessment.
[Cap. II, S. 11]
(4) For the purposes of subsection (2), expenditure shall be deemed to have been incurred on the day on which the machinery or plant is capable of being used for the purposes of deriving rent from the letting of real property.
(5) For the purposes of this section— "qualifying capital expenditure" in relation to an asset is capital expenditure incurred on the provision of machinery or plant used for the purposes of deriving rent from the letting of real property, including-
(a) expenditure incurred on the alteration of an existing building for the purpose of installing that machinery or plant and other expenditure incurred incidentally to the installation thereof provided that such expenditure does not exceed seventy-five per cent of the aggregate of itself and any other expenditure (being qualifying capital expenditure); and
(b) expenditure incurred on preparing or levelling land in order to prepare a site for the installation of that machinery or plant provided that such expenditure does not exceed ten per cent of the aggregate of itself and any other expenditure (being qualifying capital expenditure); "residual expenditure" at any date in relation to an .asset in respect of which qualitying. : capital expenditure has been incurred by a unit trust shall be the total qualifying capital expenditure incurred on the provision of the asset before that date reduced by the allowance falling to be made in relation to that asset for any year of assessment before that date.
Special focuction expenses. [Cap. II, S. 11] 63b. (1) In ascertaining the total income of a unit trust for the basis period for a year of assessment, there shall be deducted before any deduction falling to be made under section 44 (1) (c) an amount in respect of expenses incurred by that unit trust during that period, which amount shall be determined in accordance with the formula A x B 4C' where A is the total of the permitted expenses incurred for that basis period; B is the gross income consisting of dividend, interest and rent chargeable to tax for that basis period; and C is the aggregate of the gross income consisting of dividend (whether exempt or not), interest and rent, and gains made from realisation of investments (whether chargeable to tax or not) for that basis period: Provided that-
(a) the amount of deduction to be made shall not be less than ten per cent of the total permitted expenses incurrec for that basis period; and
(b) where, by reason of an absence or insufficiency of aggregate income for i, ettect canno the tyear of assessn be piven in tanlt any deduction falling to be made ic the unit trust under this section for that year that deduction which has not been so made shall not be mad to the unit trust for any subsequen year of assessment.
[Cap. II, S. 11-13] of section
(2) For the purposes of this section— "permitted expenses" means expenses incurred by the unit trust in respect of-
(a) manager's remuneration;
(b) maintenance of register of unit holders;
(c) share registration expenses;
(d) secretarial, audit and accounting fees, telephone charges, printing and stationery costs and postage, which are not deductible under section 33
(1).".
Section 110 of the principal Act is amended by inserting, after subsection (9), the following subsection: "(9A) Notwithstanding subsections (8) and (9), where income distributed by a unit trust is included in the aggregate income of a person for a year of assessment, the tax chargeable on the unit trust and attributable to the income included in the aggregate income of that person (or, where the trust is entitled to any relief under section 132 or 133, that tax less the amount of that relief) shall be set off against the tax harged on the chargeable income, if any, of that erson for that vear of assessment." Dc Sectio 13.Section 145 of the principal Act. is amended by ubstituting for subsections (3) and (4) the followins subsections: "(3) Where a person to whom there has been addressed a registered letter containing a notice under this Act-
(a) is informed that there is a registered letter awaiting him at a post office but refuses or neglects to take delivery of the letter; or
[Cap. II, S. 13-14]
(b) refuses to accept delivery of that registered letter when tendered, the notice shall be deemed to have been served upon him on the date on which he was informed that the letter was awaiting him or on which the letter was tendered to him, as the case may be. belief—
(a) there has been delivered to the address appearing on a registered letter a post office notification informing the addressee that there is a registered letter awaiting him; or
(b) there has been tendered for delivery to the addressee a registered letter, shall, until the contrary is proved, be evidence that the addressee has been so informed or that that registered letter has been tendered to him, as the case may be.".
Schedule 1 to the principal Act is amended by New inserting, after Part VI, the following Part: Part VII of Schedule 1.
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
