Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) Rules 2012 [P.U. (A) 151/2012]

With effect from the year of assessment of 2012, the chargeable income from employment (with any Malaysian resident person) of an approved individual during the specified years of assessment is subject to tax under Part XV of Schedule 1 of Income Tax Act,1967 (ITA), and shall be ascertained in accordance with the formula :


(A/B) x C

Where 

A is the statutory income from employment with the Malaysian resident person;
B is the aggregate income (in the case of a combined assessment under S45(2) of ITA, including income from spouse); and
C is the chargeable income (from all sources).

The balance of chargeable income of that approved individual shall be charged under Part 1, Schedule 1 of ITA at the relevant rate that would have been applicable to his chargeable income if he had not been an approved individual under these Rules.

The above Rules apply to an approved individual who receives employment income from any Malaysian resident person and the employment commences on or after 1 May 2011.

These Rules shall cease to apply to an approved individual if he ceases to be employed by any Malaysian resident person.

An approved individual, in these Rules, is defined as an individual who

• is a Malaysian citizen resident in Malaysia;

• is an expert in a field specified by the Minister;

• has applied to the Minister on or after 12 April 2011 but not later than 31 December 2020 under Returning Expert Programme (REP) (to be subject to tax at a standard rate of 15% under Part XV of Schedule 1, ITA);

• has not derived Malaysian employment income for at least a continuous period of 36 months prior to the date of application; and

• has never been approved under these Rules.

Specified years of assessment means

• 5 consecutive years of assessment commencing from the basis period of a year of assessment an option is made by an approved individual to be subject to tax under Part XV of Schedule 1 of the Act (at a flat rate of 15%); and

• the option shall be made in the year of assessment or the following year of assessment of the approved individual’s return to Malaysia;

Returning Expert Programme means a programme managed by the Talent Corporation Malaysia Berhad and approved by the Government.


For more information of the REP, members may view the website at http://www.talentcorp.com.my/malaysians-abroad/returning-expert-programme/.

IRB Letter – Refund of Tax Credits of Companies Liquidated by the Registrar, under Section 308, Companies Act 1965

In response to CTIM’s request for expedient finalization of cases under liquidation in the Operations Dialogue, the Inland Revenue Board (IRB) has informed, via its letter dated 14 May 2012, as follows:

A company applying to strike off its name under Section 308 of Companies Act 1965 (CA) must make a Statement Of Declaration By Applicant to the Companies Commission of Malaysia, including a declaration that “the company does not have any assets or liabilities including any outstanding charges in the Register of Charges kept at the office of the Registrar of Companies”. All assets, including tax credit, of the company after the name of the company has been struck off shall be vested in the Registrar of Companies. In view of this, all applications for refund of tax credit in such cases must be submitted directly to the Companies Commission of Malaysia.
Members may view the IRB letter at the Institute’s website. 

For reference on the procedure for striking off the name of a company, members may refer to the Guidelines to Strike Off the Name of a Company issued by the Companies Commission of Malaysia.
Extracts from the Companies Act 1965, are provided for your ease of reference:
Section 308. Power of Registrar to strike defunct company off register.


(1) Where the Registrar has reasonable cause to believe that a company is not carrying on business or is not in operation, he may send to the company by post a letter to that effect and stating that if an answer showing cause to the contrary is not received within one month from the date thereof a notice will be published in the Gazette with a view to striking the name of the company off the register.


(2) Unless the Registrar receives an answer within one month from the date of the letter to the effect that the company is carrying on business or is in operation, he may publish in the Gazette and send to the company by registered post a notice that at the expiration of three months from the date of that notice the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.


(3) If in any case where a company is being wound up the Registrar has reasonable cause to believe that—


 (a) no liquidator is acting;

 (b) the affairs of the company are fully wound up and for a period of six months the liquidator has been in default in lodging any return required to be made by him; or

 (c) the affairs of the company have been fully wound up under Division 2 and there are no assets or the assets available are not sufficient to pay the costs of obtaining an order of the Court dissolving the company,


he may publish in the Gazette and send to the company or the liquidator, if any, a notice to the same effect as that referred to in subsection (2).


(4) At the expiration of the time mentioned in the notice the Registrar may, unless cause to the contrary is previously shown, strike the name of the company off the register, and shall publish notice thereof in the Gazette, and on the publication in the Gazette of this notice the company shall be dissolved; but

 (a) the liability, if any, of every officer and member of the company shall continue and may be enforced as if the company had not been dissolved; and

 (b) nothing in this subsection shall affect the power of the Court to wind up a company, the name of which has been struck off the register.


(5) If any person feels aggrieved by the name of the company having been struck off the register, the Court on an application made by the person at any time within fifteen years after the name of the company has been so struck off may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be restored to the register, order the name of the company to be restored to the register, and upon an office copy of the order being lodged with the Registrar the company shall be deemed to have continued in existence as if its name had not been struck off, and the Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.


(6) A notice to be sent under this section to a liquidator may be addressed to the liquidator at his last known place of business, and a letter or notice to be sent under this section to a company may be addressed to the company at its registered office or, if no office has been registered, to the care of some officer of the company, or if there is no officer of the company whose name and address are known to the Registrar, may be sent to each of the persons who subscribed the memorandum of the company, addressed to him at the address mentioned in the memorandum.


Section 310. Outstanding assets of defunct company to vest in Registrar.


(1) Where, after a company has been dissolved, there remains any outstanding property, movable or immovable, including things in action and whether within or outside Malaysia which was vested in the company or to which it was entitled, or over which it had a disposing power at the time it was so dissolved, but which was not got in, realized upon or otherwise disposed of or dealt with by the company or its liquidator, the property except called and uncalled capital shall, for the purposes of the following sections of this Subdivision and notwithstanding any written law or rule of law to the contrary, by the operation of this section be and become vested in the Registrar for all the estate and interest therein, legal or equitable, of the company or its liquidator at the date the company was dissolved, together with all claims, rights and remedies which the company or its liquidator then had in respect thereof.


(2) Where any claim, right or remedy of the liquidator may, under this Act, be made, exercised or availed of only with the approval or concurrence of the Court or some other person, the Registrar may, for the purposes of this section, make, exercise or avail himself of that claim, right or remedy without that approval or concurrence.

Amendments to the Claim Codes in the 2012 Form C Guidebook

Please be informed that the Inland Revenue Board (IRB) has made the following amendments to the Claim Codes listed in Appendix D to 2012 Form C Guidebook as follows:-

Appendix D to Form C 2012 Guidebook

• Additional code 149 for “Deduction for expenditure to obtain the 1-InnoCERT certification” [Reference P.U. (A) 109/2012, , e-CTIM No. 65/2012], is inserted in Section 1 (Special Deduction and Other Claims) of Appendix D.
• Additional code 150 for “Deduction for promotion of international or private school’ [Reference P.U. (A) 110/2012, e-CTIM No. 67/2012], is inserted in Section 1 (Special Deduction and Other Claims) of Appendix D.
Members may access the Form C 2012 Guidebook at the IRB’s website via the following link http://www.hasil.gov.my/index.php > Home > Forms > Company > 2012.

Income Tax (Deduction for Promotion of International or Private School) Rules 2012 [P.U. (A) 110/2012]

Following from paragraph 44 of the 2012 Budget speech, and the related Appendix 17, the above Rules were gazetted on 26 April 2012 and shall have effect from the year of assessment 2012.
These Rules shall apply to an international or private school which -

• is registered with the Ministry of Education; and
• has complied with the conditions and regulations under Education Act 1996; and
• is a company incorporated under the Companies Act 1965 or a society established and registered under Societies Act 1966, and
• carries on a business of providing education in a school located in Malaysia in the basis period for a year of assessment.

The Rules prescribe that any outgoings and expenses incurred by an international or private school in the basis period for a year of assessment, primarily and principally for the purpose of promoting its international or private school operated and located in Malaysia, shall be allowed a deduction in arriving at the adjusted income.
The outgoings and expenses eligible for deduction are expenses incurred:-

1. in respect of market research for international or private school education;
2. in respect of preparation of technical information to a person outside Malaysia relating to the services provided by that school in Malaysia;
3. in respect of traveling to a country outside Malaysia (by not more than 3 representatives of that school) for the purpose of participating in approved foreign education fairs, subject to certain conditions;
4. directly in participating in approved foreign education fairs other than those expenses specified in paragraph (2)(c); or
5. in respect of publicity and advertisement in any media outside Malaysia for the promotion of international or private school in Malaysia.

The deduction allowable should be in addition to any deduction under section 33 of the Income Tax Act 1967 (ITA) and the total amount shall not exceed RM100,000 for each year of assessment.
The Rules shall not be applicable where -

• the outgoings, expenses or other payments fall within the ambit of Section 39(1) ITA;
• the outgoings, expenses or other payments are incurred in a country in which the international or private school has a place of business and subject to local tax; or
• the international or private school is eligible for a deduction under Income Tax (Deductions for Promotion of Export of Services) Rules 1999 [P.U.(A) 193/1999]

IMPLICATIONS OF THE HOUSING DEVELOPMENT (CONTROL AND LICENSING) (AMENDMENT) ACT 2012 ON INSOLVENCY PRACTITIONERS

The Housing Development (Control and Licensing) (Amendment) Act 2012 was gazetted on 9 February 2012. The effective date of the Act has yet to be announced.

The Ministry of Housing and Local Government has proposed that the Housing Development (Control and Licensing) Act 1966 be amended for more protection to house buyers and to minimise the occurrence of abandoned projects. The amendments which involved eight existing provisions, one new provision and one abolished provision were passed in the Parliament in December 2011.

A new section (Section 18A) was introduced in the Housing Development (Control and Licensing) (Amendment) Act 2012 which enables house buyers to initiate criminal proceedings against any licensed housing developers who abandon or cause to be abandoned housing projects. The licensed developer who abandons or causes a housing development to be abandoned can be fined between RM250,000 and RM500,000 or jailed up to 3 years, or both.

The Act has also been amended to extend the interpretation of a ‘housing developer’ to include a person or body appointed by a court of competent jurisdiction to be the provisional liquidator or liquidator for the housing developer in a case where the housing developer is under liquidation. Hence, the liquidator is subjected to the duties imposed by the Act and may be liable for the offences of breaching such duties of a housing developer.

In view of the seriousness of the amendment to the interpretation of a “housing developer”, members who are liquidators are advised to seek legal advice before taking on any abandoned housing project. Meanwhile, the Institute is engaging with the relevant authorities to discuss the implications of the Housing Development (Control and Licensing) (Amendment) Act 2012 on insolvency practitioners. Members will be informed of the outcome in due course.

A copy of the Housing Development (Control and Licensing) (Amendment) Act 2012 is attached herewith for your attention.

Please be guided accordingly.

REVISION IN MINIMUM COVERAGE OF PROFESSIONAL INDEMNITY INSURANCE (PII)

The Council at its meeting held on 29 March 2012 had approved a revision in the minimum coverage of Professional Indemnity Insurance from RM100,000.00 to RM250,000.00 per partner per firm with effect from 1 July 2012.

PII was first made mandatory for all members in public practice on 1 October 1998 where the minimum mandatory limit of indemnity was set at RM100,000.00 per partner per firm. The increase takes into consideration the need to have a higher insured policy limits to cater for higher costs of civil liabilities. The increment is also in line with several regulated professions in Malaysia and several international professional accountancy bodies which have a similar mandatory requirement for PII.

Consequently, the current Section 510 of the Institute’s By-Laws (On Professional Ethics, Conduct and Practice) has been amended as follows:



510.3 (1) Every member in public practice must maintain a policy of professional indemnity insurance with a minimum coverage of Ringgit Malaysia Two Hundred and Fifty Thousand (RM250,000.00), upon commencement of public practice.
(2) Proof of such coverage is required for the purpose of the annual renewal of the member’s practising certificate pursuant to Rule 9 of the Malaysian Institute of Accountants (Membership and Council) Rules 2001.
(3) The Membership Affairs Committee of the Council or any other Committee so delegated by the Council for this purpose, may reject the application of any professional accountant for the renewal of the practising certificate if there is non-compliance with the requirements of Rule 9 of the Malaysian Institute of Accountants (Membership and Council) Rules 2001 or with the above requirement without proper excuse. Any professional accountant aggrieved with such a decision, may appeal to the Council whose decision on the same is final.
510.4 Where a member in public practice carries on practice under more than one firm, that member is required to have separate policies of professional indemnity insurance with a minimum coverage of Ringgit Malaysia Two Hundred and Fifty Thousand (RM250,000.00) each, for himself or herself in each of these firms.


With the amendments, all member firms are required to maintain a PII policy with the minimum coverage of RM250,000.00 per partner per firm and are required to make the necessary arrangement to increase the sum insured for the firm’s existing policy/ies.

Member firms with PII policies obtained from the Institute’s appointed broker, Marsh are required to increase the coverage in the coming renewal. For those who have renewed their policies earlier, please contact your insurance broker/company to increase the sum insured and notify the Institute thereafter.

Please provide us with a copy of your firm’s revised PII policy latest by 31 July 2012. The policy can be faxed to 03 – 22799386 or emailed to memberfirm@mia.org.my. For any clarification, please contact the Membership Department of the Institute at 03-22799200.

Thank you.

HO FOONG MOI (MS)
Acting Chief Executive Officer

AMENDMENTS TO THE CLAIM CODES IN THE 2011 AND 2012 FORM C GUIDEBOOKS

The IRB has recently made amendment to the Claim Codes listed in Appendix D of Section 1: Special Deduction and Other Claims of the 2011 and 2012 Form C Guidebooks as appended below:

a. Appendix D to Form C 2011 Guidebook


- Additional code “147” for “Deduction for payment of premium to Malaysia Deposit Insurance Corporation”


b. Appendix D to Form C 2012 Guidebook


- Additional code “147” for “Deduction for payment of premium to Malaysia Deposit Insurance Corporation”
- Additional code “148” for “Deduction for expenditure on franchise fee”
- Code “119” for “Implementation of RosettaNet” is removed with effect from year of assessment 2012

For further details, please refer to the respective year of Form C Guidebook which is available on the IRB’s website at http://www.hasil.gov.my under the heading “Borang” > “Syarikat” (Bahasa Melayu version) and “Forms” > “Company”(English version).

PUBLIC RULING NO. 2/2012

Members are hereby informed that the Inland Revenue Board (IRB) has on 3 May 2012 issued Public Ruling (PR) No. 2/2012: Foreign Nationals Working in Malaysia – Tax Treaty Relief. This PR, provides an explanation on the application of tax treaty relief to foreign nationals from treaty countries seconded to Malaysia by their employers that are not resident in Malaysia.

The above PR can be downloaded from the IRB's website at the following link:http://www.hasil.gov.my/pdf/pdfam/PR2_2012.pdf.

MASB SEEKS VIEWS ON MANAGEMENT COMMENTARY

The Malaysian Accounting Standards Board (“MASB”) has, on 30 April 2012, issued MASB ED 76 Management Commentary (“Guidance”) for public comment.

The ED 76 provides a broad, non-binding framework for the presentation of management commentary that relates to financial statements that have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”).

The [draft] guidance is not governed under the MFRS Framework. The objective of the [draft] guidance is to assist management in presenting useful management commentary that supplements and complements information presented in the financial statements. Such commentary includes management’s view of the entity’s performance, position and progress. Management should also include forward-looking information that explains the management’s objectives for the entity and its strategies for achieving those objectives.

MASB believes that it is critical for affected parties to provide feedback on the [draft] guidance.

The ED 76 is available for download on the MASB website at http://www.masb.org.my.

Members are encouraged to study the ED 76 and provide feedback to the Institute attechnical@mia.org.my by 23 July 2012 for onward deliberations with the MASB.

We look forward to receiving your comments.

Income Tax (Deduction for Expenditure to Obtain The 1-InnoCERT Certification) Rules 2012 [P.U. (A) 109/2012]

The Rules prescribe that in ascertaining the adjusted income of a qualified person from its business, the expenses incurred in obtaining the 1-InnoCERT Certification from the Small and Medium Enterprises Corporation Malaysia shall be allowed as a deduction, provided that it applies on or before 31 December 2014, and it is in respect of its first 1-InnoCERT Certification, for which approval is granted.  The expenses incurred shall be expenditure directly incurred for the application and shall be deemed to have been incurred in the basis period for the year of assessment in which the 1-InnoCERT Certification is granted.
The Rules are deemed to have come into operation from the year of assessment 2010.
In these Rules -

“qualified person” means

• For the manufacturing industry, manufacturing related services industry and agro-based industry -

a person resident in Malaysia and at the end of the basis period for a year of assessment

• has not less than 5 and not more than 150 full-time employees, or
• has achieved not less than RM250,000 and not more than RM25 million in annual sales.
• For the services industry, primary agriculture, information and communication technology industry -

a person resident in Malaysia and at the end of the basis period for a year of assessment

• has not less than 5 and not more than 50 full-time employees, or
• has achieved not less than RM250,000 and not more than RM5 million in annual sales.

“expenses” means the following expenses:

• certification fee of RM5,000
• expenses incurred by SIRIM’s auditors which consist of travelling expenses (including economy airfare and airport transfer claim, mileage, toll and parking fee), accommodation costs (in a standard room) or lodging allowance, and meal allowance.

“1-InnoCERT Certification” means a 1-Innovation Certification for Enterprise Rating & Transformation issued by Small and Medium Enterprises Corporation Malaysia to a qualified person who has been rated AAA, AA or A by SIRIM Berhad.
(The following is a brief description of 1-InnoCERT Certification extracted from http://www.smeinfo.com.my.)
Innovation Certification for Enterprise Rating and Transformation (1-InnoCERT) is a certification programme for recognising and certifying innovative enterprises and SMEs and to encourage entrepreneurs to venture into high technology and innovation-driven industries.
Through 1-InnoCERT, businesses will be guided through coaching and business advisory to implement innovation systems, processes, and business models in order to comply with the innovation standard.  Certified companies will be given fast track access to incentives, including funding for their project.
The mechanism for 1-InnoCERT is based on 2 levels of assessment;

• On-line assessment; and;
• On-site visit evaluation/ audit by experts.

Parameters evaluated in the 1-InnoCERT are:

Benefits
1-InnoCERT SMEs will be eligible to:

• Participate in the SME Innovation Award; and
• Enjoy Green Lane Policy

(For more information, please visit http://www.1-innocert.my/Home/SolutionPages/Default.aspx)
Green Lane Policy

• The Green Lane Policy is intended to incentivise innovative SMEs under 1-InnoCERT Programme, Bio Nexus and MSC status companies as well as Malaysian Technology Development Corporation (MTDC) grant recipients.
• The Ministry of Finance (MOF) is the current  Secretariat for the Green Lane Policy.
• The incentives covered under the Green Lane Policy are:

All application of the Green Lane Incentives should be forwarded to:

Secretariat of the Green Lane Policy
Ketua Penolong Setiausaha
Bahagian Pengurusan Pinjaman,
Pasaran Kewangan dan Aktuari Tingkat 5,
Blok Tengah Kompleks Kementerian Kewangan
No. 5 Persiaran Perdana Presint 2,
Pusat Pentadbiran Kerajaan Persekutuan
62592 Putrajaya.
(att.: En. Nik Azman Nik Ab Kadir)

Ketua Penolong Setiausaha
Bahagian Analisa Cukai Perbendaharaan Malaysia
Aras 6, 7 Blok Tengah,
Kompleks Kementerian Kewangan,
Presint 2 Pusat Pentadbiran Persekutuan
62592 Putrajaya
(att.: Pn. Farah Dhiba Amad @ Salleh)

For more information:
Green Lane Policy-Pekeliling          OR          http://www.treasury.gov.my/pekeliling/pp/pp072011.pdf

For queries or feedback on the CTIM e-circular, please email secretariat@ctim.org.my.

Stamp Duty (Exemption) Order 2012 [P.U. (A) 108/2012]

An instrument of loan agreement or financing under the syariah is chargeable under item 27(a)(i) of the First Schedule to the Stamp Act 1949.
 
The Order exempts the stamp duty on any of such instruments which is executed between a small and medium enterprise (SME) and-
(a) Bank Perusahaan Kecil & Sederhana Malaysia Berhad;
(b) Bank Pembangunan Malaysia Berhad; or
(c) Export-Import Bank of Malaysia Berhad.
The instrument covered in this order shall be executed on or after 15 June 2011 but not later than 31 December 2014 and the SME must have been approved for an incentive under the Green Lane Policy by the Secretariat for Green Lane Policy (of the Ministry of Finance)
This Order is deemed to have come into operation on 15 June 2011,
The Green Lane Policy is intended to incentivise innovative SMEs under the 1-InnoCERT Programme, Bio Nexus and MSC status companies as well as recipients of Malaysian Technology Development Corporation (MTDC) grant. 
For more information on the Green Lane Policy members may visit http://www.1-innocert.my/Home/SolutionPages/GreenLanePolicy.aspx or refer to the Treasury Circular No.7/2011 – Guidelines on granting incentives under Green Lane Policy issued by the Ministry of Finance.