Gazette Order on Tax Exemption for Tour Operators
New Exemption Order
To legislate the proposal, the Income Tax (Exemption) (No. 9) Order 2021 was gazetted on 23 August 2021.
Details of the Exemption Order
- Effective from the year of assessment (YA) 2021 until the YA 2022.
- A qualifying person is exempted from the payment of income tax in a basis period for a YA in respect of the statutory income derived from a qualifying activity.
- The exemption only applies if the total number of local tourists for a qualifying activity is not less than two hundred (200) persons in a basis period for a YA.
- The total number of local tourists and foreign tourists for a qualifying activity must be verified in writing by an authorised officer of the Ministry of Tourism, Arts and Culture Malaysia.
- The qualifying person is required to maintain a separate account for the income exempted under the Order.
- A qualifying person carrying on a qualifying activity and an activity other than a qualifying activity must treat each activity as a separate and distinct source of that qualifying person.
A company resident in Malaysia which is licensed under the Tourism Industry Act 1992 to carry out a tour operating business and which carries on a qualifying activity.
What is a qualifying activity?
A tour operating business (same meaning assigned to it in the Tourism Industry Act 1992) which provides a domestic tour package for travel within Malaysia utilised by local tourists and foreign tourists, including transportation by air, land or sea, and accommodation.
Income Tax Rules on Special Deduction for Reduction of Rental
Under the various economic stimulus packages, the Government has announced a special tax deduction for owners of buildings or business spaces that provide a reduction or waiver of rent to their tenants.
New Income Tax Rules
To legislate the proposal, the following Rules were gazetted on 8 September 2021:
- Effective from the YA 2020.
- A deduction is allowed for an amount equivalent to the total amount of reduction of rental of not less than thirty per cent (30%) of the rate of a monthly rental under the existing tenancy agreement for a business premise for each of the qualifying month (April 2020 until December 2021).
- The landlord is also eligible for the deduction when the rents are paid in advance.
The landlord should keep the following documents in order to qualify for the deduction:
- a tenancy agreement which is stamped under the Stamp Act 1949.
- a separate statement of income for rental income for the qualifying months in the basis period for a YA.
- a confirmation made by the landlord stating the amount of reduction of rental given.
- a confirmation made by the small and medium enterprise stating the receipt of reduction of rental.
- certificate by the SME Corporation Malaysia confirming the status of the small and medium enterprise.
- Effective from the YA 2021.
- A deduction shall be allowed for an amount equivalent to the total amount of reduction of rental of not less than thirty per cent (30%) of the rate of a monthly rental under the existing tenancy agreement for a business premise for each of the qualifying months (January 2021 until December 2021).
- The landlord is also eligible for the deduction when the rents are paid in advance.
- a tenancy agreement which is stamped under the Stamp Act 1949.
- a separate statement of income for rental income for the qualifying months in the basis period for a YA.
- a confirmation made by the landlord stating the amount of reduction of rental given.
- a confirmation made by the tenant stating the receipt of reduction of rental.
Revised Service Tax Guide on Management Services
Effective 1 September 2018, under Group G, First Schedule of the Service Tax Regulations 2018, the provision of management services under prescribed circumstances is subject to service tax.
Previous Service Tax Guide on Management Services
The previous Service Tax Guide on Management Services was published on 15 January 2021.
Revised Service Tax Guide on Management Services
The Royal Malaysian Customs Department (RMCD) published a revised Service Tax Guide on Management Services on 4 August 2021 to clarify the Service Tax treatment with regards to the provision of maintenance services.
In the previous guide, an example was given whereby if rental services and maintenance management services were separately charged by the service providers, Service Tax should be charged on the maintenance management services.
In this revised guide, it is clarified that the provision of maintenance services for the common area should not be subject to Service Tax.
The revised guide also mentioned that only the provision of maintenance services for the rented area (i.e. other than the common area) would be treated as taxable management services and subject to Service Tax.
