Crowe Chat Vol.5/2021

Under the PEMERKASA Plus economic stimulus package, the Prime Minister announced an extension of the Home Ownership Campaign (HOC) until 31 December 2021.

New Stamp Duty Exemption Orders

The following Orders were gazetted on 12 July 2021 to exempt the stamp duty payable on an instrument of transfer and a loan agreement:

• Stamp Duty (Exemption) (No. 4) Order 2021
• Stamp Duty (Exemption) (No. 5) Order 2021

These Orders are deemed to have come into operation on 1 June 2021.

 

Details of the New Stamp Duty Exemption Orders

 Stamp duty shall be exempted for the purchase of residential property priced more than RM300,000 but not more than RM2.5 million under the HOC for the following instruments:

 

Loan agreements	Instruments of transfer
Full exemption	Partial exemption: First RM1 million value: exempted In excess of RM1 million value: 3% stamp duty

Stamp duty exemption will be given, subject to the following conditions:

• The sale and purchase agreement (SPA) is made between an individual and a property developer;
• The SPA is executed between 1 June 2021 and 31 December 2021 and is stamped at any branch of the IRBM; and
• The purchase price in the SPA is a price after a discount of at least 10% from the original price offered by the property developer except for a residential property which is subject to controlled pricing.

Paragraph 34(6)(k) of the Income Tax Act, 1967 (ITA) provides for a tax deduction of up to RM700,000 per year in respect of expenditure incurred for sponsoring arts, cultural and heritage activities. Out of the RM700,000, a claim of up to RM300,000 per year is allowed for sponsoring foreign arts, cultural and heritage activities. In the Budget 2020, the government increased the tax deduction limit of sponsorships to RM1,000,000 per year with the deduction limit for sponsoring foreign arts, cultural and heritage activities to remain up to RM300,000 per year.

The IRBM issued PR 2/2021 - Tax Deduction for Sponsoring Arts, Cultural and Heritage Activities on 8 July 2021. 

 
Details of new PR

The objective of this PR is to provide an explanation on the tax deduction available to a company that sponsors any approved local or foreign arts, cultural and heritage activities in Malaysia.
This new PR provides guidance on the following aspects:

• Application for an Approval of Sponsorship and Letter of Approval for Tax Deduction; and
• Tax Deduction.

• Festivals or fairs
• Exhibitions or expo
• Conferences, seminars, workshops, symposium and discourse
• Preservation or conservation
• Research, documentation or publication
• Recording or production
• Competition
• Recognition or appreciation
• Education or learning
• Promotion or development
• Marketing, product promotion or activities
• Innovation
• Content development
• Archiving or creation of records or data
• Other activities or programmes related to arts, culture and heritage recognised by MOTAC

b) the form of sponsorship (cash / payment of cost of organizing activities/ donation in kind, etc.);

c) the process of applying for a letter of sponsorship; and

d) the process of applying for a letter of approval for a tax deduction.

Tax Deduction
The new PR also explains the provision in the ITA which allows a tax deduction claim of up to RM1,000,000 per year in respect of expenditure incurred for sponsoring arts, cultural and heritage activities of which the amount deducted in respect of expenditure incurred in sponsoring foreign arts, cultural and heritage activities must not exceed RM300,000 per year.