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:
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).
