This Act may be cited as the Finance Act 1995. Short title.
Act 531
Finance Act 1995
Akta kewangan 1995
Text recovered by OCR from a scanned copy — section numbers and wording may be wrong. Check the official PDF on lom.agc.gov.my before citing.
An Act to amend the Income Tax Act 1967, the Petroleum (Income Tax) Act 1967, the Stamp Act 1949 and the Promotion of Investments Act 1986. 1 17th FEBRUARY 1995 BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: CHAPTER I PRELIMINARY 1. This Act may be cited as the Finance Act 1995. Short title. 2. The Income Tax Act 1967, the Petroleum (Income Amendments Tax) Act 1967, the Stamp Act 1949 and the Promotion of Investments Act 1986 are amended in the manner specified in Chapters II, III, IV and V respectively. CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 and subsequent years of assessment. (2) Section 6 (except for subparagraph 6(a)(i)) shal 4ct1506 Te have effect for the year of assessment 1994 and subsequent years of assessment. (3) Subparagraph 6(a)(i) shall be deemed to have come into force for the year of assessment 1991.
Data synced
Chapter I — Preliminary
The Income Tax Act 1967, the Petroleum (Income Amendments Tax) Act 1967, the Stamp Act 1949 and the Promotion of Investments Act 1986 are amended in the manner specified in Chapters II, III, IV and V respectively.
Chapter II — Amendments to the income tax act 1967
The Income Tax Act 1967, which is referred to as of section 3. the "principal Act" in this Chapter, is amended by inserting after section 3b the following section: "Non- 3c. Notwithstanding section 3, tax shall not be charged under this Act on income arising from sources outside Malaysia and received in respect of Malaysia by a resident company (other than a received in company carrying on the business of banking, Malaysia from outside insurance, shipping and air transport).". Malaysia. Amendment 5. Subsection 6A(2) of the principal Act is amended— of section 6A.
(a) in paragraph (a) by substituting for the word "ninety" the words "one hundred and ten"; and
(b) in paragraph (b) by substituting for the word "fifty" the word "sixty". of section 34B.
Section 34B of the principal Act is amended-
(a) in subsection (1)—
(i) by substituting for the words "subsection
(3)" the words "subsection (2)";
(ii) by deleting the word "or" at the end of paragraph (a);
(iii) by substituting for the full stop at the end of paragraph (b) the punctuation mark and word " or". and
(iv) by inserting after paragraph (b) the following paragraph: "(c) payment for the use of the services of a research and development company or a contract research and development company.";
(b) by substituting for the full stop at the end of subsection (2) a colon and inserting thereafter the following proviso: "Provided that no deduction in respect of that expenditure shall be made under this section to a person being a related company of a research and development company which has been given approval under section Act 327. 27D(1) of the Promotion of Investments Act 1986 and whose period as prescribed under section 29E(2)(b) of that Act has not ended."; and
(c) by substituting for the full stop at the end of paragraph (4)(b) a semicolon and inserting thereafter the following paragraph: "(c) a "contract research and development company", a "related company" and a "research and development company" have the meaning assigned thereto in section 2 of the Promotion of Investments Act 1986."
The proviso to paragraph 39(1)(1) of the principal Act Amendment is amendedof section 39.
(a) by deleting the word "or" at the end of subparagraph (iv); and
(b) by inserting after subparagraph (v) the following subparagraph: vi) the pravayoi of promtiona or fs viles incorporating a conspicuous advertisement or logo of the business; or".
Section 44 of the principal Act is amended—
(a) in subsection (1)—
(i) by deleting the word "and" at the end of paragraph (b); of section 44.
(ii) by substituting for paragraph (c) the following paragraph: "(c) next, by any deduction falling to be so made pursuant to subsection
(6); and "; and
(iii) by inserting after paragraph (c) the following paragraph: "(d) thereafter, in respect of an individoal, so many pueduanion subsection (8).";
(b) in the proviso to subsection (6) by substituting for the words "31st January 1994" the words "30th June 1994";
(c) in subsection (7), in the definition of "institution"—
(i) by deleting the word "or" at the end of paragraph (d);
(ii) by inserting the word "or" at the end of paragraph (e); and
(iii) by inserting after paragraph (e) the following paragraph: "(f) a technical or vocational training institute established and andintained by a statutory body:";
(d) by inserting after subsection (7) the following subsection: "(8) There shall be deducted pursuant to this subsection from the aggregate income of a person to whom section 34(6)(g) does not apply, for the relevant year reduced by any deduction for that year pursuant to subsection
(2) or Schedule 4, 4A or 4B, an amount equal to any gift of money made by him in the basis year for that year, for the provision of
library facilities which are accessible to the public and in respect of contributions to public libraries and libraries of schools and institutions of higher education, not exceeding twenty thousand ringgit.".
Section 46 of the principal Act is amended— of section 46.
(a) by deleting the word "and" at the end of paragraph (c);
(b) by substituting for the full stop at the end of paragraph (d) a semicolon; and
(c) by inserting after paragraph (d) the following paragraphs: "(e) a further five thousand ringgit for that individual if he is a disabled person; and
(f) an amount limited to a maximum of two thousand ringgit on fees expended in that basis year by that individual for any course of study in any institution in Malaysia recognized by the Government undertaken for the purpose of acquiring technical, vocational or industrial skills.".
Section 47 of the principal Act is amended-
(a) by substituting for subsection (1) the following subsection: "(1) In the case of an individual resident for the basis year for a year of assessment who in that basis year had a wife living together with him, there shall, subject to subsections (3) and (4), be allowed for that year of assessment a deduction of—
(a) three thousand ringgit for the wife;
(b) a further two thousand five hundred ringgit for the wife if she is a disabled person."; and of section 47.
(b) in subsection (3) by substituting for the words "subsections (1) and (2)" the words "subsections (1)(a) and (2)". or sention 4. 11. Section 48 of the principal Act is amended-
(a) in paragraph (2)(a) by deleting the words "for the first five children in order of age,"; and
(b) by deleting subsection (7). of section 60.
Section 60 of the principal Act is amended-
(a) by substituting for the full stop at the end of subparagraph (2)(b)(ii) a semicolon and inserting thereafter the following paragraph: "(c) where an insurer carries on life business, the income of the life fund shall be treated as a separate source of income from the income of the shareholders' fund in respect of the life business.";
(b) by substituting for subsection (3) the following subsections: "(3) The adjusted income of the life fund for the basis period for a year of assessment of an insurer resident for the basis year for that year of assessment shall be ascertained by— that period from the investments made out of any of the insurer's life funds; and paragraph (i) applies and which
or any rights arising from them; paragraph (a)(ii) is applicable for that period to gross proceeds receivable in realising those investments or rights.
(3A) The adjusted income of the shareholders' fund for the basis period for a year of assessment of an insurer resident for the basis year for that year of assessment shall be ascertained bythat period from the investments made out of any of the shareholders' funds; and paragraph (1) applies and which or any rights arising from them;
(iii) the amount of the actuarial surplus (subject to any adjustment as the Director General may think fit to make in accordance with the provisions of this Act) for that period arısıng trom the lite tund as 1s apportioned to the shareholders' fund; and
paragraph (a)(ii) is applicable for that period to gross proceeds receivable in realising those investments or rights.";
(c) by substituting for subsection (4) the following subsections: "(4) The adjusted income of the life fund of an insurer not resident for the basis year for that year of assessment shall where that business is wholly or partly carried on in Malaysia be ascertained by— that period from investments made (in Malaysia or elsewhere) out of the insurer's Malaysian life fund; and paragraph (i) applies and which or any rights arising from them; paragraph•(a)(ii) is applicable for that period to gross proceeds receivable in realising those investments or rights.
(4A) The adjusted income of the shareholders' fund for the basis period for a year
of assessment of an insurer not resident for the basis yearfor thatyear of assessment shall, where that business is wholly or partly carried on in Malaysia, be ascertained bythat period from the investments made out of any of the shareholders' funds; and paragraph (i) applies and which or any rights arising from them;
(iii) the amount of the actuarial surplus (subject to any adjustment as the Director General may think fit to make • in accordance with the provisions of this Act) for that period arising from the life fund as is apportioned to the shareholders' fund; and aragraph (a)(il) 1s applicable tor th eriod to gross proceeds receivable i realising those investments or rights.
(4B) The adjusted income as ascertained under subsections (3A) and (4A) shall be deemed to be the statutory income from that source.";
(d) in subsection (5)—
(i) in subparagraph (a)(iv) by inserting after the word "recovered" the words "or recoverable"; and
(ii) in paragraph (b) by substituting for subparagraph (i) the following subparagraph: "(i) claims incurred in that period in connection with his general policies;";
(e) in subsection (6)— (*) in s wpragraph (ered by ie eroirds ter recoverable"; and
(ii) in paragraph (b) by substituting for subparagraph (i) the following subparagraph: "(i) claims incurred in that period in connection with his Malaysian general policies;"; and
(f) by inserting after subsection (10) the following subsections: "(10A) Notwithstanding section 43(2) and section 60(10), any unabsorbed losses of the Lice busin egs ishalhe nta be ry aiane for the basis period for a year of assessment and subsequent years of assessment in respect of the life fund of the insurer.
(10B) Notwithstanding paragraph 75 of Schedule 3, any unabsorbed allowances of the life business shall only be available for deduction against the adjusted income for the basis period for a year of assessment and subsequent years of assessment in respect of the life fund of the insurer.
(10c) Allowances under Schedule 3 shall only be available for deduction against the adjusted income of the life fund and the
balance of such allowances shall not be available as a deduction against the adjusted income of the shareholders' fund.".
The principal Act is amended by inserting after New section section 6OAA the following section: 60лb. "Chargeable 60AB. The chargeable income in respect of the infefundf life fund as determined under sections 60(3) and 60(4) is subject to tax as specified under Part VIII of Schedule 1.".
Section 60E of the principal Act is amended—
(a) by deleting subsection (5);
(b) in subsection (6) by deleting the words "or income exempt under subsection (5)"; and
(c) in subsection (7)—
(1) by substituting for the definition of 'approved operational headquarters company" the following definition: "approved operational headquarters company" means a company—
(a) which carries on a business in Malaysia providing qualifying services to its offices outside Malaysia or to its related companies outside Malaysia; and
(b) which is approved by the Minister for the purposes of this section;";
(ii) by deleting the definition of "foreign company"; and
(iii) in subparagraph (a)(iii) of the definition of "qualifying services" by substituting for the words "and components" the words components and finished products". of section
of section
Paragraph 65A(b) of the principal Act is amended by substituting for the word "six" the word "eight".
Section 108 of the principal Act is amended—
(a) by inserting after subsection (2c) the following subsection: "(2D) Notwithstanding any other provision of tis ieu ehereadir dendis deduecredi e tax during the basis year for the year of assessment 1995, the amount of the dividend received by the shareholder shall be deemed to be a dividend of such a gross amount as after deduction of tax at the rate of thirty per cent would be equal to-
(a) the amount in fact paid or credited; or
(b) where the dividend consists of propertoo the market alue of thet property at the time of the dividend's distribution, and a sum equal to the difference between that gross amount and the amount mentioned in paragraph (a) or (b), as the case may be, shall be deemed to have been deducted from the dividend as tax.";
(b) by inserting after subsection (4c) the following subsection: "(4D) In any case where tax has been deducted or deemed to have been deducted at the rate of thirty-two per cent on any dividend paid, credited or distributed during the basis year for the year of assessment 1995 to which subsection (2D) applies, the compared total shall be determined at the rate of thirty per cent."; and
(c) in subsection (11)—
(i) by substituting for the full stop at the end of subparagraph (b)(ii) the punctuation mark and word "; or"; and
(ii) by inserting after subparagraph (b)(ii) the following paragraph: "(c) a life insurer in respect of his chargeable income which is subject to tax under Part VIII of Schedule 1.".
Section 110 of the principal Act is amended by Amendment inserting after subsection (1c) the following subsection: 110. "(1D) Notwithstanding subsection (1), where tax on any dividend paid, credited or distributed during the basis year for the year of assessment 1995 has been deducted at the rate of thirty-two per cent, the tax to be set off under subsection (1) shall be the sum deemed to be the tax deducted from such dividend under section 108(2D).".
Subsection 154(1) of the principal Act is amended by Amendment inserting after paragraph (e) the following paragraph: of section "(ea) prescribing penalties for any contravention or failure to comply with any of the provisions of any rules made under this section: Provided that no such penalty shall exceed the penalty prescribed under section 120;".
Schedule 1 to the principal Act is amended—
(a) in paragraph 1 of Part I by substituting for the Schedule 1. rates the following rates: of the first 2,500 2,500 5,000 O per cent 3 per cent 6 per cent
of the nex or every ringg f the nex 15,000 15,000 20,000 30,000 7 per cent 12 per cent 18 per cent 23 per cent 28 per cent 50,000 31 per cent Eorevery rineeit 150,000 32 per cent";
(b) in paragraph 2 of Part I by substituting for the words "32 per cent" the words "30 per cent";
(c) in paragraphs 1 and 2 of Part II by substituting for the words "20% of gross" and "15% of gross' appearing under the column "Rate of income tax" the words "15% of gross" and "10% of gross" respectively;
(d) in Part IV by substituting for the rates the following rates: for every ringgil of the first 1 per cent 3 per cent 6 per cent 9 per cent 12 per cent 25,000 25,000 16 per cent 20 per cent
50,000 24 per cent 100,000 27 per cent Por every ringeit 250,000 30 per cent exceeding 500,000 32 per cent";
(e) in Part V by substituting for the words "15% of gross" the words "10% of gross"; and
(f) by inserting after Part VII the following Part:
Part VIII — Notwithstanding Part I and Part II, income tax
Schedule 3 to the principal Act is amended—
(a) in paragraph 37B—
(i) by substituting for subparagrah (c) the following subparagraph: "(c) industrial, technical or vocational training approved by the Minister;";
(ii) by substituting for the comma at the end of subparagraph (d) the punctuation mark and word", or", and
(iii) by inserting after subparagraph (d) the following subparagraph: "(e) research undertaken by a research and development company or a contract research and development company as defined in Act 327. section 2 of the Promotion of Investments Act 1986,"; and Schedule 3.
(b) in paragraph 62 by inserting after subparagraph
(3) the following subparagraph: "(4) Notwithstanding paragraph 62(1) where an asset in relation to which the person has incurred qualifying plant expenditure for the purposes of a business of his is disposed of by way of gift, its disposal value shall be deemed to be zero if the gift is made to-
(a) a technical or vocational training institute established and maintained by the government or a statutory body;
(b) a technical or vocational training institute as approved by the Minister; or
(c) an approved research institute as defined in section 34B.". omendment 21. Schedule 6 to the principal Act is amended by Schedule 6. inserting after paragraph 35 the following paragraph: "36. Sums received by way of annuities granted insürersnuity contracts issud by Malaysian life
Chapter III — Amendments to the petroleum (income tax)
(1) Except for section 23, this Chapter shall have effect for the year of assessment 1994 and subsequent years of assessment.
(2) Section 23 shall be deemed to have come into force on the 1st June 1991.
The Petroleum (Income Tax) Act 1967, which is referred to as the "principal Act" in this Chapter, is 45167. amended in section 2 in the definition of "approved scheme" by inserting after the word "means" the words "the Employees Provident Fund or".
Paragraph 16(3)(a) of the principal Act is amended Amendment by substituting for the words "fifteen per cent" the words section 16. "sixteen per cent".
Section 22 of the principal Act is amended—
(a) by substituting for the full stop at the end of section 22. subsection (1) a colon; and
(b) by inserting after subsection (1) the following proviso: "Provided that in respect of any gift of money made by that chargeable person during the period from the 1st November 1993 to the 30th June 1994 to the Government low-cost housing fund nanaged by the Central Bank of Malaysia, ther hall be given a further deduction of an amoun equal to one half of that gift of money.".
Chapter IV — Amendment to the stamp act 1949
This Chapter shall come into force on the Ist January Comentor 1995. Act 194,amp
The Stamp Act 1949 is amended by substituting for Amendment section 20b the following section: section 20b. Act 378. 20B. (a) Er set loneny ance itherans fle or bor transfer an undivided interest in real property, shall contain an affidavit of the transferee certifying that the transaction effected by the instrument does not form part of a larger transaction or series of transactions completed or to be completed within a period of twelve months after the date of the first of the instruments employed to complete the conveyance of the property.
(2) Where the transaction effected by the instrument forms part of a larger transaction or series
of transactions, ad valorem duty upon that instrument and upon every other instrument following shall be calculated on the aggregate of the consideration or market values of the separate parts or parcels being conveyed, whichever is the higher, at the rates specified under paragraph (a) of Item 32 in the First
Chapter V — Amendments to the promotion of investments
This Chapter shall come into force on the 28th romemens October 1994 and shall have effect for the year of assessment 1995 and subsequent years of assessment. Promotion of section 2. Act 327.
The Promotion of Investments Act 1986, which i eferred to as the "principal Act" in this Chapter, i amended in subsection 2(1)—
(a) by substituting for the words "Tourist Development Corporation of Malaysia" appearing in the definitions of "hotel" and "tourist project" the words "Ministry of Culture, Arts and Tourism", and
(b) by inserting after the definition of "tax relief period" the following definition: • "technical or vocational training company" means a company which provides technical or vocational training in Malaysia;.
Section 4B of the principal Act is amended by section 4B. substituting for the words "and 26e" the words ", 26E and 26G".
The principal Act is amended by inserting after New section section 26F the following section: "Application 26G. (1) Any technical or vocational training approval company participating or intending to for participate in Malaysia may make an application investment in writing to the Minister for approval for allowance purposes. of an investment tax allowance. technical or vocational training *shl e n plocadincmnade under sebsictions as company. may be made under this Act.".
The principal Act is amended by inserting after New section section 27F the following section: "Grant of 27g. (1) The Minister may grant approval in approval of respect of an application for an investment tax application for allowance made under section 26g(1) subject to investment such terms and conditions as he deems fit: allowance nade under Provided that where the Minister is satisfied that the company was engaged in an activity or had otherwise incurred capital expenditure in relation thereto, from a date prior to the date from which the activity was deemed as a promoted activity under section 4, the approval may be granted retrospectively from a date not earlier than the 28th October 1994.
(2) The Minister may vary the terms and conditions imposed under subsection (1).
(3) In exercising his powers under subsections (1) and (2), the Minister shall act with the concurrence in writing of the Minister of Finance.".
Section 28 of the principal Act is amended—
(a) in subsection (1)—
(i) by substituting for the words "or 27F" the words ", 27F or 27g"; and
(i) byrds +, 27 gc(1), 2he (worda "27(2)" the , 27g(1), 27g(2)"; and section 28.
New section 29h.
(b) in subsection (2)—
(i) by substituting for the words "or 27F(1)" the words" ', 27F(1) or 27g(1)"; and
(ii) in paragraph (b) by inserting after the words "27F(2)" the words ", 27c(1), 27G(2)".
The principal Act is amended by inserting after section 29g the following section: "Investment 29H. (1) Where a technical or vocational allowance training company which has been granted approval under section 27g has incurred in the application basis period for a year of assessment in respect of an activity relating to technical or vocational training capital expenditure for the purposes of that activity, there shall be given to the company approved for that year of assessment an investment tax allowance of one hundred per cent of that expenditure.
(2) An allowance for expenditure given under subsection (1)—
(a) subject to subsection (4), shall be given only for the year of assessment in the basis period for which that expenditure was incurred;
(b) shall be given in respect of expenditure incurred within ten years from thedate •from which the approval is to take effect: Provided that where a company incurs capital expenditure from the date from which the approval is to take effect referred to in subsection
(2)(b) in relation to a business which it is about to carry on in respect of an activity relating to technical or vocational training, that expenditure shall be deemed to be incurred in the basis period in which it commences to carry on the business.
(3) Where an allowance is given to a company under subsection (1) for a year of
assessment, so much of the statutory income of the business of the company in respect of an activity relating to technical or vocational training for that year of assessment as is equal to the amount of the allowance (or to the aggregate amount of any such allowance, as the case may be) shall be exempt from tax under the principal Act: Provided that the amount so exempt shall not exceed seventy per cent of the statutory income of that business of thecompany forthat year of assessment.
(4) Where, by reason of an insufficiency or absence of statutory income of the business of the company in respect of an activity relating to technical or vocational training for a year of assessment, effect cannot be given or cannot be given in full to any allowance or allowances to which the company is entitled under this section for that year in relation to the source consisting of that business, then, notwithstanding subsections (1), (2) and (3), so much of the allowance or allowances in question as cannot be given for that year shall be deemed to be an allowance to be given to the company under this section for the first subsequent year of assessment for which there is statutory income from that business, and so on for subsequent years of assessment until the company has received the whole of the allowance or allowances to which it is so entitled.
(5) Where any income is exempt from tax by virtue of subsection (3), section 23 shall apply to that income (with any necessary modifications) as it applies to income exempt under section 22.
(6) For the purposes of this section and subject to subsection (7), "capital expenditure", in relation to technical or vocational training, means capital expenditure incurred on a building
or on any plant and machinery used in Malaysia in connection with and for the purposes of an activity relating to training. expentiur moaimed on brcitinge o ca l used as living accommodation for persons), plant nd machinery where such buildings, plant o nachinery are provided wholly or partly for the use of a director or an individual who is a member of the management, administrative or clerical stafff.". of section 37.
Subsection 37(2) of the principal Act is amended by substituting for the word "adjusted" the word "statutory". DICETAK OLEH PNME Harga: RM4.00
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Finance Act 1995 [Act 531] (Laws of Malaysia, lom.agc.gov.my). Retrieved via LawPlayer, https://lawplayer.com/my/act/act-531
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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).