FINANCE (NO. 2) ACT 2023

Finance (No. 2) LAWS OF MALAYSIA Act 851 FINANCE (NO. 2) ACT 2023 1 2 Laws of Malaysia Act 851 Date of Royal Assent ... ... 27 December 2023 Date of publication in the Gazette ... ... 29 December 2023 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 (No. 2) LAWS OF MALAYSIA Act 851 FINANCE (NO. 2) ACT 2023 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 5. Amendment of section 4 6. Amendment of section 4b 7. Amendment of section 6 8. New section 15c 9. Amendment of section 44 10. Amendment of section 46 11. Amendment of section 61 12. New Chapter 9 13. Amendment of section 77a 14. Amendment of section 77b 15. Amendment of section 82 16. New sections 82b and 82c 17. Amendment of section 83 18. Amendment of section 96a 19. Amendment of section 97a 20. Amendment of section 99 3 4 Laws of Malaysia Act 851 Section 21. Amendment of section 103 22. Amendment of section 107c 23. Amendment of section 112 24. Amendment of section 120 25. Amendment of section 131a 26. New section 134a 27. Amendment of section 138 28. Amendment of section 152a 29. Amendment of section 154 30. New Part XI 31. Amendment of Schedule 1 32. Amendment of Schedule 3 33. Amendment of Schedule 6 34. Amendment of Schedule 7 Chapter III AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 35. Commencement of amendments to the Real Property Gains Tax Act 1976 36. Amendment of section 2 37. Amendment of section 13 38. New section 13a 39. Amendment of section 14 40. Amendment of section 15 41. New section 15a 42. New section 16a 43. Amendment of section 17 44. Amendment of section 19 45. New section 19a 46. Amendment of section 20 47. Amendment of section 21 48. New sections 28a, 28b and 28c Finance (No. 2) 5 Section 49. Amendment of section 57a 50. Amendment of Schedule 2 Chapter IV AMENDMENTS TO THE STAMP ACT 1949 51. Commencement of amendments to the Stamp Act 1949 53. Amendment of section 7 52. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. Amendment of section 2 Deletion of section 8 Amendment of section 15 Amendment of section 39 Amendment of section 42 Amendment of section 43 Amendment of section 45 Amendment of section 48 Amendment of section 57 Deletion of section 60 Deletion of section 60a Deletion of section 71 Deletion of section 72 Deletion of section 73 Amendment of section 82 Amendment of First Schedule Deletion of Second Schedule Deletion of Fifth Schedule Chapter V AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967 71. Commencement of amendments to the Petroleum (Income Tax) Act 1967 72. Amendment of section 2 73. Amendment of section 3 74. Amendment of section 4 75. New section 34b 76. New section 57b 6 Laws of Malaysia Section 77. 78. Act 851 Amendment of section 71 Amendment of section 82a Chapter VI AMENDMENTS TO THE LABUAN BUSINESS ACTIVITY TAX ACT 1990 79. Commencement of amendments to the Labuan Business Activity Tax Act 1990 81. Amendment of section 3 80. 82. 83. 84. 85. 86. Amendment of section 2 Amendment of section 9 New section 21b Amendment of section 22a New section 22da New section 22ea Chapter VII AMENDMENT TO THE ENTERTAINMENTS DUTY ACT 1953 87. 88. Commencement of amendment to the Entertainments Duty Act 1953 Amendment of section 23 Chapter VIII AMENDMENT TO THE CUSTOMS ACT 1967 89. 90. Commencement of amendment to the Customs Act 1967 Amendment of section 11 Chapter IX AMENDMENT TO THE EXCISE ACT 1976 91. 92. Commencement of amendment to the Excise Act 1976 Amendment of section 6 Chapter X AMENDMENT TO THE GOODS VEHICLE LEVY ACT 1983 93. Commencement of amendment to the Goods Vehicle Levy Act 1983 94. Amendment of section 3 Finance (No. 2) 7 Chapter XI AMENDMENT TO THE WINDFALL PROFIT LEVY ACT 1998 95. 96. Commencement of amendment to the Windfall Profit Levy Act 1998 Amendment of section 7 Chapter XII AMENDMENTS TO THE TOURISM TAX ACT 2017 97. Commencement of amendments to the Tourism Tax Act 2017 99. Amendment of section 10 98. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. Amendment of section 8 Amendment of section 11 Amendment of section 14 Amendment of section 19 Amendment of section 20c Amendment of section 20i Amendment of section 22 New Part VIa Amendment of section 65 Deletion of section 66 Amendment of section 70 Chapter XIII AMENDMENTS TO THE SALES TAX ACT 2018 110. Commencement of amendments to the Sales Tax Act 2018 112. Amendment of section 11a 111. 113. 114. 115. 116. 117. 118. 119. 120. Amendment of section 10 Amendment of section 11b New section 11e Amendment of section 13 Amendment of section 14 Amendment of section 23 Amendment of section 26 Amendment of section 39 Amendment of section 43 8 Laws of Malaysia Act 851 Section 121. Amendment of section 82 122. Amendment of section 90 123. Amendment of section 96 124. Amendment of section 106 125. Amendment of Schedule Chapter XIV AMENDMENTS TO THE SERVICE TAX ACT 2018 126. Commencement of amendments to the Service Tax Act 2018 127. Amendment of section 10 128. Amendment of section 13 129. Amendment of section 14 130. Amendment of section 17 131. Amendment of section 26 132. Amendment of section 26a 133. Amendment of section 38 134. Amendment of section 39 135. Amendment of section 42 136. Amendment of section 56c 137. Amendment of section 56h 138. Amendment of section 75 139. Amendment of section 81 140. Amendment of section 91 Chapter XV AMENDMENT TO THE DEPARTURE LEVY ACT 2019 141. Commencement of amendment to the Departure Levy Act 2019 142. Amendment of section 11 9 Finance (No. 2) LAWS OF MALAYSIA Act 851 FINANCE (NO. 2) ACT 2023 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 Labuan Business Activity Tax Act 1990, the Entertainments Duty Act 1953, the Customs Act 1967, the Excise Act 1976, the Goods Vehicle Levy Act 1983, the Windfall Profit Levy Act 1998, the Tourism Tax Act 2017, the Sales Tax Act 2018, the Service Tax Act 2018 and the Departure Levy Act 2019. [ ] ENACTED by the Parliament of Malaysia as follows: Chapter I PRELIMINARY Short title 1. This Act may be cited as the Finance (No. 2) Act 2023. 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 Labuan Business Activity Tax 10 Laws of Malaysia Act 851 Act 1990 [Act 445], the Entertainments Duty Act 1953 [Act 103], the Customs Act 1967 [Act 235], the Excise Act 1976 [Act 176], the Goods Vehicle Levy Act 1983 [Act 294], the Windfall Profit Levy Act 1998 [Act 592], the Tourism Tax Act 2017 [Act 791], the Sales Tax Act 2018 [Act 806], the Service Tax Act 2018 [Act 807] and the Departure Levy Act 2019 [Act 813] are amended in the manner specified in Chapters II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV and XV respectively. Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Paragraphs 4(a), (b) and (d), 17(b), 22(c), 24(b) and 33(b), and sections 5, 6, 7, 8, 11, 12, 13, 14, 18, 19, 20, 21, 23, 25, 26, 27 and 31 come into operation on 1 January 2024. (2) Sections 15 and 16, and paragraph 24(a) in relation to section 82c of the Income Tax Act 1967 come into operation on 1 January 2024. (3) Paragraph 17(c) in relation to subsections 83(2), (3) and (4) of the Income Tax Act 1967 comes into operation on 1 January 2024. (4) Paragraphs 4(c), 10(a), (c), (d), and (e), 22(a) and (b) and 33(a), sections 9, 32 and 34 have effect for the year of assessment 2024 and subsequent years of assessment. (5) Paragraph 10(b) has effect from the year of assessment 2024 until the year of assessment 2026. (6) Paragraph 10(f) has effect from the year of assessment 2024 until the year of assessment 2027. (7) Paragraphs 17(a) and (c) in relation to subsection 83(1) of the Income Tax Act 1967 have effect for the year ending 31 December 2023 and subsequent years. (8) Paragraph 24(a) and section 16 in relation to section 82b of the Income Tax Act 1967 have effect for the year of assessment 2025 and subsequent years of assessment. Finance (No. 2) 11 (9) Section 28 comes into operation on the coming into operation of this Act. (10) Section 29 comes into operation on 1 January 2025. (11) Section 30 in relation to— (a) sections 157 to 197 in new Part XI of the Income Tax Act 1967 have effect for the Financial Year beginning on or after 1 January 2025 and subsequent Financial Years; and (b) sections 198 to 239 in new Part XI of the Income Tax Act 1967 come into operation on 1 January 2025. Amendment of section 2 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in subsection 2(1)— (a) by inserting after the definition of “business trust” the following definition: ‘ “capital asset” means movable or immovable property including any rights or interests thereof;’; (b) by inserting after the definition of “Director General” the following definition: ‘ “electronic invoice” means an invoice or any document approved by the Director General, issued by a person in respect of goods sold or services performed as provided under section 82c;’; (c) in the definition of “foreign tax”, by inserting after the word “Malaysia” the words “in which the same income arose”; and 12 Laws of Malaysia Act 851 (d) by inserting after the definition of “statutory order” the following definition: ‘ “stock exchange” has the meaning assigned to it in the Capital Markets and Services Act 2007;’. Amendment of section 4 5. Section 4 of the principal Act is amended by inserting after paragraph (a) the following paragraph: “(aa) gains or profits from the disposal of capital asset;”. Amendment of section 4b 6. The principal Act is amended by substituting for section 4b the following section: “Non-business income 4 b . For the purposes of section 4, gains or profit from a business shall not include— (a) any interest that first becomes receivable by a person in the basis period for a year of assessment other than interest where subsection 24(5) applies; and (b) gains or profits from the disposal of capital asset other than gains or profits where subsection 24(1) applies.”. Amendment of section 6 7. Subsection 6(1) of the principal Act is amended— (a) in paragraph (p), by substituting for the full stop at the end of the paragraph a semi colon; and Finance (No. 2) 13 (b) by inserting after paragraph (p) the following paragraph: “(q) income tax shall be charged upon the chargeable income of a company, limited liability partnership, trust body or co-operative society from each disposal of capital asset in the basis period for a year of assessment at the appropriate rate as specified under Part XXI of Schedule 1.”. New section 15c 8. The principal Act is amended by inserting after section 15b the following section: “Derivation of gains or profits from the disposal of capital assets deriving value from real property in Malaysia 15c. (1) Subject to subsection (2), gains or profits accruing to a person in a year of assessment on the disposal of capital asset which is a share of a controlled company (hereinafter referred to as the “relevant company”) incorporated outside Malaysia s