FINANCE ACT 2013

Finance laws OF MalaYsIa act 755 FInance act 2013 1 2 Date of Royal Assent Laws of Malaysia Act 755 ... ... 27 December 2012 Date of publication in the Gazette ... ... ... 10 January 2013 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 755 FInance act 2013 ARRANgemeNt of sectioNs chapter i PReLimiNARY section 1. short title 2. Amendment of Acts chapter ii part I 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 4b 6. Amendment of section 6 7. Amendment of section 8 8. Amendment of section 21 9. Amendment of section 21a 10. Amendment of section 24 11. Amendment of section 25 12. Amendment of section 27 13. New section 34d 14. amendment of section 39 15. amendment of section 44 16. Amendment of section 44a 17. Amendment of section 46 18. Amendment of section 48 19. Amendment of section 60aa 3 4 Laws of Malaysia Act 755 section 20. Amendment of section 60g 21. Amendment of section 60I 22. Amendment of section 65a 23. New section 75b 24. Amendment of section 77 25. Amendment of section 77a 26. Amendment of section 91 27. Amendment of section 103 28. Amendment of section 107b 29. Amendment of section 107c 30. New sections 109g and 109h 31. Amendment of section 111 32. Amendment of section 131 33. Amendment of schedule 1 34. Amendment of schedule 2 35. Amendment of schedule 3 36. Amendment of schedule 4 37. Amendment of schedule 6 38. Amendment of schedule 7a part II sAViNgs AND tRANsitioNAL 39. Application of this Part 40. Balance of allowances and adjusted loss of a person in respect of interest income chapter iii AmeNDmeNts to the stAmP Act 1949 41. commencement of amendments to the stamp Act 1949 42. Amendment of section 8 Finance 5 section 43. Amendment of section 9 44. New section 60a 45. Amendment of first schedule 46. Amendment of second schedule chapter iV AmeNDmeNts to the PetRoLeum (iNcome tAx) Act 1967 47. commencement of amendments to the Petroleum (income tax) Act 1967 48. Amendment of section 18 49. Amendment of section 39 50. Amendment of section 50 51. New section 57a 52. Amendment of section 66 53. New section 72a 54. Amendment of section 83 chapter V AmeNDmeNts to the ReAL PRoPeRtY gAiNs tAx Act 1976 55. commencement of amendments to the Real Property gains tax Act 1976 56. Amendment of section 2 57. Amendment of section 13 58. Amendment of section 14 59. Amendment of section 15 60. Amendment of section 19 61. Amendment of section 21b 62. Amendment of section 24 63. Amendment of schedule 1 64. Amendment of schedule 4 6 Laws of Malaysia Act 755 7 Finance laws OF MalaYsIa act 755 FInance act 2013 An Act to amend the income tax Act 1967, the stamp Act 1949, the Petroleum (income tax) Act 1967 and the Real Property gains tax Act 1976. [ ] enacted by the Parliament of malaysia as follows: chapter i PReLimiNARY short title 1. this Act may be cited as the finance Act 2013. 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] and the Real Property gains tax Act 1976 [Act 169] are amended in the manner specified in chapters ii, iii, iV and V respectively. 8 Laws of Malaysia Act 755 chapter ii part I AmeNDmeNts to the iNcome tAx Act 1967 commencement of amendments to the Income tax act 1967 3. (1) subparagraphs 4(a)(i) and (iii), paragraphs 4(b) and (c), sections 7 and 23, and paragraph 35(c) in relation to business trust come into operation on the coming into operation of the corresponding provisions of the capital markets and services (Amendment) Act 2012 [Act A1437] relating to business trust. (2) subparagraph 4(a)(ii), sections 20 and 22, and paragraph 35(a) come into operation on the coming into operation of this Act. (3) subparagraphs 4(a)(iv), (v) and (vi), sections 7, 8, 9, 14, 15, 23, 24, 25, 27, 28 and 29, paragraphs 33(b) and (c), and paragraphs 35(c), 35(f) and 37(a) in relation to limited liability partnership come into operation on the coming into operation of the Limited Liability Partnerships Act 2012 [Act 743]. (4) subparagraph 4(a)(vii), sections 5, 10, 13, 18, paragraphs 33(a) and (d), paragraphs 35(d) and (e), paragraphs 38(a), (b), (c), (d), (e), (g), (h) and (i), and sections 39 and 40 have effect for the year of assessment 2013 and subsequent years of assessment. (5) sections 6 and 30, and paragraph 33(e) come into operation on 1 January 2013. (6) sections 11, 12, 16, 26, 31, 32 and 34, paragraph 35(b), section 36 and paragraph 38(f) come into operation on 1 January 2014. (7) section 17 has effect for the years of assessment 2012, 2013, 2014, 2015, 2016 and 2017. (8) sections 19 and 21, and paragraph 37(b) have effect for the year of assessment 2012 and subsequent years of assessment. Finance 9 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— (a) in subsection (1)— (i) by inserting after the definition of “business” the following definition: ‘ “business trust” has the same meaning assigned to it in the capital markets and services Act 2007[Act 671];’; (ii) in the definition of “central Bank”, by substituting for the words “central Bank of malaysia Act 1958 [Act 519]” the words “central Bank of malaysia Act 2009 [Act 701]”; (iii) in the definition of “company”, by inserting after the word “malaysia” the words “and a business trust”; (iv) by inserting after the definition of “lease” the following definition: ‘ “limited liability partnership” means a limited liability partnership registered under the Limited Liability Partnerships Act 2012 [Act 743];’; (v) in the definition of “partnership”, by inserting after the words “a partner in a partnership” the words “, a limited liability partnership”; (vi) in the definition of “person”, by inserting after the words “body of persons” the words “, a limited liability partnership”; and (vii) by inserting after the definition of “total income” the following definition: ‘ “treasury share” means a share of a company that was previously issued but was repurchased, redeemed or otherwise acquired by such company and not cancelled;’; 10 Laws of Malaysia Act 755 (b) in subsection (9), by inserting after the words “shall exclude” the words “a business trust and”; and (c) by inserting after subsection (10) the following subsection: “(11) in relation to a business trust, any reference in this Act to shares or ordinary share capital, shareholders and dividend shall be read as including a reference to units or derivatives of units, unit holders and distributions, respectively.”. new section 4b 5. the principal Act is amended by inserting after section 4a the following section: “non-business income 4b. for the purpose of section 4, gains or profit from a business shall not include 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.”. 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 (k) a semicolon; and (b) by inserting after paragraph (k) the following paragraph: “(l) subject to section 109g but notwithstanding any other provisions of this Act, income tax shall be charged for a year of assessment upon the income of an individual consisting of a withdrawal of his contribution made to a private retirement scheme where the withdrawal is made by that individual before reaching the age of fifty-five (other than by reason of death or permanently leaving malaysia) at the appropriate rate as specified under Part xVi of schedule 1.”. Finance 11 amendment of section 8 7. section 8 of the principal Act is amended— (a) by inserting after subsection (1) the following subsection: “(1a) Notwithstanding subsection (1), for the purposes of this Act— (a) a limited liability partnership carrying on a business is resident in malaysia for the basis year for a year of assessment if at any time during that basis year the management and control of its business or of any one of its businesses, as the case may be, are exercised in malaysia; (b) any other limited liability partnership is resident in malaysia for the basis year for a year of assessment if at any time during that basis year the management and control of its affairs are exercised in malaysia by its partners; (c) a business trust is resident in malaysia for the basis year for a year of assessment if the trustee manager of that business trust is resident in malaysia and a trustee manager of a business trust is resident for the basis year for a year of assessment if— (i) the trustee manager in his capacity as such carries on such business trust in malaysia; and (ii) the management and control of the business of such business trust is exercised in malaysia.”; and (b) in subsection (2), by inserting after the word “company” wherever appearing the words “, limited liability partnership, business trust”. 12 Laws of Malaysia Act 755 amendment of section 21 8. section 21 of the principal Act is amended— (a) in the shoulder note, by inserting after the word “company” the words “, limited liability partnership”; and (b) by inserting after the word “company” the words “, limited liability partnership”. amendment of section 21A 9. section 21a of the principal Act is amended— (a) in the shoulder note, by inserting after the word “company” the words “, limited liability partnership”; and (b) by inserting after the word “company” wherever appearing the words “, limited liability partnership” except in subsection (5). amendment of section 24 10. section 24 of the principal Act is amended in subsection (5), by substituting for the words “and the business is one which includes the regular lending of money” the words “of lending of money and the business is one which is licensed under any written law”. amendment of section 25 11. section 25 of the principal Act is amended— (a) in subsection (3), by substituting for the word “five” wherever appearing the word “four”; (b) in subparagraph (4)(a)(i), by substituting for the word “five” wherever appearing the word “four”; (c) in paragraph (4)(b), by substituting for the word “five” the word “four”; Finance 13 (d) in paragraph (4)(c), by substituting for the word “five” wherever appearing the word “four”; and (e) in the proviso to subsection (5), by substituting for the word “five” wherever appearing the word “four”. amendment of section 27 12. section 27 of the principal Act is amended— (a) in paragraph (2)(b), by substituting for the word “five” the word “four”; (b) in paragraph (2)(c), by substituting for the word “five” wherever appearing the word “four”; and (c) in the proviso to subsection (3), by substituting for the word “five” wherever appearing the word “four”. new section 34d 13. the principal Act is amended by inserting after section 34c the following section: “special deduction for expenditure on treasury shares 34 d . (1) Notwithstanding section 33 but subject to this section, in ascertaining the adjusted income of a company from a business for the basis period for a year of assessment, a deduction shall be made from the gross income for that period any expenses incurred by that company in acquiring treasury shares. (2) the amount of deduction referred to in subsection (1)— (a) shall be the cost of acquiring the treasury shares which are transferred to its emp