FINANCE ACT 2010

Finance LAWS OF MALAYSIA Act 702 FINANCE ACT 2010 1 2 Date of Royal Assent ... ... 6 January 2010 Date of publication in the Gazette ... ... ... 14 January 2010 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). 3 LAWS OF MALAYSIA Act 702 FINANCE 2010 ARRANGEMENT OF SECTIONS CHAPTER I PRELIMINARY Section 1. Short title 2. Amendment of Acts CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 3. Commencement of amendments to the Income Tax Act 1967 4. Amendment of section 2 4A. Amendment of section 6A 5. Amendment of section 46 6. Amendment of section 49 7. Amendment of section 60I 8. Amendment of section 83 9. Amendment of section 107 10. Amendment of section 107C 11. Amendment of section 112 12. Amendment of section 120 13. Amendment of section 152A 14. Amendment of Schedule 1 15. Amendment of Schedule 6 16. Amendment of Schedule 7B 4 Laws of Malaysia ACT 702 CHAPTER III AMENDMENTS TO THE STAMP ACT 1949 Section 17. Commencement of amendments to the Stamp Act 1949 18. New section 72A 19. Amendment of First Schedule 20. Amendment of Second Schedule CHAPTER IV PART I AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967 21. Commencement of amendments to the Petroleum (Income Tax) Act 1967 22. Amendment of section 5 23. Amendment of section 30 24. New sections 30A and 30B 25. New section 34A 26. Amendment of section 38 27. New section 39A 28. Amendment of section 40 29. New section 40A 30. Amendment of section 48 31. New section 49A 32. Amendment of section 51 33. Amendment of section 58 34. New section 82A PART II MISCELLANEOUS 35. Application of this Part 36. Year of assessment 2010 37. Estimate and instalment for year of assessment 2010 current year basis 38. Savings and transitional provisions Finance 5 CHAPTER V AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 Section 39. Commencement of amendments to the Real Property Gains Tax Act 1976 40. Amendment of section 7 41. Amendment of section 13 42. Amendment of section 16 43. Amendment of section 17 44. Amendment of section 20 45. Amendment of section 21A 46. Amendment of section 21B 47. Amendment of section 22 48. Amendment of section 24 49. New section 48A 50. Amendment of section 52 51. Amendment of section 53 52. Amendment of section 55 53. New section 57A 54. Amendment of Schedule 2 55. Amendment of Schedule 4 56. Amendment of Schedule 5 57. Savings and transitional provisions CHAPTER VI AMENDMENT TO THE LABUAN OFFSHORE BUSINESS ACTIVITY TAX ACT 1990 58. 59. Commencement of amendment to the Labuan Offshore Business Activity Tax Act 1990 New section 12A 6 Laws of Malaysia ACT 702 7 Finance LAWS OF MALAYSIA Act 702 FINANCE ACT 2010 An Act to amend the Income Tax Act 1967, the Stamp Act 1949, the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976 and the Labuan Offshore Business Activity Tax Act 1990. [ ] ENACTED by the Parliament of Malaysia as follows: CHAPTER I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 2010. Amendment of Acts 2. The Income Tax Act 1967 [Act 53], the Stamp Act 1949 [Act 378], the Petroleum (Income Tax) Act 1967 [Act 543], the Real Property Gains Tax Act 1976 [Act 169] and the Labuan Offshore Business Activity Tax Act 1990 [Act 445] are amended in the manner specified in Chapters II, III, IV, V and VI respectively. 8 Laws of Malaysia ACT 702 CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4 and 4A, subparagraph 5(a)(i), sections 6, 7, 14, 15 and 16 have effect for the year of assessment 2010 and subsequent years of assessment. (2) Subparagraphs 5(a)(ii), (iii), (iv) and paragraph 5(b) have effect for the years of assessment 2010, 2011 and 2012. (3) Section 8 has effect for the year ending 31 December 2009 and subsequent years. (4) Sections 9, 11, 12 and 13 come into operation on the coming into operation of this Act. (5) Section 10 has effect for the year of assessment 2011 and subsequent years of assessment. Amendment of section 2 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in section 2 by inserting after subsection (8) the following subsection: “(9) Any reference in subsection 107C(4A), paragraph 2A of Schedule 1 and paragraph 19A of Schedule 3 to a company which has a paid-up capital in respect of ordinary shares of two million five hundred thousand ringgit and less at the beginning of the basis period for a year of assessment shall exclude a company which is established for the issuance of asset-backed securities in a securitization transaction approved by the Securities Commission.”. Amendment of section 6A 4A. Subsection 6A(2) of the principal Act is amended— (a) in paragraph (c), by substituting for the full stop at the end of the paragraph a colon; and Finance 9 (b) by inserting after paragraph (c) the following proviso to that subsection: “Provided that where Part XIV of Schedule 1 applies, thirty-five thousand ringgit shall consist of chargeable income of that individual from all sources.”. Amendment of section 46 5. Section 46 of the principal Act is amended— (a) in subsection (1)— (i) in paragraph (a), by substituting for the word “eight” the word “nine”; (ii) in paragraph (k), by deleting the word “and” at the end of the paragraph; (iii) in paragraph (l), by substituting for the full stop at the end of the paragraph the words “; and”; and (iv) by inserting after paragraph (l) the following paragraph: “(m) an amount limited to a maximum of five hundred ringgit in respect of expenses expended or deemed expended under subsection (3) in that basis year by that individual for the payment of monthly bill for broadband subscription under that individual’s name as evidenced by receipts issued in respect of such bill.”; and (b) in subsection (3), by substituting for the words “and (l)” the words “, (l) and (m)”. Amendment of section 49 6. Section 49 of the principal Act is amended by substituting for subsection (1A) the following subsection: “(1A) For the purposes of subsection (1)— (a) where the aggregate amount of deduction allowed under that subsection in respect of payments, other 10 Laws of Malaysia ACT 702 than payment of premium for any deferred annuity contracted by an individual on or after 1 January 2010, or contributions or both, is six thousand ringgit or less, there shall be allowed a further deduction on any payment of premium for such deferred annuity: Provided that the total of that aggregate amount of deduction and that further deduction shall not exceed seven thousand ringgit; and (b) where subsection 50(2) or 50(3) applies, the total deduction under that subsection shall not exceed six thousand ringgit or where paragraph (a) applies, shall not exceed seven thousand ringgit.”. Amendment of section 60I 7. Subsection 60I(4) of the principal Act is amended— (a) in the definition of “Islamic securities”, by inserting after the words “Securities Commission” the words “or Labuan Offshore Financial Services Authority”; and (b) in the definition of “special purpose vehicle”— (i) by inserting after the words “Companies Act 1965” the words “or a company incorporated under the Offshore Companies Act 1990 which has made an election under section 3A of the Labuan Offshore Business Activity Tax Act 1990”; and (ii) by inserting after the words “Securities Commission” the words “or Labuan Offshore Financial Services Authority”. Amendment of section 83 8. Section 83 of the principal Act is amended— (a) by substituting for subsection (1) the following subsection: “(1) Every employer shall, for each year, furnish to the Director General a return in the prescribed form not Finance 11 later than 31 March in the year immediately following the first-mentioned year containing— (a) the number of employees employed in the firstmentioned year; (b) the number of employees subject to deductions under the Income Tax (Deduction From Remuneration) Rules 1994 [P.U. (A) 507/1994] for the first-mentioned year; (c) the number of new employees employed in the first-mentioned year; (d) the number of employees who have resigned in the first-mentioned year; (e) the number of employees who have resigned and left Malaysia in the first-mentioned year; and (f) such other particulars as may be required by the Director General.”; and (b) by inserting after subsection (1) the following subsection: “(1 A ) For the purpose of subsection (1), every employer shall, for each year, prepare and render to his employee a statement of remuneration of that employee on or before the last day of February in the year immediately following the first-mentioned year containing the following information: (a) the relevant particulars of the employee; (b) the full amount of the gross income falling within section 13 paid, payable or provided by or on behalf of the employer to that employee in respect of the employment; (c) pension, annuity or periodical payment falling under paragraph (4)(e); (d) total deductions under the Income Tax (Deduction From Remuneration) Rules 1994 paid to the Director General in the first-mentioned year; 12 Laws of Malaysia ACT 702 (e) the compulsory contributions made by the employees to the Pension Fund or Employees’ Provident Fund, or any approved fund pursuant to section 150; (f) details relating to the payment of arrears and others for the years prior to the first-mentioned year; (g) tax exempt allowances, perquisites, gifts and benefits for the first-mentioned year; and (h) such other particulars as may be required by the Director General.”. Amendment of section 107 9. Subsection 107(4) of the principal Act is amended by inserting after the words “failed to deduct” the words “, and such amount of tax shall be a debt due from that employer to the Government and shall be payable forthwith to the Director General”. Amendment of section 107C 10. Section 107C of the principal Act is amended— (a) in subsection (4), by inserting after the words “in a year of assessment” the words “and the basis period for that year is not less than six months”; (b) in subsection (8), by inserting after the words “(3),” the words “(4),”; (c) by inserting after subsection (10) the following subsection: “(10A) Where for a year of assessment— (a) no estimate is furnished by a company, trust body or co-operative society and no direction is given by the Director General to make payment by instalment under subsection (8); (b) no prosecution under section 120 has been instituted in relation to failure to furnish such estimate; and Finance 13 (c) tax is payable by that company, trust body or co-operative society pursuant to an assessment for that year of assessment, such tax payable shall without any further notice be increased by a sum equal to ten per cent of the tax payable and that sum shall be recoverable as if it were tax due and payable under this Act: Provided that if that company, trust body or co-operative society pays that sum or, where the sum is remitted under subsection (11), that company, trust body or cooperative society shall not be liable to be charged on the same facts with an offence under section 120.”; and (d) in subsection (11), by substituting for the words “or (10)” the words “, (10) or (10A)”. Amendment of section 112 11. Section 112 of the principal Act is amended by inserting after subsection (3) the following subsection: “(4) The Director General may require any person to pay an additional amount of penalty in accordance with subsection (3)