FINANCE ACT 2017

Finance LAWS OF MALAYSIA Act 785 FINANCE ACT 2017 1 2 Date of Royal Assent Laws of Malaysia Act 785 ... ... 9 January 2017 Date of publication in the Gazette ... ... ... 16 January 2017 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 785 FINANCE ACT 2017 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 13 6. Amendment of section 15A 7. Amendment of section 34 8. Amendment of section 44 9. Amendment of section 45A 10. Amendment of section 46 11. Amendment of section 47 12. Amendment of section 60 13. Amendment of section 60AA 14. Amendment of section 61A 15. Amendment of section 63A 16. Amendment of section 63b 17. Amendment of section 63C 18. Amendment of section 97A 19. Amendment of section 107C 20. Amendment of section 109C 3 4 Laws of Malaysia Act 785 Section 21. Amendment of section 110C 22. New section 112A 23. New section 113A 24. New section 119b 25. New section 131A 26. Amendment of section 154 27. Amendment of Schedule 1 28. Amendment of Schedule 3 29. Amendment of Schedule 6 ChApTER III AMENDMENTS TO ThE pETROLEUM (INCOME TAX) ACT 1967 30. Commencement of amendments to the Petroleum (Income Tax) Act 1967 31. Amendment of section 2 32. Amendment of section 41A 33. New section 66A ChApTER IV AMENDMENTS TO ThE REAL pROpERTY GAINS TAX ACT 1976 34. Commencement of amendments to the Real Property Gains Tax Act 1976 35. Amendment of section 13 36. Amendment of Schedule 2 ChApTER V AMENDMENTS TO ThE LAbUAN bUSINESS ACTIVITY TAX ACT 1990 37. Commencement of amendments to the Labuan Business Activity Tax Act 1990 38. Amendment of section 2 39. Amendment of section 21 Finance 5 ChApTER VI AMENDMENTS TO ThE GOODS AND SERVICES TAX ACT 2014 Section 40. Commencement of amendments to the Goods and Services Tax Act 2014 41. Amendment of section 2 42. Amendment of section 13 43. Amendment of section 20 44. Amendment of section 33 45. New sections 34A and 34b 46. Amendment of section 41 47. Amendment of section 42 48. Amendment of section 49 49. Amendment of section 51 50. Amendment of section 56 51. Amendment of section 57 52. Amendment of section 70 53. Amendment of section 72 54. Amendment of section 73 55. Amendment of section 103 56. Amendment of section 156 57. Amendment of section 160 58. Amendment of Part XV 59. Amendment of section 161 60. Amendment of section 162 61. New sections 162A and 162b 62. Amendment of section 163 63. Amendment of Second Schedule 6 Laws of Malaysia Act 785 7 Finance LAWS OF MALAYSIA Act 785 FINANCE ACT 2017 An Act to amend the Income Tax Act 1967, the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976, the Labuan Business Activity Tax Act 1990 and the Goods and Services Tax Act 2014. [ ] ENACTED by the Parliament of Malaysia as follows: ChApTER I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 2017. Amendment of Acts 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 Labuan Business Activity Tax Act 1990 [Act 445] and the Goods and Services Tax Act 2014 [Act 762] are amended in the manner specified in Chapters II, III, IV, V and VI respectively. 8 Laws of Malaysia Act 785 ChApTER II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4, 6, 22, 23, 24 and 26, and paragraph 28(b) come into operation on the coming into operation of this Act. (2) Section 5 and subparagraph 10(a)(i) are deemed to have effect from the year of assessment 2015. (3) Sections 12, 13, 20 and 21, subparagraph 27(a)(iii), and paragraphs 27(b) and 29(e) are deemed to have come into operation on 30 June 2013. (4) Paragraph 7(a) is deemed to have effect from 1 January 2010. (5) Paragraph 7(b), sections 8 and 9, subparagraphs 10(a)(ii), (iii), (iv), (v), (vi), (vii) and (viii), paragraph 10(b), sections 11, 14, 15, 16 and 17, and subparagraphs 27(a)(i) and (ii), and paragraphs 29(a), (b), (c), (d), (f), (g) and (h) have effect for the year of assessment 2017 and subsequent years of assessment. (6) Sections 18 and 25 come into operation on 1 January 2017. (7) Section 19 has effect for the year of assessment 2019 and subsequent years of assessment. (8) Paragraph 28(a) is deemed to have effect from the year of assessment 2016. Amendment of section 2 4. Subsection 2(1) of the Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended— (a) in the definition of “Malaysia”— (i) by inserting after the words “subsoil of the territorial waters,” the words “and the airspace above such areas,”; and Finance 9 (ii) by inserting after the words “sovereign rights” the words “or jurisdiction”; (b) by substituting for the definition of “public entertainer” the following definition: ‘ “public entertainer” includes— (a) a compere, model, circus performer, lecturer, speaker, sportsperson, an artiste or individual exercising any profession, vocation or employment of a similar nature; or (b) an individual who uses his intellectual, artistic, musical, personal or physical skill or character in, carrying out any activity in connection with any purpose through live, print, electronic, satellite, cable, fibre optic or other medium, for film or tape, or for television or radio broadcast, as the case may be;’; and (c) by substituting for the definition of “royalty” the following definition: ‘ “royalty” includes any sums paid as consideration for, or derived from— (a) the use of, or the right to use in respect of, any copyrights, software, artistic or scientific works, patents, designs or models, plans, secret processes or formulae, trademarks or other like property or rights; (b) the use of, or the right to use, tapes for radio or television broadcasting, motion picture films, films or video tapes or other means of reproduction where such films or tapes have been or are to be used or reproduced in Malaysia, or other like property or rights; (c) the use of, or the right to use, know-how or information concerning technical, industrial, commercial or scientific knowledge, experience or skill; 10 Laws of Malaysia Act 785 (d) the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by— (i) satellite; or (ii) cable, fibre optic or similar technology; (e) the use of, or the right to use, visual images or sounds, or both, in connection with television broadcasting or radio broadcasting, transmitted by— (i) satellite; or (ii) cable, fibre optic or similar technology; (f) the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence; (g) a total or partial forbearance in respect of— (i) the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or (b) or any such knowledge, experience or skill as is mentioned in paragraph (c); (ii) the reception of, or the granting of the right to receive, any such visual images or sounds as are mentioned in paragraph (d); (iii) the use of, or the granting of the right to use, any such visual images or sounds as are mentioned in paragraph (e); or (iv) the use of, or the granting of the right to use, some or all such part of the spectrum specified in a spectrum licence as is mentioned in paragraph (f); or (h) the alienation of any property, know-how or information mentioned in paragraph (a), (b) or (c) of this definition;’. Finance 11 Amendment of section 13 5. Section 13 of the principal Act is amended by inserting after subsection (1) the following subsection: “(1 A ) The total amount of gross income referred to in subsection (1), where applicable, shall include any amount of output tax paid under the Goods and Services Tax Act 2014 in connection with the gross income which is borne by the employer.”. Amendment of section 15a 6. Section 15A of the principal Act is amended— (a) by substituting for the colon at the end of subparagraph 15A(iii) a full stop; and (b) by deleting the proviso. Amendment of section 34 7. Section 34 of the principal Act is amended— (a) by deleting subsections (3A) and (3b); and (b) in paragraph (6)(k)— (i) by substituting for the words “Ministry of Information, Communication and Culture” the words “Minister charged with the responsibility for arts, culture or heritage”; and (ii) in the proviso— (A) by substituting for the word “five” the word “seven”; and (B) by substituting for the word “two” the word “three”. 12 Laws of Malaysia Act 785 Amendment of section 44 8. Section 44 of the principal Act is amended— (a) in subsection (6)— (i) by inserting after the words “local authority or an institution or organization” the words “or a fund”; and (ii) in the proviso, by substituting for the words “or organization” the words “, organization or fund”; (b) in subsection (7), by inserting before the definition of “institution” the following definition: ‘ “fund” means a fund administered and augmented by an institution or organization in Malaysia for the sole purpose of carrying out the objectives for which the fund is established or held and that fund is not established or held primarily for profit;’; (c) in paragraph (7A)(a)— (i) by inserting after the word “funds” the words “or that of the fund approved under subsection (6)”; and (ii) in the proviso, by substituting for the words “or organization” the words “, organization or fund”; (d) in paragraph (7b)(a), by substituting for the words “or organization” the words “, organization or fund”; (e) in paragraph (7b)(b), by substituting for the words “or organization” the words “, organization or fund”; and (f) in subsection (11b), by substituting for the words “or cost of contribution in kind made by the relevant person in the basis period for that year for any sports activity approved by the Minister or to any sports body approved by the Commissioner of Sports appointed under the Sports Development Act 1997 [Act 576]” the words “made by the relevant person in the basis period for that year for any sports activity approved by the Minister”. Finance 13 Amendment of section 45a 9. Section 45A of the principal Act is amended— (a) by renumbering the existing section 45A as subsection 45A(1); and (b) by inserting after subsection (1) as renumbered the following subsection: “(2) This section shall not apply where, in relation to paragraph (1)(b), the husband, other than a husband who is a disabled person, has an income which is derived from sources outside Malaysia and his gross income from those sources for a year of assessment is more than the amount of deduction allowed for a husband.”. Amendment of section 46 10. Section 46 of the principal Act is amended— (a) in subsection (1)— (i) in the proviso to paragraph (h), by substituting for the word “five” the word “six”; (ii) by deleting paragraph (i); (iii) by deleting paragraph (j); (iv) by deleting paragraph (l); (v) by deleting paragraph (m); (vi) in paragraph (n), by deleting the word “and” at the end of the paragraph; (vii) in paragraph (o), by substituting for the full stop at the end of the paragraph a semicolon; and 14 Laws of Malaysia Act 785 (viii) by inserting after paragraph (o) the following paragraphs: “(p) an amount expended or deemed expended under sub