FINANCE ACT 2024

Finance LAWS OF MALAYSIA Act 862 FINANCE ACT 2024 1 2 Laws of Malaysia Act 862 Date of Royal Assent ... ... 24 December 2024 Date of publication in the Gazette ... ... 31 December 2024 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 862 FINANCE ACT 2024 ARRANGEMENT OF SECTIONS Chapter I PRELIMINARY Section 1. 2. Short title Amendment of Acts Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 3. Commencement of amendments to the Income Tax Act 1967 5. Amendment of section 15c 4. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Amendment of section 6 Amendment of section 34 Amendment of section 44 Amendment of section 45a Amendment of section 46 Substitution of section 46b Amendment of section 47 Amendment of section 48 Amendment of section 49 Amendment of section 107c Amendment of section 108 Amendment of Schedule 1 Amendment of Schedule 6 3 4 Laws of Malaysia Act 862 Chapter III AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 Section 18. Commencement of amendments to the Real Property Gains Tax Act 1976 20. Amendment of section 7 19. 21. 22. Amendment of section 3 Amendment of section 11 Amendment of section 21 Chapter IV AMENDMENTS TO THE STAMP ACT 1949 23. Commencement of amendments to the Stamp Act 1949 25. New sections 36ca and 36cb 24. 26. 27. Amendment of section 20a Amendment of section 47a Amendment of First Schedule Chapter V AMENDMENT TO THE PETROLEUM (INCOME TAX) ACT 1967 28. 29. Commencement of amendment to the Petroleum (Income Tax) Act 1967 Amendment of First Schedule Chapter VI AMENDMENT TO THE FINANCE ACT 2012 30. 31. Commencement of amendment to the Finance Act 2012 Amendment of section 3 Chapter VII AMENDMENT TO THE FINANCE (NO. 2) ACT 2023 32. 33. Commencement of amendment to the Finance (No. 2) Act 2023 Amendment of section 30 5 Finance LAWS OF MALAYSIA Act 862 FINANCE ACT 2024 An Act to amend the Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Stamp Act 1949, the Petroleum (Income Tax) Act 1967, the Finance Act 2012 and the Finance (No. 2) Act 2023. [ ] ENACTED by the Parliament of Malaysia pursuant to Article 68 of the Federal Constitution as follows: Chapter I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 2024. Amendment of Acts 2. The Income Tax Act 1967 [Act 53], the Real Property Gains Tax Act 1976 [Act 169], the Stamp Act 1949 [Act 378], the Petroleum (Income Tax) Act 1967 [Act 543], the Finance Act 2012 [Act 742] and the Finance (No. 2) Act 2023 [Act 851] are amended in the manner specified in Chapters II, III, IV, V, VI and VII respectively. 6 Laws of Malaysia Act 862 Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4, 8, 11, 12, 13, 14, 15, 16 and 17, and paragraphs 9(a), (b), (c), (d) and (g) have effect for the year of assessment 2025 and subsequent years of assessment. (2) Sections 5 and 10 come into operation on 1 January 2025. (3) Section 6 comes into operation on 1 April 2025. (4) Section 7 comes into operation on the coming into operation of this Act. (5) Paragraphs 9(e), (f) and (h) have effect from the year of assessment 2025 until the year of assessment 2027. Amendment of section 6 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in subsection 6(1)— (a) in paragraph (q), by substituting for the full stop at the end of the paragraph a semicolon; and (b) by inserting after paragraph (q) the following paragraph: “(r) notwithstanding anything contrary to this Act or any other written law, income tax shall be charged for each year of assessment upon the income of an individual, who is a shareholder of a company, either through direct shareholding or a nominee, which consists of dividend paid, credited or distributed, whether in monetary form or otherwise, by the company, and the dividend is deemed by virtue of section 14 to be derived from Malaysia, at the appropriate rate as specified under Part XXII of Schedule 1.”. Finance 7 Amendment of section 15c 5. Section 15c of the principal Act is amended— (a) in subsection (1), by substituting for the words “subsection (2)” the words “subsections (2) and (2a)”; (b) in subsection (2)— (i) by inserting after the words “the date of acquisition of the shares of the relevant company” the words “by the company, limited liability partnership, trust body or co-operative society”; (ii) in paragraph (b)— (A) by substituting for the words “asset:” the words “asset; or”; and (B) by deleting the words “Provided that the defined value of the real property situated in Malaysia (including any right or interest thereof) owned by another controlled company, is not less than seventy-five per cent of the value of its total tangible asset; or”; (iii) in the proviso, by substituting for the full stop at the end of the proviso a colon; and (iv) by inserting after the proviso the following second proviso: “Provided further that where at any date the relevant company disposes of the real property or the shares of another controlled company, or both, whereby the defined value of the real property or the shares of another controlled company, or both, owned at the date of disposal and thereafter is less than seventy-five per cent of the value of its total tangible assets, that relevant company shall not be regarded as a relevant company under subsection (1) as from that date of disposal.”; 8 Laws of Malaysia Act 862 (c) by inserting after subsection (2) the following subsection: “(2a) Where the relevant company is a real property company as defined under subparagraph 34a(6) of Schedule 2 to the Real Property Gains Tax Act 1976 prior to 1 January 2024, the date of acquisition of shares of the relevant company shall be deemed to be the date of acquisition of those shares as determined in accordance with subparagraph 34a(2) of Schedule 2 to that Act.”; (d) by substituting for subsection (3) the following subsection: “(3) Where, on the date of acquisition of the shares of the relevant company, the defined value referred to in paragraphs (2)(a), (b) and (c) is less than seventy-five per cent of the value of its total tangible asset and the relevant company subsequently acquires real property or shares of another controlled company, or both, resulting in the defined value of the real property or shares, or both, owned on the date of acquisition by the relevant company being not less than seventy-five per cent of the value of its total tangible asset (hereinafter referred to as the “subsequent acquisition date”), the shares of the relevant company shall be deemed to be acquired on the subsequent acquisition date.”; (e) in subsection (4)— (i) in paragraph (a)— (A) by substituting for the words “paragraph 3(a)” the words “subsection (3)”; (B) by inserting after the words “in accordance with the” the word “following”; (C) in the formula, in explanation A, by substituting for the words “referred to in subsection (1)” the words “disposed by a company, limited liability partnership, trust body or co-operative society”; and Finance (D) 9 in the formula, in explanations B and C, by substituting for the words “date of acquisition of the shares of the relevant company referred to in subsection (1)” the words “subsequent acquisition date”; and (ii) in paragraph (b), by substituting for the words “paragraph (3)(b)” the words “subsection (2)”; (f) by inserting after subsection (4) the following subsection: “(4a) Where subsection (2a) applies, the acquisition price of the real property company as determined under subparagraph 34 a (3) of Schedule 2 to the Real Property Gains Tax Act 1976 prior to 1 January 2024 shall be deemed to be the acquisition price of the shares of the relevant company.”; and (g) in subsection (5)— (i) by inserting before the definition of “defined value” the following definition: ‘ “another controlled company” means a controlled company which owns real property situated in Malaysia (including any right or interest thereof) or shares in another controlled company, or owns both, where the defined value of the real property or shares, or both, is not less than seventy-five per cent of the value of its total tangible asset;’; and (ii) in the definition of “value of its total tangible assets”, by inserting before the word “means” the words “in relation to the relevant company or another controlled company,”. 10 Laws of Malaysia Act 862 Amendment of section 34 6. Subsection 34(6) of the principal Act is amended— (a) by substituting for paragraph (h) the following paragraph: “(h) an amount equal to the expenditure incurred by the relevant person in the relevant period on the provision of services, public amenities and contributions to a charity or community project pertaining to education, health, housing, conservation or preservation of environment, enhancement of income of the poor, infrastructure, information and communication technology or maintenance of a building designated as a heritage site by the Commissioner of Heritage under the National Heritage Act 2005 [Act 645], and where the amount of expenditure is— (i) not more than three hundred thousand ringgit, the amount of expenditure shall be verified and the charity or community project shall be approved, by the relevant government authority; or (ii) more than three hundred thousand ringgit, the amount of expenditure shall be verified by the relevant government authority and the charity or community project shall be approved by the Minister: Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under subsection 44(6).”; and (b) by substituting for paragraph (ha) the following paragraph: “(ha) an amount equal to the expenditure incurred by a company on the provision of infrastructure in relation to its business which is available for public use, and where the amount of expenditure is— (i) not more than three hundred thousand ringgit, the amount of expenditure and the provision of infrastructure shall be verified and approved by the relevant government authority; or Finance 11 (ii) more than three hundred thousand ringgit, the amount of expenditure shall be verified by the relevant government authority and the provision of infrastructure shall be approved by the Minister: Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under subsection 44(6).”. Amendment of section 44 7. Subsection 44(7) of the principal Act is amended in the definition of “organization”, in paragraph (k), by deleting the words “as defined in subsection 46(2)”. Amendment of section 45a 8. Subsection 45 a (1) of the principal Act is amended by substituting for the words “five thousand ringgit” the words “six thousand ringgit”. Amendment of section 46 9. Subsection 46(1) of the principal Act is amended— (a) in paragraph (c)— (i) by substituting for the word “parents” wherever appearing the words “parents or grandparents”; and (ii) in the proviso— (A) in subsubparagraph (b), by substituting for the words ‘ “parents” ’ the words ‘ “parents or grandparents” ’; and 12 Laws of Malaysia (B) Act 862 by inserting after subsubparagraph (c) the following subsubparagraph: “(ca) “complete medical examination” shall include any vaccination;”; (b) in paragraph (e), by substituting for the words “six thousand ringgit” the words “seven thousand ringgit”; (c) in paragraph (h)— (i) in subparagraph (i), by inserting after the word “expenses” the words “or payment o