This Order applies to a company incorporated under the Companies Act 1965 and resident in Malaysia who has made an investment, in the form of cash or holding of paid-up share capital in respect of ordinary shares, in its related company undertaking a new approved food production project (the project) under the Income Tax (Exemption) (No.3) Order 2011 [P.U. (A) No.166/2011] and who has applied to the Minister between 1 October 2005 and 31 December 2015.
Related company means a company incorporated under the Companies Act 1965 where at least 70% of its paid-up share capital in respect of ordinary shares is directly owned by a company that made an investment for the purpose of an approved food production project.
In arriving at the adjusted income of a company from its business in the basis period for a year of assessment, an amount equivalent to the value of investment for the sole purpose of financing the project undertaken by the related company is allowed as a deduction. The value of investment is equivalent to expenditure incurred by the related company in the basis period for the same year of assessment and is made for a period and up to an amount as approved by the Minister. Such an investment shall not be disposed of within 5 years from the date of the last investment made if such investment is in the form of holding of paid-up share capital in respect of ordinary shares.
Where a company which has made an investment in the form of holding of paid-up share capital in respect of ordinary shares and claimed a deduction in respect of that investment receives an amount as consideration for the disposal of such shares, the amount so received shall be added in ascertaining the adjusted income for the year of assessment in the basis period in which that amount was received, provided that the amount added in ascertaining the adjusted income shall not exceed the total deductions allowed in relation to that investment. This does not apply to disposal of shares which takes place after 5 years from the date of the last investment in the form of paid-up share capital in respect of ordinary shares made in the related company.
The deduction to the company shall cease in the basis period for a year of assessment in which the period of exemption of the related company commences (refer P.U. (A) No.166/2011 above).
The deduction is not available to a company which has been granted an exemption for an approved food production project under:
(i) Income Tax (Exemption) (No. 3) Order 2011 [P.U.(A) 166/2011]
(ii) Income Tax (Exemption) (No. 9) Order 2006 [P.U.(A) 50/2006]
(iii) Income Tax (Exemption) (No. 10) Order 2006 [P.U.(A) 51/2006]
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