MIDA e-News - Incentives Expiring on 31 December 2012

The Malaysian Investment Development Authority (MIDA) reminds businesses that certain tax incentives will expire on 31 December 2012. They are:

1. Import duty and sales tax exemption on solar photovoltaic system equipment for importers and Service Providers (SPs);

2. Import duty and sales tax exemption on high efficiency motors to importers and traders;

3. Sales tax exemption on locally manufactured insulation materials; and

4. Sales tax exemption on locally manufactured EE consumer goods such as refrigerator, air conditioner, lightings, fan and television.

Companies are advised to submit all related applications prior to the expiration date or, at the latest, by 31 December 2012, 5.30 p.m.


The MIDA e-News may be viewed at the following link.

Secondment Of Employees And Outsourcing/Supply Of Employees Is Not Subject To Service Tax

Employment services were first prescribed as taxable services under Service Tax (Amendment) (No. 4) Regulations 1997 [P.U. (A) 413/1997] with effect from 1 January 1998. The description of the taxable employment services was “provision of all types of employment services".

The description of taxable employment services was subsequently amended by Service Tax (Amendment) (No. 2) Regulations 2002 [P.U. (A) 509/2002], with effect from 1 Jan 2003, as follows:

"Provision of all types of employment services excluding -
provision of employment services in the form of secondment or supplying employees to work for another person for a period of time; or
provision of employment services for employment outside Malaysia."

However, administratively, Royal Malaysian Customs (RMC) had decided that "secondment of employees with administrative fee/charge/mark-up imposed” is subject to service tax. This was disputed by businesses and a dialogue was held on 16 December 2011 among the RMC, CTIM and the representatives from the industry associations to discuss the matter. The dialogue urged the RMC to re-consider the above administrative decision.

Upon re-assessment of the disputed issue, the RMC has recently issued an official letter indicating that
secondment of employees or supplying/outsourcing employees for a specific period of time by an agreement is not subject to service tax underItem (i), Group G of the Second Schedule to the Service Tax Regulations 1975.
Relevant employment agencies may apply to their respective RMC Branches to cancel their service tax licences.
All service taxes levied and collected from the customers by the relevant employment agencies must be paid over to the RMC.

Members may view the RMC letter on the Institute's website.

PR No.7/2012: Taxation of Unit Holders of Real Estate Investment Trusts / Property Trust Funds

Please be informed that the Inland Revenue Board (IRB) has uploaded Public Rulings No.7/2012 and No.8/2012 on 29 October 2012 and 2 November 2012 respectively. Both the Public Rulings (PR) have taken into account the comments submitted by CTIM earlier. Members may view the Public Rulings on the website of the Institute and the website of the IRB.

PR No.7/2012: Taxation of Unit Holders of Real Estate Investment Trusts / Property Trust Funds

The Public Ruling (PR) illustrates, with examples, the tax treatment of income from Real Estate Investment Trusts (REITs) or Property Trust Funds (PTFs) by the unit holders, and the circumstances for filing of the relevant Income Tax Return Form.

PR No.8/2012: Real Estate Investment Trusts / Property Trust Funds – An Overview

The objective of this PR is to provide an overview of REITs, PTFs and Islamic REITs.

· Paragraph 4 explains what a REIT is, its purposes and functions and the types of income it receives.

· Paragraph 5 of the PR sets out the regulatory framework governing REITs / PTFs in Malaysia, and the relevant Guidelines issued by the Securities Commission (SC).

· Paragraph 6 explains that Islamic REITs are similar to conventional REITs/ PTFs except that the Islamic REITs invest through Syariah-compliant capital market instruments. For the establishment of Islamic REITs, a person must observe and comply with both the requirements under the Guidelines for Islamic REITs and the Guidelines on REITs.

· Paragraph 7 sets out the key features and structure of Conventional REITs/PTFs and Islamic REITs. It illustrates the types of authorized investment activities as follows:

	Type of authorised investment activities
	Conventional REITs/PTFs		Islamic REITs
	a	Real estate	a	Acquiring real estate with existing client
	b	Single purpose companies	b	Investment, deposit and financing for Islamic REITs
	c	Real estate-related assets	c	Insurance
	d	Non-real estate-related assests	d	Forward sales or purchases of currency for risk   management
	e	Cash, deposits, and money market instrument
	f	Investment in foreign real estates and markets

          

It also set out non-permissible activities of Conventional and Islamic REITs

· Paragraphs 8 and 10 explain the difference in the tax treatment of rental income for a REIT/PTF and rental income from a unit trust. Rental income received by the REIT/PTF would be treated as a business income, subject to certain restrictions. Details on the restriction are further discussed in the forthcoming Public Ruling on Taxation of Real Estate Investment Trust/Property Trust Fund. Rental income of other property trusts is treated as Section 4(d) income with special deductions available under Sections 63A and 63。


· Paragraph 11 illustrates, with an example, the determination of the basis periods and the due dates for filing of Income Tax Return Form (Form TR).

We would be pleased if you could let us have your feedback and/or enquiry, so that we may raise it to the IRB.

CTIM Malaysian Tax Portal launches Mobile Site

CTIM Malaysian Tax Portal, the most-visited web portal on Malaysian tax, has launched its mobile-optimised version. The mobile site aims to help those who use their smart phones to access the contents of the Portal.

Like all other services of the Portal, mobile version is also publicly available, free of charge. To access the mobile site, simply type “m.malaysiantax.com” onto your mobile browser.

About CTIM Malaysian Tax

CTIM Malaysian Tax, the first-of-its-kind web portal on Malaysia tax, provides free access to latest Malaysian tax developments. The Portal at malaysiantax.com covers all categories of Malaysia tax information. It is promoted by Chartered Tax Institute of Malaysia (CTIM), and published on behalf of CTIM by Muttath Knowledge Management Services Sdn Bhd.

Announcement on Incentives Claim Form

Following the email by CTIM on issues relating to the Reinvestment Allowance Claim Form (Form EPS), the Inland Revenue Board (IRB) has announced the following:

With regard to claims for incentives, effective from 17 August 2012, the claimant company need not submit the Incentive Claim Forms to the Tax Policy Department at Head Office of IRB.

However, the claimant company must keep the original copy of the claim form, together with the supporting documents, for audit purposes.

If CTIM receives any further information/clarification from the IRB on the same matter, members will be informed accordingly.

Members may view the Announcement on Incentives Claim Form at www.hasil.gov.my

CTIM -- RESOURCE CENTRE

Additional Resources Available at CTIM Resource Centre

CTIM has upgraded the technical resources available for the benefit the members. We have recently subscribed to a new online resource, OECD Taxation i-Library, which is an addition to the existing subscriptions to online Malaysian and Singapore Tax Cases, Malaysian Tax Treaties and Malaysian Revenue Legislation (all published by CCH), as well as Lawnet (published by National Printer of Malaysia).

Members only may access the online resources via the computer terminal at the Resource Centre of the Institute.

Below are brief descriptions of the online resources currently available to members.

· OECD iLibrary is one of the most comprehensive online resources on the world economy, society, education and environment. It contains publications and statistics published since 1998 by OECD (Organisation for Economic Cooperation and Development), International Energy Agency (IEA), Nuclear Energy Agency (NEA), OECD Development Centre, PISA (Programme for International Student Assessment), and International Transport Forum (ITF).

It has 6,200 e-book titles, 1,000 journal issues, 12,000 articles, 2700 working papers, 14,000 tables and graphs, 290 cross-searchable datasets.

Taxation theme is one of the 17 thematic collections of OECD iLibrary. It includes a broad range of taxation information, such as tax evasion, harmful tax practices, administration of tax policy, environmental taxes, tax standards setting and international comparable statistics, etc. OECD Taxation iLibrary has over 200 e-books, more than 100 issues and articles as well as over 75 datasets. Some of the contents are as follows:

Annuals and Outlooks such as –


· Benefit systems and work incentives

· Benefits and wages

· Consumption Tax Trends

· Model Tax Convention on Income and on Capital

· OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations

· Tax Co-operation

· Taxing Wages


Papers –

· OECD Journals: Competition Law and Policy


Book Series

· Global Forum on Tax Transparency and Exchange of Information for Tax Purposes

· Issues in International Taxation

· OECD Tax Policy Studies

Databases –

· Revenue Statistics

· Comparative Tables

· Financing Of Social Security Benefits

· Contributions and taxes paid by government

· European Union VAT and Customs Duties

· Reference Series

For more information about OECD iLibrary, members may read a general brochure, the OECD iLibrary Catalogue, at http://issuu.com/oecd.publishing/docs/oecd-ilibrary-themes-catalogue#download, Terms and Conditions, Copyright and Permissions, Privacy Policy and Help page.

· CCH Online

(a) Malaysia and Singapore Tax Cases :

(b) Malaysian Revenue Legislation :

(c) Malaysian Tax Treaties :



· PNMB-LawNet :

This is an Internet Division of Percetakan Nasional Malaysia Berhad (PNMB), providing an Online Library of Malaysian Laws which contains the authoritative text of the Laws of Malaysia.

LawNet started its operation since 1998 and has since included Updated Acts of Parliament, Principal Acts (Original), Amendment Acts, Ordinances, Bills Supplement, Updated Rules & Regulations, Legislative Supplement (A), Legislative Supplement (B), Federal Constitution, Criminal Procedure Code, Penal Code, National Land Code, Rules of Court, Court Forms, General Orders and"Arahan Perbendaharaan". LawNet launched its electronic Gazette (e-Gazette), an electronic version of Malaysia Gazette printed by PNMB, the official printer appointed by the Government of Malaysia since 2001.

LawNet also contains among others value-added services such as the Istilah Undang-undang, Latin Dictionary, Index of Subsidiary Legislation and selected Judgments of the Privy Council. LawNet is expanding its range of database and value-added services.

Excise Duties (Exemption) Amendment Order 2012 [P.U (A) 336/2012)]

The Order, which comes into operation on 16 October 2012, amends Part I of the Schedule of the Excise Duties (Exemption) Order 1977 [P.U.(A) 151/1977] as follows:-


(a) in column (2), by inserting after the words “cab licence” the words “airport taxi cab”;

(b) in column (4) –


(i) by inserting after the words “taxi cab” wherever appearing the words “airport taxi cab”;


(ii) by substituting for the words “Commercial Vehicles Licensing Board” wherever appearing the words “Land Public Transport Commission”;


(iii) by substituting for the words “Commercial Vehicles Licensing Board Act 1987 [Act 334]” wherever appearing the words “Land Public Transport Act 2010 [Act 715]”; and


(iv) by inserting after subitem (viii) the following subitem:

“(ix) that the motor vehicle is purchased from the excise duty unpaid stock.”

The Order facilitates exemption on the Excise Duty for “airport taxi cab” which previously was approved via ad hoc ministerial approval. It also introduces consequential amendments resulting from changes in other related legislation.

Members may click here to view the Regulations.

MOF Media Release – BR1M_2.0

Pursuant to Paragraphs 136 and 137 of the 2013 Budget Speech, the Government will distribute a one-off cash assistance of RM500 and the criteria for eligibility remain the same as in the previous year.

In addition, the Government has extended this assistance to single unmarried individuals (including widows and widowers who have no dependents) aged 21 years and above (born in 1992 or before) and earning not more than RM2,000 a month. The assistance is RM250.

Registration began on 1 November 2012.

No registration is required for existing BR1M recipients; however if they wish to update the information provided earlier, they are required to re-register.

New applicants can register online, or manually by filling in the BR1M 2.0 Form. The form can be obtained at the Inland Revenue Board (IRB) branch offices and service centres, Federal Development Department, Social Welfare Department, Information Department and Government agencies, or downloaded from the IRB website at www.hasil.gov.my

Payment of BR1M 2.0 to those eligible will be made in the early part of 2013.

For further details, members may email to br1m2@treasury.gov.my or call the hotline at 1-800-222-500 which operates from 9.00 a.m to 5.00 p.m (Monday to Friday).

Members may view the Media Release at our website and the MOF website.

IRB Media Release – Office & Operations of Sungai Petani, Kedah IRB Branch will Move to New Building

The Inland Revenue Board (IRB) has notified that the Sungai Petani, Kedah IRB Branch has moved to a new building and has begun operations from 4 November 2012 (Sunday), at the following address:-.

Lembaga Hasil Dalam Negeri Malaysia,

Cawangan Sungai Petani,

Menara Hasil, Jalan Lencongan Timur,

Bandar Amanjaya,

08000 Sungai Petani, Kedah Darul Aman.

General Line: 04 – 445 6000

Members may view the IRB Media Release at the IRB website.

Tax Relief for Firms holding Family Day Events

PEKAN: THE government will give tax exemption to private companies that organise family day events for their staff, in efforts to strengthen the family institution.

Prime Minister Datuk Seri Najib Razak, announcing this yesterday, said the incentive was part of initiatives under the Gerakan 1Malaysia Utamakan Keluarga (Family First 1Malaysia Movement) to strengthen ties between employers and their employees, improve productivity and create happy families.

"We must always give priority to our families and the government has introduced various initiatives to strengthen the family institution, which is the most important unit in the community," he said when launching the 1Malaysia Family Month 2012 national-level celebrations here.

Among other initiatives under the movement, Najib said, the government had implemented the National Family Policy, introduced maternity and paternity leave, provided subsidies for childcare services, encouraged the set-up of more childcare centres at workplaces and launched the first house ownership campaign for the people.

"I also hope that Family Month can be made an annual event," said Najib, who had mooted the idea for the celebrations under the National Blue Ocean Strategy.

Najib, who is also women, family and community development minister, said the government was striving to improve the country's family well-being index, which currently stood at 7.55 on a scale of 10.

Instead of stressing only on a high per-capita income towards becoming a developed nation, he said Malaysia preferred a more holistic approach which also gave importance to family well-being.

"We may have high incomes but we will not be happy if there is internal bickering in our family or the crime index is high, or if we are always caught in traffic jams.

"That is why we want to improve the family well-being index from B+ to A soon," he said at the event which was attended by more than 10,000 people.

Also present were the prime minister's wife, Datin Seri Rosmah Mansor, and Pahang Menteri Besar Datuk Seri Adnan Yaakob.

Earlier when launching the "Astro Kasih Knowledge Zone" at the Sultanah Hajjah Kalsom Children's Home in Penor, near here, Najib said the government had reviewed the guidelines to set up new childcare centres (taska) to ensure that more such facilities could be opened nationwide.

He said taska operators who met the minimum standard set by the Welfare Department would no longer be required to get the approval of technical agencies.

Previously, childcare centre operators were required to get the approval of the local authorities and technical agencies before registering with the Welfare Department.

Najib said some 372 centres had benefited from the new guidelines.

At present, there are 1,767 childcare centres in the country, which handle a total of 53,000 children.

Najib, who is Pekan member of parliament, said the government had also approved a RM10 million allocation to help interested parties open about 1,000 new taska.

He also lauded the effort by Astro in setting up the "Astro Kasih Knowledge Zone", which provided reading materials at 24 child welfare homes nationwide.

Present were Astro Malaysia Holdings chairman Tun Zaki Tun Azmi and Deputy Women, Family and Community Development Minister Datuk Heng Seai Kie.