INCOME TAX (DEDUCTION FOR EXPENDITURE ON ISSUANCE OF RETAIL DEBENTURE AND RETAIL SUKUK) RULES 2013 [P.U.(A) 71]

Further to our e-CTIM TECH 21/2013, the above Rules were gazetted on 1 March 2013 to provide additional incentive for income tax and are effective from the year of assessment (YA) 2012 until YA 2015.

Deduction (Rule 2)

In ascertaining the adjusted income of a company resident in Malaysia from its business, a deduction is allowed for additional expenses incurred by the company on the issuance of:-

(a) a retail debenture approved or authorized by the Securities Commission under the Capital Markets and Services Act 2007.

· The total deduction allowed is equivalent to twice the amount of additional expenses allowed under these Rules. [Rule 2(6)]

(b) a retail sukuk approved or authorized by the Securities Commission under the Capital Markets and Services Act 2007.

· The total deduction allowed is an amount equal to the additional expenses allowed under these Rules.[Rule 2(7)]

The terms "retail debenture", "retail sukuk" and "retail investor" are defined in Rule 2(3), (4) and (5) respectively.

The "additional expenses" that qualify [Rule 2(2)] for deduction are:

a) professional fee relating to due diligence, drafting and preparation of prospectus;

b) printing cost of prospectus;

c) advertisement cost of prospectus;

d) the Securities Commission prospectus registration fee;

e) Bursa Malaysia processing fee and initial listing fee;

f) Bursa Malaysia new issue crediting fee;

g) primary distribution fee.

The Rules may be viewed at the Attorney-General’s Chambers website.