FINANCE ACT 1983

Finance LAWS OF MALAYSIA REPRINT Act 293 FINANCE ACT 1983 Incorporating all amendments up to 1 January 2006 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 IN COLLABORATION WITH PERCETAKAN NASIONAL MALAYSIA BHD 2006 1 2 FINANCE ACT 1983 Date of Royal Assent … … … … … 28 December 1983 Date of publication in the Gazette … ... … 29 December 1983 PREVIOUS REPRINT First Reprint ... ... ... ... ... 2001 3 LAWS OF MALAYSIA Act 293 FINANCE ACT 1983 ARRANGEMENT OF SECTIONS CHAPTER I PRELIMINARY Section 1. Short title and commencement 2. Amendments of Acts and Ordinances 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. New section 4 A 6. Amendment of section 6 7. Amendment of section 13 8. Deletion of section 13A 9. New section 15A 10. Amendment of section 24 11. Amendment of section 39 12. Amendment of section 54 13. Amendment of section 54A 14. Deletion of section 54B 15. Amendment of section 67 16. Amendment of section 103 4 Laws of Malaysia ACT 293 Section 17. Amendment of section 104 18. Amendment of section 107A 19. New section 109B 20. Amendment of section 110 21. Amendment of section 127 22. Amendment of section 145 23. Amendment of Schedule 1 24. Amendment of Schedule 3 25. Amendment of Schedule 6 CHAPTER III AMENDMENTS TO THE PETROLEUM (INCOME TAX) ACT 1967 26. Commencement of amendments to the Petroleum (Income Tax) Act 1967 27. Amendment of section 18 CHAPTER IV AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 28. Commencement of amendments to the Real Property Gains Tax Act 1976 29. Amendment of Schedule 2 30. Amendment of Schedule 4 CHAPTER V AMENDMENTS TO THE STAMP ORDINANCE 1949 31. Commencement of amendments to the Stamp Ordinance 1949 32. Amendment of section 2 33. Amendment of section 15 34. Amendment of First Schedule CHAPTER VI AMENDMENTS TO THE STAMP ORDINANCE (SABAH) 35. Commencement of amendments to the Stamp Ordinance (Sabah) Finance 5 Section 36. Amendment of section 2 37. Amendment of section 15 38. Amendment of First Schedule CHAPTER VII AMENDMENTS TO THE STAMP ORDINANCE (SARAWAK) 39. Commencement of amendments to the Stamp Ordinance (Sarawak) 40. Amendment of section 2 41. Amendment of First Schedule CHAPTER VIII AMENDMENTS TO THE FINANCE (ESTATE DUTY) 1980 42. Commencement of amendments to the Finance (Estate Duty) Act 1980 43. Amendment of the First Schedule 44. Amendment of the Second Schedule CHAPTER IX AMENDMENTS TO THE SALES TAX ACT 1972 45. Commencement of amendments to the Sales Tax Act 1972 46. Amendment of section 2 47. Amendment of section 9 48. Amendment of section 15 49. Amendment of section 22 50. Amendment of section 23 51. Amendment of section 30 52. New section 60A 53. Deletion of Part XV CHAPTER X AMENDMENTS TO THE SERVICE TAX ACT 1975 54. Commencement of amendments to the Service Tax Act 1975 55. Amendment of section 5 6 Laws of Malaysia CHAPTER XI AMENDMENTS TO THE EXCISE ACT 1976 Section 56. Commencement of amendments to the Excise Act 1976 57. Amendment of section 6 58. Amendment of section 12 59. Amendment of section 13 60. Amendment of section 28 61. Amendment of section 69 62. Amendment of section 73 63. Amendment of section 74 64. Amendment of section 78 65. Amendment of section 79 66. Amendment of section 81 CHAPTER XII AMENDMENTS TO THE CUSTOMS ACT 1967 67. Commencement of amendments to the Customs Act 1967 68. Amendment of section 11 69. Amendment of section 14 70. New section 14A 71. Amendment of section 16 72. New section 29A 73. Amendment of section 57 74. Amendment of section 69 75. Amendment of section 75 76. Amendment of section 93 77. Amendment of section 99 78. Amendment of section 121 79. New sections 122A and 122B 80. Amendment of section 123 ACT 293 Finance Section 81. Amendment of section 131 82. Amendment of section 135 83. Amendment of section 137 84. Amendment of section 138 7 8 Laws of Malaysia ACT 293 9 Finance LAWS OF MALAYSIA Act 293 FINANCE ACT 1983 An Act to amend the Income Tax Act 1967, the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976 and the Stamp Ordinance 1949, the Stamp Ordinance (Sabah), the Stamp Ordinance (Sarawak), the Finance (Estate Duty) Act 1980, the Sales Tax Act 1972, the Service Tax Act 1975, the Excise Act 1976 and the Customs Act 1967 and to provide for matters connected therewith. [ ] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: C HAPTER I PRELIMINARY Short title and commencement 1. This Act may be cited as the Finance Act 1983 and shall have effect or be deemed to have effect as provided in this Act. Amendments of Acts and Ordinances 2. The Income Tax Act 1967 [Act 53], the Petroleum (Income Tax) Act 1967 [Act 543], the Real Property Gains Tax Act 1976 [Act 169], *the Stamp Ordinance 1949 [Ord. 59 of 1949], **the Stamp Ordinance (Sabah) [Sabah Cap. 137], †the Stamp Ordinance (Sarawak) [Swk. Cap. 32], ††the Finance (Estate Duty) Act 1980 [Act 224], the Sales Tax Act 1972 [Act 64], the Service Tax Act 1975 [Act 151], the Excise Act 1976 [Act 176] and the Customs Act 1967 [Act 235] are amended respectively in the manner specified in Chapters II, III, IV, V, VI, VII, VIII, IX, X, XI and XII respectively. *NOTE—The Stamp Ordinance 1949 [Ord. 59 of 1949] has since been revised as the Stamp Act 1949 [Act 378]. **NOTE—The Stamp Ordinance of Sabah has since been wholly repealed except for section 83– see the Schedule of the Stamp (Amendment and Extension) [Act A723]. †NOTE—The Stamp Ordinance of Sarawak has since been repealed–see the Schedule of the Stamp (Amendment and Extension) Act 1989 [Act A723]. ††NOTE—The Finance (Estate Duty) Act 1980 has since been repealed by the Finance Act 1992 [Act 476]. 10 Laws of Malaysia ACT 293 CHAPTER II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Except for sections 4, 5, 6, 7, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22, the provisions of this Chapter shall have effect for the year of assessment 1984 and subsequent years of assessment. (2) Sections 4, 5, 6, 9, 10, 11, 15, 16, 17, 18, 19, 20, 21 and 2 shall be deemed to have come into force on 21 October 1983. (3) Section 7 shall be deemed to have come into force on 1 January 1984. (4) Sections 12, 13 and 14 shall have effect for the year of assessment 1984 and subsequent years of assessment: Provided that income which would have qualified for exemption or abatement under section 54A or 54B respectively of the Income Tax Act 1967 immediately before the coming into force of this subsection shall be treated as exempt or abated income under that Act. Amendment of section 2 4. Section 2 of the Income Tax Act 1967, which in this Chapter is referred to as “the principal Act”, is amended by deleting paragraphs (c) and (d) of the definition of “royalty”. New section 4A 5. The principal Act is amended by inserting immediately after section 4 the following new section 4A: “Special classes of income on which tax is chargeable 4A. Notwithstanding the provisions of section 4 and subject to this Act, the income of a person not resident in Malaysia for the basis year for a year of assessment in respect of— (i) amounts paid in consideration of services rendered by the person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from, such person; Finance 11 (ii) amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme; or (iii) rent or other payments made under any agreement or arrangement for the use of any moveable property, which is derived from Malaysia is chargeable to tax under this Act.”. Amendment of section 6 6. Subsection 6(1) of the principal Act is amended— (a) by substituting for the full stop at the end of paragraph (d) a semicolon; and (b) by inserting immediately after paragraph (d) the following new paragraph (e): “(e) subject to the provisions of section 109B but notwithstanding any other provisions of this Act, income tax shall be charged for each year of assessment upon the income of a person charged under section 4A at the appropriate rate as specified under Part V of Schedule 1.”. Amendment of section 13 7. Paragraph 13(1)(b) of the principal Act is amended— (a) by deleting the words “or passages between Malaysia and any place outside Malaysia” in subparagraph (i); (b) by inserting immediately after subparagraph (i) the following new subparagraph (ii): “(ii) a benefit or amenity consisting of leave passages within Malaysia not exceeding three times in any calendar year or between Malaysia and any place outside Malaysia not exceeding one passage in any calendar year: Provided that the benefit or amenity enjoyed under this subparagraph is confined only to the employee and members of his immediate family.”; and 12 Laws of Malaysia ACT 293 (c) by renumbering the existing subparagraphs (ii) and (iii) as the new subparagraphs (iii) and (iv) respectively. Deletion of section 13A 8. The principal Act is amended by deleting the whole of section 13A. New section 15A 9. The principal Act is amended by inserting immediately after section 15 the following new section 15A: “Derivation of special classes of income in certain cases 15A. Gross income in respect of— (a) amounts paid in consideration of services rendered by a person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from, such person; (b) amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme; (c) rent or other payments made under any agreement or arrangement for the use of any moveable property, shall be deemed to be derived from Malaysia— (i) if responsibility for payment of the above or other payments lies with the Government or a State Government; (ii) if responsibility for the payment of the above or other payments lies with a person who is a resident for that basis year; or (iii) if the payment of the above or other payments is charged as an outgoing or expense in the accounts of a business carried on in Malaysia.”. Finance 13 Amendment of section 24 10. Section 24 of the principal Act is amended by inserting immediately after subsection (7) the following new subsection (8): “(8) This section shall not apply to income under section 4A.”. Amendment of section 39 11. Subsection 39(1) of the principal Act is amended— (a) by deleting the word “or” at the end of paragraph (h); (b) by substituting for the full stop at the end of paragraph (i) a semicolon and the word “or”; and (c) by inserting immediately after paragraph (i) the following new paragraph (j): “(j) any payments from which tax is deductible under section 109B, if tax has not been deducted there from and paid to the Director General in accordance with subsection (1) of that section.”. Amendment of section 54 12. Section 54 of the principal Act is amended by deleting the words “or section 54B” in paragraph (2)(a). Amendment of section 54A 13. Section 54 A of the principal Act is amended by substituting the following therefor: “Exemption of shipping profits 54A. (1) Subject to the following subsections, the statutory