FINANCE ACT 2012

Finance laws OF MALAYSIA Act 742 finance act 2012 1 2 Laws of Malaysia Date of Royal Assent Act 742 ... ... 2 February 2012 Date of publication in the Gazette ... ... ... 9 February 2012 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 laws of malaysia Act 742 finance act 2012 arrangement of sections Chapter I PRELIMINARY Section 1. 2. Short title Amendment of Acts Chapter II Part I amendments to the income tax act 1967 3. Commencement of amendments to the Income Tax Act 1967 5. Amendment of section 6 4. 6. 7. 8. 9. 10. 11. 12. 13. Amendment of section 2 Amendment of section 6a Amendment of section 34b Amendment of section 39 Amendment of section 45 Amendment of section 49 Amendment of section 54a Amendment of section 60 Amendment of section 67 14. Amendment of section 81 16. Amendment of section 97a 15. New section 83a 3 4 Laws of Malaysia Act 742 Section 17. Amendment of section 109e 18. New section 111d 19. Amendment of section 120 20. Amendment of section 134 21. Amendment of Schedule 1 22. Amendment of Schedule 4b 23. Amendment of Schedule 7a Part II savings and transitional provisions 24. Application of this Part 25. Balance of allowances and adjusted loss of a person in respect of a Malaysian ship Chapter III amendments to the stamp act 1949 26. Commencement of amendments to the Stamp Act 1949 27. Amendment of section 9 28. Amendment of First Schedule 29. Amendment of Second Schedule Chapter IV amendment to the real property gains tax act 1976 30. Commencement of amendment to the Real Property Gains Tax Act 1976 31. Amendment of Schedule 2 Chapter V amendment to the labuan business activity tax act 1990 32. Commencement of amendment to the Labuan Business Activity Tax Act 1990 33. Amendment of section 22 Finance Section 34. Amendment of section 22a Chapter VI AMENDMENT TO THE FINANCE ACT 2009 35. Commencement of amendment to the Finance Act 2009 36. Amendment of section 3 5 6 Laws of Malaysia Act 742 7 Finance laws of malaysia Act 742 finance act 2012 An Act to amend the Income Tax Act 1967, the Stamp Act 1949, the Real Property Gains Tax Act 1976, the Labuan Business Activity Tax Act 1990 and the Finance Act 2009. [ ] ENACTED by the Parliament of Malaysia as follows: Chapter I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 2012. Amendment of Acts 2. The Income Tax Act 1967 [Act 53], the Stamp Act 1949 [Act 378], the Real Property Gains Tax Act 1976 [Act 169], the Labuan Business Activity Tax Act 1990 [Act 445] and the Finance Act 2009 [Act 693] are amended in the manner specified in Chapters II, III, IV, V and VI respectively. 8 Laws of Malaysia Act 742 Chapter II Part I AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4, 6, 7, 9, 11, 12, 21 and 22, paragraphs 23(a) and (c), sections 24 and 25 have effect for the year of assessment 2012 and subsequent years of assessment. (2) Section 5 comes into operation from 1 January 2012 until 31 December 2016. (3) Sections 8, 13, 15, 16, 17 and 19 come into operation on 1 January 2012. (4) Section 10 comes into operation from the year of assessment 2012 until the year of assessment 2021. (5) Section 18 has effect from the year of assessment 2013. (6) Section 14 comes into operation on the coming into operation of this Act. (7) Section 20 comes into operation on the coming into operation of the amendment to section 6a of the Inland Revenue Board of Malaysia Act 1995 [Act 533]. (8) Paragraph 23(b) is deemed to have effect from the year of assessment 2011. Amendment of section 2 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended— (a) in subsection 2(1)— (i) in the definition of “approved scheme”, by inserting after the words “Employees Provident Fund” the words “, private retirement scheme”; and Finance 9 (ii) by inserting after the definition of “prescribed” the following definition: ‘ “private retirement scheme” means a retirement scheme approved by the Securities Commission in accordance with the Capital Markets and Services Act 2007 [Act 671];’; and (b) in subsection 2(8), by substituting for the words “or the Labuan Offshore Financial Services Authority” the words “, the Labuan Financial Services Authority or the Malaysia Co-operative Societies Commission”. Amendment of section 6 5. Paragraph 6(1)(i) of the principal Act is amended by substituting for the words “three years from the year of assessment 2009” the words “five years from the year of assessment 2012”. Amendment of section 6a 6. Paragraph 6a(2)(c) of the principal Act is amended in the proviso by inserting after the words “Part XIV” the words “or XV”. Amendment of section 34b 7. Subsection 34b(4) of the principal Act is amended— (a) by substituting for paragraph (c) the following paragraph: “(c) a “contract research and development company” and a “research and development company” have the same meaning assigned thereto in section 2 of the Promotion of Investments Act 1986 and fulfills the conditions specified by the relevant Ministry;”; and 10 Laws of Malaysia Act 742 (b) by inserting after paragraph (c) the following paragraph: “(d) a “related company” has the meaning assigned to it in section 2 of the Promotion of Investments Act 1986.”. Amendment of section 39 8. Section 39 of the principal Act is amended by inserting after subsection (2) the following subsection: “(3) Paragraphs (1)(f), (i) and (j) shall not apply if for a year of assessment a person is exempt under paragraph 127(3) (b) or subsection 127(3a) or the Promotion of Investments Act 1986, in respect of all income of that person from all sources not being exemption on income equal to capital expenditure incurred.”. Amendment of section 45 9. Section 45 of the principal Act is amended by substituting for subsection (5) the following subsection: “(5) The election referred to in subsection (2) shall be made in a return furnished in accordance with subsection 77(1).”. Amendment of section 49 10. Section 49 of the principal Act is amended— (a) in subsection (1)— (i) in paragraph (a), by deleting the words “or deferred annuity”; and (ii) in paragraph (b), by substituting for the words “or the Employees Provident Fund as the case may be” the words “(other than a private retirement scheme)”; Finance 11 (b) in subsection (1a)— (i) by deleting paragraph (a); and (ii) in paragraph (b), by deleting the words “or where paragraph (a) applies, shall not exceed seven thousand ringgit”; and (c) by inserting after subsection (1 c ) the following subsections: “(1d) In the case of an individual resident for the basis year for a year of assessment who has— (a) paid any deferred annuity; or (b) made or suffered the making of a contribution to a private retirement scheme, there shall be allowed for that year of assessment a deduction of the aggregate amount of the payments or contribution or both or a deduction of three thousand ringgit whichever is the less. (1e) For the purposes of subsection (1d), where subsection 50(2) or (3) applies, the total deduction under that subsection shall not exceed three thousand ringgit.”. Amendment of section 54a 11. Section 54a of the principal Act is amended— (a) in subsection (1), by substituting for the words “the statutory income” the words “seventy per cent of the statutory income of that person”; and (b) by substituting for subsection (2) the following subsection: “(2) Notwithstanding the provisions of this Act— (a) the income derived from each Malaysian ship referred to under subsection (1) shall be treated as income from a separate and distinct business source of that person; 12 Laws of Malaysia Act 742 (b) the adjusted loss (if any) of the person for any year of assessment in respect of a source consisting of a Malaysian ship shall not be available as a deduction in arriving at the total income of that person for that year of assessment; (c) an amount of statutory income of a person from a source consisting of a Malaysian ship referred to in paragraph (b) which is exempt under this section for the following year of assessment shall be reduced by the adjusted loss referred to in that paragraph, and if by reason of insufficiency or absence of that statutory income, the amount of adjusted loss which has not been so utilized shall further reduce the amount of statutory income of that person from that source which is exempt under this section for any subsequent years of assessment until the amount of adjusted loss is fully utilized; and (d) an amount of statutory income of a person for a year of assessment from a source consisting of a Malaysian ship which is not exempt under this section shall be deemed to be the total income of that person.”. Amendment of section 60 12. Section 60 of the principal Act is amended— (a) by substituting for subsection (10 a ) the following subsection: “(10a) Notwithstanding subsections (10), 43(2) and 44(2), any adjusted loss of the life fund for the basis period for a year of assessment of an insurer shall only be available as a deduction against the statutory income of the life fund of the insurer for subsequent years of assessment until fully utilized.”; and Finance 13 (b) by inserting after subsection (10 c ) the following subsection: “(10d) In arriving at the total income of an insurer for a year of assessment, the adjusted loss from a source or sources of an insurer for that year of assessment other than from a source consisting of a life fund, shall be available as deduction against the aggregate statutory income (excluding the statutory income from a source consisting of a life fund) of an insurer, and any unabsorbed loss ascertained under subsection 44(4) or (5) for that year of assessment shall not be deducted against the statutory income of the life fund of the insurer for the subsequent years of assessment.”. Amendment of section 67 13. Section 67 of the principal Act is amended by inserting after subsection (4) the following subsection: “(4a) For the purposes of subsection (4), where a representative is a person appointed as an agent under section 68, the Director General may, by way of a notice in writing, require the representative to remit to him any accessible moneys for the purpose of payment of any tax due from the principal or for any debt so due referred to in that subsection, notwithstanding that no assessment in respect of such tax has been made in the name of the representative: Provided that the accessible moneys shall not include any moneys held by the representative in his custody and control on behalf of the principal.”. Amendment of section 81 14. Section 81 of the principal Act is amended by inserting after the word “possession” the words “or control”. 14 Laws of Malaysia Act 742 New section 83a 15. The principal Act is amended by inserting after section 83 the following section: “Duty to furnish particulars of payment made to an agent, etc. 83a. (1) Every company shall for each year prepare and provide to each of its agent, dealer or distributor a copy of the form prescribed by the Director General containing— (a) particulars of payment (whether in monetary form or otherwise) made during that year of assessment to that agent, dealer or distributor; (b) name and address of that agent, dealer or distributor; and (c) such other particulars as may be required by the Director General. (2) For the purpose of subsection (1), the prescribed form shall be provided to the agent, dealer or distributor not later than 3