Commencement of amendments to the Promotion of Investments
(1) Section 32 comes into operation on the coming into operation of this Act. (2) Sections 36, 37 and 62 have effect from the year of assessment 2019 and subsequent years of assessment. (3) Sections 33, 34 and 35 come into operation on 1 January 2019.
Amendment of section 2
Section 2 of the Promotion of Investments Act 1986 which is referred to as the “principal Act” in this Chapter, is amended by substituting for the definition of “research and development” the following definition: ‘ “research and development” means any systematic, investigative and experimental study that involves novelty or technical risk carried out in the field of science or technology with the object of acquiring new knowledge or using the results of the study for the production or improvement of materials, devices, products, produce, or processes, but does not include— (a) quality control or routine testing of materials, devices or products; (b) research in the social sciences or the humanities; (c) routine data collections; (d) efficiency surveys or management studies; (e) market research or sales promotion; (f) routine modifications or changes to materials, devices, products, processes or production methods; or (g) cosmetic modifications or stylistic changes to materials, devices, products, processes or production methods.”.
Amendment of section 6
Subsection 6(1ac) of the principal Act is amended— (a) by substituting for the full stop at end of the subsection a colon; and (b) by inserting the following proviso: “Provided that the contract research and development company at the time of application has an adequate number of full time employees and incurred adequate amount of annual operating expenditure in Malaysia for an activity relating to research and development.”.
Special provision relating to section 6
Notwithstanding the proviso of subsection 6(1 ac ) of the principal Act as introduced by section 33 of this Act— (a) where a contract research and development company has been granted a pioneer status on or before 16 October 2017, the proviso to subsection 6(1ac) shall not apply to that company until 30 June 2021; and (b) where a contract research and development company has been granted a pioneer status after 16 October 2017, the proviso to subsection 6(1ac) shall not apply to that company until 31 December 2018.
Amendment of section 21e
Section 21e of the principal Act is amended by inserting after subsection (2) the following subsections: “(2a) For the avoidance of doubt, the income of a pioneer company referred to in subsection (2) shall not include any income from royalty and other income derived from an intellectual property right if it is receivable as consideration for the commercial exploitation of that right. (2b) Any income derived from intellectual property right referred to in subsection (2a) is subject to tax under the Income Tax Act 1967. (2c) For the purpose of this section, “intellectual property right” means a right arising from any patent, utility innovation and discovery, copyright, trade mark and service mark, industrial design, layout-design of integrated circuit, secret processes or formulae and know-how, geographical indication and the grant of protection of a plant variety, and other like rights, whether or not registered or registrable.”.
Amendment of section 25
Section 25 of the principal Act is amended— (a) by deleting subsection (3); (b) in subsection (4), by deleting the proviso; and (c) by inserting after subsection (4) the following subsection: “(5) Notwithstanding subsection (4), the deduction which has not been so made (or so much thereof as has not been so made) for a year of assessment under that subsection, shall only be made to that company in accordance with that subsection for a period of seven consecutive years of assessment and that period commences immediately following the year of assessment that relates to the basis period in which the day the post pioneer business falls, and any amount of deduction at the end of that period which has not been so made to that company, by reason of insufficiency or absence of statutory income for that period, shall be disregarded for the purpose of this section.”.
Special provision relating to section 25
Notwithstanding subsection 25(4) of the principal Act as amended by section 36 of this Act and subsection 25(5) of the principal Act as introduced by section 36 of this Act, any amount of deduction which cannot be made under subsection 25(4) of the principal Act for the year of assessment 2018 and preceding years of assessment— (a) shall only be made to that company in accordance with subsection 25(4) of the principal Act for a period of seven consecutive years of assessment and that period commences immediately following the year of assessment 2018; and (b) any amount of deduction at the end of that period which has not been so made to that company, by reason of insufficiency or absence of statutory income from its business for that period, shall be disregarded for the purposes of the principal Act.
Amendment of section 30a
Subsection 30 a (1) of the principal Act is amended by substituting for the word “two” the word “five”.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
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).