Crowe Chat Vol.5/2022
Tax
Welcome to our Crowe Chat Vol.5/2022. In this issue, we will cover the following topics:
- Public Ruling (PR) 2/2022 – Tax Incentive for Organizing Conferences in Malaysia
- PR 3/2022 – Taxation of Foreign Fund Management Company
- Guideline on the Tax Treatment for Developers or Management Bodies for the Maintenance and Management of Buildings and Common Property
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PR 2/2022 – Tax Incentive for Organizing Conferences in Malaysia
Income Tax (Exemption) (No.53) Order 2000 provides tax exemption to a resident company, association or organisation whose main activities are promoting and organising conferences in Malaysia. This exemption was effective from the year of assessment (YA) 1997. In the Budget 2020, the government extended this income tax exemption to a qualifying person whose main activity does not include promoting and organising conferences in Malaysia from YA 2020 to YA 2025.
Details of new PR
The objective of this PR is to provide an explanation on the tax incentive available to:
- conference promoter promoting and organising conferences in Malaysia as its main activity; and
- qualifying person whose main activities are other than promoting and organising conferences in Malaysia.
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Income Tax (Exemption) (No.53) Order 2000 |
Income Tax (Exemption) (No.4) Order 2021 |
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Tax incentive |
Tax exemption granted is on 100% of the statutory income derived from organising conferences held in Malaysia and attended by at least 500 foreign participants. |
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Period of exemption |
YA 1997 onwards |
YA 2020 – YA 2025 |
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Eligibility criteria |
Resident company, association or organisation whose main activities are promoting and organising conferences in Malaysia |
Resident company, association or organisation which carries on a business or activity other than the business or activity of promoting and organising conferences |
PR 3/2022 – Taxation of Foreign Fund Management Company
A foreign fund management company is a company incorporated in Malaysia and licensed under the Capital Markets and Services Act 2007 to provide fund management services to its clients.
Previous PR
The previous PR 7/2019 - Taxation Of Foreign Fund Management Company was issued on 3 December 2019.
New PR
The IRBM issued PR 3/2022 - Taxation Of Foreign Fund Management Company on 29 July 2022.
Details of new PR
The objective of this PR is to explain the tax treatment of income received by a foreign fund management company that provides fund management services to foreign and local investors.
This new PR incorporates the gazette orders on the income tax exemptions on income from the business of providing fund management services to local and foreign investors in Malaysia. The gazette orders have been updated as follows:
- extension of the exemption period for another 3 (three) years, from YA 2021 to YA 2023; and
- the exemption is provided on condition that the company obtains an annual certification from the Securities Commission of Malaysia that the following conditions have been fulfilled:
a) The company provides fund management services to local and foreign investors in Malaysia in accordance with Shariah principles;
b) The company has at least two full-time employees in Malaysia of which one of the employees holds a Capital Markets Services Representative Licence under the Capital Markets and Services Act 2007; and
c) The company incurs annual operating expenditure of at least RM250,000 in Malaysia.
Guideline on the Tax Treatment for Developers or Management Bodies for the Maintenance and Management of Buildings and Common Property
The salient points highlighted in this new Guideline are:
- The mutuality principle also applies between the owners of the property units and the developers and/or management bodies that maintain and manage the buildings and common property. Therefore, maintenance charges, contributions to the sinking fund and any other receipts from mutual dealings with property owners will not be subject to tax under Section 53A of the Malaysian Income Tax Act, 1967 (MITA). Similarly, any attributable expenses or capital expenditure will be disregarded for tax purposes.
- Other income (other than that mentioned above) will be subject to tax and the relevant deductions can be claimed accordingly. This includes rental income received from owners of the property units who operate a cafeteria in common areas and income received from non-property unit owners.
- Management bodies are taxed at the scaled rates prescribed under Paragraph 1, Part I of Schedule 1 of the MITA and are required to submit the income tax return form (Form TF).
- Developers are taxed at the prevailing tax rates that apply to companies as prescribed under Paragraphs 2, 2A or 2B, Part 1 of Schedule 1 of the MITA. Developers are required to maintain separate accounts for their business and for the maintenance and management of buildings and common property.
