Tax Incentive for Structured Internship Programme

In response to the email enquiry made by the Institute on 22 December, 2011, Talent Corporation Malaysia Berhad (Talent Corp) has provided clarification as follows:

1)        What are the types of expenses which would qualify for the double deduction, e.g. monthly allowance, training costs, orientation/induction costs, administrative costs, etc?

The expenses that qualify for the double deduction are all related expenses incurred on the interns.  Example:

·               Cash and cash equivalent allowance.

·               Cost of training offered during the internship programme.

·               Meals, transport and accommodation allowances.

·               Payment to the Outsourced Party running or administering the programme.

2)        What are the qualifying criteria for a structured internship programme?

The qualifying criteria are:

·               Partnership or companies with share capital – min RM 2.5 m.

·               Revenue – average RM21m.

·               Headcounts for Manufacturing – min 100FTEs.

·               Headcounts for Non-manufacturing – 50 FTEs.

·               Years of establishment – min 5 years, 3-5 years may be considered if the companies meet above criteria

3)        Who is eligible for the internship programme?  Is the incentive available to all sectors?  Under Section 34(6)(n), the trainee must be a resident and must not be an employee of the claimant.  Will the same conditions apply?

Companies that meet the criteria. It is available to all sectors.  This internship only applies to local undergraduate students who are pursuing a first degree (or equivalent) and not employees (such as management trainee).

4)        Are foreign institutes of higher education and foreign students studying in local institutes of higher education allowed to participate in this programme?

No.  The double tax deduction is only applicable to Malaysian students from locally based universities only.

5)        Are participating companies required to be registered with the Ministry of Higher Education or Talent Corporation Malaysia Berhad?

Talent Corporation Malaysia Berhad.

6)        What are the procedures for participating in this programme?

Kindly visit our website www.talentcorp.com.my starting from January 2012.  

7)        Certain universities/colleges provide courses with compulsory practical/vocational training.  Are the companies/enterprises participating in providing the training eligible for the incentives?

The companies have to meet the criteria and the structured internship programme has to be endorsed by Talent Corp.

In addition to the above, Talent Corp has also provided the relevant information in Frequently Asked Questions (Companies) and Frequently Asked Questions (The Internship Programme).  You may view the document at the website of the Institute.

GUIDE TO PRACTICE MANAGEMENT FOR SMALL AND MEDIUM-SIZED PRACTICES (SECOND EDITION)

The Institute is pleased to inform you that the Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) has released the second edition of its Guide to Practice Management for Small- and Medium-Sized Practices (PM Guide). First released in 2010 and developed with CPA Australia, the new edition of the guide features guidance on several new topics, including cloud computing and updated resources for further reading.

To help practitioners improve the management of their accounting practices, this guide includes an extended case study, a sample office procedures manual, and numerous checklists and other worksheets. The comprehensive guide is comprised of eight standalone modules that include developing a growth strategy, managing staff and client relationships, risk management, succession planning, and more. An updated companion guide to help members make the best use of the PM guide will be released in early 2012.

The second edition of the PM Guide can be downloaded free of charge at IFAC website at https://www.ifac.org/publications-resources/guide-practice-management-small-and-medium-sized-practices .

Please be guided accordingly.

Public Ruling No.12/2011 on Tax Exemption on Employment Income of Non-Citizen Individuals Working for Certain Companies in Malaysia

Please be informed that the Inland Revenue Board (IRB) has just uploaded Public Ruling No.12/2011: Tax Exemption on Employment Income of Non-Citizen Individuals Working for Certain Companies in Malaysia.  You may view the Public Ruling on the website of the Institute and the website of the IRB.

Please study the Public Rulings carefully and let us have your feedback and any enquiry so that we may raise it to the IRB.

Public Ruling No.11/2011 on Bilateral Credit and Unilateral Credit

Please be informed that the Inland Revenue Board (IRB) has just uploaded Public Ruling No.11/2011: Bilateral Credit and Unilateral Credit dated 20 December 2011.  You may view the Public Ruling on the website of the Institute and the website of the IRB.

Income Tax (Exemption) (No.9) Order 2011 [P.U. (A) 421/2011]

50% of the gross housing allowance and gross Labuan Territory allowance received by an individual Malaysian citizen from exercising an employment in Labuan with a Labuan entity is exempted from income tax from YA 2011 to YA 2020.

Income Tax (Exemption) (No.8) Order 2011 [P.U. (A) 420/2011]

50% of the gross employment income received by an individual non-Malaysian citizen in a managerial capacity with a Labuan entity in Labuan, co-located office or marketing office is exempted from income tax from YA 2011 to YA 2020.

Co-located office means an office of a Labuan entity approved by the Labuan Financial Services Authority which operates in other parts of Malaysia to perform the functions assigned by the Labuan Entity.

Marketing office means a marketing office of a Labuan entity approved by the Labuan Financial Services Authority which is located in other parts of Malaysia to facilitate meetings with clients and establish contacts with potential clients except exercising trading activities on behalf of the Labuan Entity

Income Tax (Exemption) (No.7) Order 2011 [P.U. (A) 419/2011]

Fees received by an individual non-Malaysian citizen as a director of a Labuan entity are exempted from income tax from YA 2011 to YA 2020.

Income Tax (Exemption) (No.6) Order 2011 [P.U. (A) 418/2011]

65% of the statutory income derived by any person from the provision of qualifying professional services (i.e. legal, accounting, financial or secretarial services) rendered in Labuan to a Labuan entity (as specified in the Schedule to Labuan Business Activity Tax Act 1990 [Act 445]), is exempted from income tax from year of assessment (YA) 2011 to YA 2020. 

Pre-filling of Remuneration Particulars in e-Filing

Further to our e-CTIM No.56/2011 dated 22 November 2011, please be informed that the Inland Revenue Board (IRB) has now provided the latest information layout for participation in pre-filling.  Members may view the Information Layout for Prefill at the IRB’s website.  Please be reminded also that the deadline for submission of the pre-filling information is 15 February 2012.  

The information can be submitted via compact discs (CDs) to Jabatan Operasi Cukai, Aras 12, Wisma Hasil, Persiaran Rimba Permai, Cyber 8, Peti Surat 11833, 63000 Cyberjaya or by email to  bantuan_praisi@hasil.gov.my.  

Please note that the e-mail address provided is different from that stated in e-CTIM No.56/2011.

IRB Announcement - Form CP58 [2011] Prescribed for the Purpose of the New Section 83A, Income Tax Act, (ITA) 1967.

Under the 2012 Budget, a new S.83A [Clause 16, Finance (No.2) Bill 2011] was proposed, with regard to a company’s “Duty to furnish particulars of payment made to an agent, etc.”, using a form prescribed by the Director General of Inland Revenue.

The Inland Revenue Board (IRB) has made an announcement on 23 December 2011 stating that the Form CP58 [2011] has been prescribed for purposes of Section 83A ITA, 1967. It will be distributed once the Finance Act (No.2) Bill 2011 has been gazetted.

The information to be provided in the form includes the following:

1)    Payer’s information

2)    Recipient’s information (resident / non-resident)

3)    Particulars of Incentive Payment

a)    Monetary

b)    Non-monetary

The deadline for providing the prescribed form to the agent, dealer or distributor is not later than the 31^st of March in the year following the relevant year. However, for payments made in the period 1 January 2011 till 31 December 2011, only, the payer company has been granted an extension of time until 31 May 2012 to complete Form CP58 [2011] 

Notwithstanding the exemption, recipients of the incentive payments are required to report the receipt of the incentives even though they have not received a copy of Form CP58 [2011] from the payer company.

In connection with this announcement, CTIM would be pleased if members could also forward their suggestions, comments and feedback on the new Section 83A to the Institute. Members may do so by writing to kslim@ctim.org.my or kim@ctim.org.my, or faxing to 03-21628990.  

Directory of IRB Headquarters

Please be informed that the Inland Revenue Board has updated the directory of its headquarters at Wisma Hasil, Cyberjaya on its website at

http://www.hasil.gov.my/goindex.php?kump=2&skum=2&posi=1&unit=4&sequ=1

  

Public Ruling No.10/2011 - Gratuity

The Inland Revenue Board (IRB) has issued the above Public Ruling on 5 December 2011. The Public Ruling is effective from the year of assessment 2011. Members are encouraged to review the Public Ruling and forward comments, if any, to the Institute as soon as possible for submission to the IRB.

Press Release on the Eligibility Requirements for Private Retirement Scheme Providers

Paragraph 108 of the 2012 Budget Speech (and Appendix 18 and Clause 10 of Finance (No.2) Bill 2011) proposed that a separate tax relief be given on contributions made to approved Private Retirement Schemes (PRSs) and deferred annuity premiums, subject to a maximum of RM3,000.  The PRS is intended to complement the existing EPF scheme and promote the development of our capital markets.

The new Part IIIA of the Capital Markets and Services Act 2007 (Act 671) (CMSA), as introduced by Capital Markets and Services (Amendment) Act 2011 (Act A1406), gazetted on 15 September 2011, lays down the regulatory framework for the setting up of the PRS.  The CMSA empowers the Securities Commission of Malaysia (SC) to approve the PRS administrator (Section 139C), PRS provider (Section 139Q), PRS (Section 139v) and the scheme trustee (Section 139ZC), and to make any regulation concerning all matters relating to the PRS administrator, PRS provider, PRS, scheme trustee and employer trustee as well as the duties, standards and conduct of persons involved in a PRS.  Consequently, the SC has issued the Guidelines on the Eligibility Requirements for PRS Providers (the Guidelines) together with a Press Release on 5 December 2011. 

The press release (http://www.sc.com.my/main.asp?pageid=379&linkid=2991&yearno=2011&mod=paper) has indicated that only a select number of suitably qualified and experienced persons with the required expertise in pension fund management or retail fund management would be approved to be PRS providers.  Interested applications are to submit their applications, in the format as set out in the Guidelines, to the SC by 15 February 2012.  

However, prior to making the submission, applicants are required to register their interest, as soon as possible, with the SC at PRSgroup@seccom.com.my, in order to receive further information regarding the PRS framework.  The contact persons are Ms Amardeep Kaur (Tel: 03-62048703), Norlin Albakri (Tel: 03-62048435) and Azwyn Syed Aziz (Tel: 03-62048441).  Based on the response to an enquiry made by CTIM, it is noted that the operational details of the PRS framework are being refined and are subject to further consultation.  A draft is only being shared with potential providers to enable them to make a comprehensive submission to the SC.  Further details will only be released once the draft has been finalised.

Upon approval by the SC, the PRS providers are required to make an application to the SC for approval of their proposed PRSs.  The PRS guidelines will be released (no date provided) by the SC for this purpose.

Members who are interested may view the Guidelines at the Institute’s website at http://www.ctim.org.my/cms/file/news/51/00824_SC%20Press%20Release%20on%20PRS%20Providers%20%28051211%29.pdf or the SC’s website at http://www.sc.com.my/eng/html/resources/guidelines/prs/prs_111205.pdf .

Information on 1Malaysia Cash Assistance [Bantuan Rakyat 1 Malaysia (BR1M)]

Further to our e-CTIM No. 64-2011/12, please be informed that the Ministry of Finance (MOF) has provided additional information on the RM500 cash assistance.  For ease of reference, we have compiled the relevant information available to date as follows:

·         Announcements

·         Implementation of One-Off RM500 Cash To The Poor

·         Additional Information on BR1M

·         Media Release of YB FMII

·         Mechanism of Support

·               Counters Location (Location of the Counters for Getting and Submitting the Application Forms)

·         Application Form

CTIM 2012 Budget Seminar – Recognition of CPD Points by MOF

CTIM is pleased to inform members that, further to a meeting between CTIM and the Ministry of Finance (MOF) on 9 December 2011,   the MOF has confirmed in writing that the CPD points, awarded for the 2012 Budget Seminar organised by CTIM, are recognized for purposes of the approval  and renewal of tax agent licence (Section 153(3), Income Tax Act,1967).

Please also note that the CPD points awarded for all other events, on direct tax matters, organized by CTIM will continue to be recognized by the MOF for purposes of the approval  and renewal of tax agent licence.

Participants who are affected are advised to resubmit their application.

Relocation of Headquarters of Internal Tax Division

Please be informed that the Headquarters of the Internal Tax Division will be fully operational on 12 December 2011 at the new address below:-

Jabatan Kastam Diraja Malaysia,

Bahagian Cukai Dalam Negeri,

Aras 3 & 4, No.22, Menara A,

Bangunan Boulevard Square,

Persiaran Perdana, Precint 3,

62100 Putrajaya.

The location of the branches is as follows:-

Level 3

-           Policy & Implementation Branch

-           Industry, Petroleum & Gas Branch

Level 4

-           Customs Director’s Office

-           Management & Collection Branch

-           Facilities Control and Consultation Branch

Application form for 1Malaysia Cash Assistance [Bantuan Rakyat 1 Malaysia (BR1M)] and MOF Hotline

Further to our e-CTIM No. 58-2011/12, we are pleased to attach a copy of the application form for the RM500 cash assistance (sample) for your information.  The Ministry of Finance (MOF) has also provided a hotline service, beginning from 7 December 2011 (Wednesday), to answer queries and to clarify issues on the implementation.  The details of the hotline service are as follows:-

Hotline number                       :           1-800-222-500 (toll free)

Hours of operation                  :           9.00a.m till 5.00p.m (working days)

Email                                       :           belanjawan2012@treasury.gov.my

Information provided by          :           Bilik Operasi Bajet

                                                            Aras 10, Blok Tengah,

                                                            Kompleks Kementerian Kewangan Malaysia.

                                                            03-8882 3786 (Fax)

REDUCTION OF ANNUAL SUBSCRIPTION FEE BY 50% FOR MEMBERS AGED 65 AND ABOVE

·         The reduction of annual subscription fee is only for Members aged 65 and above. 

·         The implementation date for the reduction in fees is on 1 January 2012 and will be given to those members who complete an application form for the fee reduction.

·         The application form is available on CTIM website. 

IRB Headquarters Location Map in Cyberjaya

Please be reminded that the new Headquarters of the Inland Revenue Board (IRB) in Cyberjaya will be fully operational from 22 December 2011.  The location map of the new Headquarters is available at the IRB’s website at http://www.hasil.gov.my/pdf/pdfam/MapCyber.pdf.

Implementation of One-Off RM500 Cash Assistance to the Poor

Pursuant to Paragraph 112 of the 2012 Budget Speech, the Government will provide a one-off cash assistance of RM500 to each household with a monthly income RM3,000 and below.  The claimant (head of each household) must register with the Inland Revenue Board (IRB) and the cash assistance will be distributed through banks and post offices. 

“Head of household” includes the following:

·               Married individual with married children, who live together with the parents,

·               Single parent with dependents,

·               Single individual (bachelor, widower, single mother) with dependents, and

·               Senior citizen living alone.

A self-employed head of household is also eligible to apply for the assistance.

Registration for the application of the cash assistance will commence on 10 December 2011 (Saturday), and will be for a period of one month.  The registration forms are obtainable free of charge from the Federal Development Department, Service Centres and Branch Offices of the Inland Revenue Board (IRB), as well as Government agencies.  

Completed registration forms, together with copies of identification cards, may be submitted to the Federal/State Development Department, appointed schools and Branch Offices of the IRB for processing.

The payments to the heads of households, who qualify for the assistance, will commence in mid- January 2012.

Income Tax (Deduction for Payment of Premium to Malaysia Deposit Insurance Corporation) Rules 2011 [P.U. (A) 379/2011]

The Rules apply to member institutions of the Malaysia Deposit Insurance Corporation, and allow for the deduction of the first premium or annual premium paid, in arriving at the adjusted income of a member institution from its business for a basis period for a year of assessment, in the following manner:-

a)    In respect of a financial institution under the Malaysia Deposit Insurance Corporation Act 2005 [Act 642], for the years of assessment 2005 to 2010; or

b)    In respect of a financial institution, a takaful operator or an insurance company under the Malaysia Deposit Insurance Corporation Act 2011 [Act 720], for the year of assessment 2011 and subsequent years of assessment.

New Public Rulings issued on 16 November 2011

Public Ruling 08/2011 - Foreign Nationals Working in Malaysia – Tax Treatment

Public Ruling 09/2011 - Co-Operative Society

The Inland Revenue Board (IRB) has issued the above Public Rulings on 16 November 2011. The Public Rulings are effective from the year of assessment 2011.  Members are encouraged to review the Public Rulings and forward comments, if any, to the Institute as soon as possible for submission to the IRB.

Pre-filling of Income Tax Returns, in Relation to e-filing

Further to the DESIRE Meeting held on 30 September 2011, the Inland Revenue Board (IRB) has provided the information format for participation in the pre-filling of Return Forms.  The pre-filling is only available for individual taxpayers who are under employment and who e-file their tax returns.  In this connection, CTIM has made some clarifications with the IRB as follows:

·                It is applicable to those resident individuals (Forms B and BE applicable) and non-resident “employed” individuals (Form M applicable), who use the e-filing system in connection with the filing of their annual income tax returns.

·                Participation in e-filling is voluntary.  The e-filing tax return forms will be pre-filled only if the participating employer has provided the information (such as total income, monthly tax deductions, EPF deductions, insurance premiums paid, and zakat) for the relevant year, in respect of the employee.  The employer will not be penalised if he chooses not to participate in the pre-filling programme, although his employee wishes to participate in the programme.

·                It is also applicable to employees who are not taxable, or who do not have income tax reference numbers.

·                Participating employers have to write to the Tax Operations Department, IRB to indicate their intention to participate.  The IRB will then communicate with the employer regarding the particulars to be forwarded, and the format to be used.  Such information, on compact discs, must be forwarded to the IRB at bantuan.praisi@hasil.gov.my  not later than 15 February 2012.

·                Although participating employers have provided the information required for purposes of e-filling, they are still required to submit the relevant Employer’s Return (Form E).  However, the information for pre-filling is acceptable as information for Form CP8D.

·                All the pre-filled information may be edited by the employee/taxpayer.  Hence, the question of a “penalty” on incorrect “prefilled” information does not arise.  It is the responsibility of the taxpayer to check the accuracy of the information in the return form before completing the e-filing process (signing and sending) of the relevant return form.

·                In the case of an individual who has participated in the “pre-filling” programme, and has chosen to have a combined assessment, he/she would be required to input the “total income transferred from husband/wife” in the pre-filled form.

·                Employers/taxpayers may contact the IRB at bantuan.praisi@hasil.org.my or the following persons for further information / clarification on the matter :-

1.           Cik Norhayati Mat Kassim

        Tel: 03-6209 1000  ext.33101

         E-mail: hayati@hasil.gov.my

2.         Cik Sharifah Ahmad

        Tel: 03-6209 1000  ext.33816

E-mail: sharifah_ahmad@hasil.gov.my

3.         Puan Haida Daud

Tel: 03-6209 1000  ext.31206

E-mail: haida@hasil.gov.my

It has been announced in the 2012 Budget that this “pre-filling’ programme is to enhance tax system administration and compliance and it will be introduced from year of assessment 2012.  Members may refer to Appendix 21 to the 2012 Budget Speech for information.  CTIM would like to encourage members to take the opportunity to voluntarily participate in the pre-filling programme.

Service Tax Treatment for Free Zones, Tax-Free Islands and Joint Development Areas

The Ministry of Finance (MOF) has, in a letter to the Director General of the Customs and Excise, dated 14 November 2011, invoked Section 6 of the Service Tax Act, 1975 to exempt Service Tax under the following circumstances:

(a)      Exemption of Service Tax with effect from 1 January 2012

(i)        All taxable services provided by persons in Free Zones and supplied to persons in Free Zones

(ii)       All taxable services provided by persons in Free Zones and supplied to persons in Principal Customs Area

(iii)      All taxable services provided by persons in Principal Customs Area and supplied to persons in Free Zones

(iv)     All taxable services provided by persons in Principal Customs Area or Free Zones in relation to matters in Langkawi, Tioman, Labuan and Joint Development Areas.

(b)      Refund of Service Tax Paid

In connection with (a) above, where the tax charged has been paid before 1 January 2012, any application for service tax refund will not be approved.

(c)      Remission of Service Tax Uncollected

Any service tax, in respect of the services mentioned in (a) above, which has not been collected before 1 January 2012, is remitted under Section 22 of the Service Tax Act, 1975

(d)      Services Not Subject to Service Tax

(i)        All taxable services provided by persons in Free Zones and supplied to persons in Langkawi, Tioman, Labuan and Joint Development Areas, and

(ii)       All taxable services provided by persons in Principal Customs Area and supplied to persons in Langkawi, Tioman, Labuan and Joint Development Areas

(e)      Exemption Granted Until the Introduction of Goods and Services Tax.

Meanwhile, members view the MOF letter on our website.  You may also get further information on the matter from the Royal Malaysian Customs website soon.