SUMMARY OF TAX SYSTEM 2008 TABLE OF CONTENTS

1. INCOME TAX ...........................................................................................................................2 1.1 INDIVIDUAL INCOME TAX ..........................................................................................................2 1.2 COMPANY INCOME TAX .......................................................................................................3 1.2.1 Unit Trust .................................................................................................................4 1.2.2 Close-End Fund Company ......................................................................................5 1.3 WITHHOLDING TAX .............................................................................................................6 1.4 TAXATION OF COOPERATIVE SOCIETIES. ..............................................................................7 1.5 TAXATION ON PETROLEUM COMPANIES ...............................................................................7 2. 3. 4. 5 STAMP DUTIES........................................................................................................................8 TAXATION ON PROPERTY.....................................................................................................8 ENTERTAINMENT DUTY.........................................................................................................8 TAXES ON INTERNATIONAL TRADE AND ON GOODS AND SERVICES .........................9 5.1 TAX ON IMPORT .................................................................................................................9 5.2 TAX ON EXPORT .................................................................................................................9 5.2.1 Crude Palm Oil.........................................................................................................9 5.2.2 Processed Palm Oil ................................................................................................9 5.2.3 Palm Kernel Oil/ Olein/ Stearin ..............................................................................10 5.2.4 Crude Oil................................................................................................................10 6. 7. 8. 9. EXCISE DUTY .......................................................................................................................10 SALES TAX ...........................................................................................................................11 SERVICE TAX .......................................................................................................................11 LEVY ON GOODS VEHICLES ...............................................................................................12

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MALAYSIA SUMMARY OF TAX SYSTEM (UPDATED TO BUDGET 2008)

1. 1.1 INCOME TAX Individual Income Tax (Income Tax Act, 1967)

This is an annual tax at graduated rates on the taxable income from all sources accrued in or derived from Malaysia. Income received in Malaysia from outside Malaysia is tax exempt. These sources include gains or profits from any profession, vocation or employment, pension or annuity and rent. The residence status of an individual entitles him for personal relief and other relieves. Members of a partnership are assessed individually.

Resident An individual is regarded as a resident tax payer if: (i) (ii) he is in Malaysia for at least 182 days in total in a calendar year; he is in Malaysia for a period of less than 182 days but that period is linked to another period of physical presence of at least 182 consecutive days in an adjoining year; he is in Malaysia for 90 days or more in a particular basis year, not necessarily consecutive, in any 3 basis years for the 4 years of assessment immediately preceding basis years he was either a resident or in Malaysia for 90 days or more; and he is a resident for the immediately following year and for the 3 immediately preceding years.

(iii)

(iv)

Dividend income Effective year of assessment 2008, Malaysia moves to Single-tier company income tax system. Under this single tier company tax system, tax on the companys profit is a final tax, and dividends distributed to shareholders will be exempted from tax. Companies with Section 108 tax credit have been given 6 years until 31st December 2013 to fully utilize such credits. Prior to year of assessment 2008, dividend income is taxed at gross and the tax deducted at source by the company under an imputation system will be given as a tax credit to the shareholders. However shareholders receive dividend declare under Section 108 balance during the 6 year transitional period can continue to frank such dividend.

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Tax Relief and Tax Rebates In ascertaining the taxable income of a resident individual, various forms of tax relief and tax rebates (Appendix 1) are given in order to reduce tax burden. Exemptions and Deductions Individuals are also enjoying various exemptions and deductions. (Appendix 2) Individual Tax Rate Individual income tax is subject to progressive tax rates. (Appendix 3) Married woman A married woman will be automatically assessed separately on her income from all sources. For joint assessment, an election has to be made. The 2001 Budget accords equal tax treatment to taxpayers without gender bias. In the case of a husband electing for joint assessment in his wifes name, the wife is allowed a personal relief of RM8, 000 and a spouse relief of RM3, 000.

Schedular Tax Deduction System Payments of income tax are collected through compulsory deductions from salaries under the Schedular Tax Deduction System effective from 1.1.1995. Partnership In a case of a partnership, the main partner is required to make a return of the partnerships income, but each is assessed separately on share of the partnership.

1.2

Company Income Tax (Income Tax Act, 1967)

Prior to year of assessment 1995, the scope of company income tax in Malaysia was based on derived and remittance basis, except for banking, insurance, air and sea transport which are based on world wide income. However, with effect from year of assessment 1995, the scope of company income tax in Malaysia was changed to derived basis except for banking, insurance, air and sea transport. For non-resident companies, tax is only imposed on income accruing in or derived from Malaysia, but not on income received in Malaysia from outside. Prior to year of assessment 2008, the taxation of dividend was based on a full imputation system i.e. the tax of a company is in fact an advance tax of the shareholders who receive dividend from the company. Upon the declaration of dividends, the shareholders are taxed on the grossed dividends at the highest marginal tax rate and are given full tax credit in respect of the tax deducted at source by a company.

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Effective year of assessment 2008, Malaysia has moved to Single-tier company income tax system. Under this single tier company tax system, tax on the companys profit is a final tax, and dividends distributed to shareholders will be exempted from tax.

Resident Status of a Company A company is tax resident in Malaysia if its management and control is exercised in Malaysia. Management and control is considered to be exercised in Malaysia if the directors' meetings are held in Malaysia.

Exemptions and Deductions

Taxable income is computed on the basis of accounting principles as modified by certain tax adjustments. In arriving at taxable income, companies can claimed certain expenses (Appendix 4) allowable for tax purposes. There are also certain types of income that are exempted (Appendix 4) from income tax.
Business losses can be set off against income from all sources in the current year. Any unutilized losses can be carried forward indefinitely to be utilized against income from any business source. However, from year of assessment 2006, losses are not allowed to be carried forward in the event there is a change of more than 50% in companys shareholdings. Group relief (Appendix 5) is available for all locally incorporated resident companies provided that the conditions for eligibility are met. A company that qualifies may surrender a maximum of 50% of its adjusted loss for a year of assessment to one or more related companies.

Company Tax Rate Company is subject to a flat tax rate. (Appendix 6)

1.2.1 Unit Trust

Income distributed by a unit trust is chargeable to tax on the unit holder. The tax chargeable on a unit trust will be set-off against the tax charged on the unit holder. Unit trust derives its income from investment in landed properties, shares or bonds. The income derived will be investment income, assessable either under Section 4(c) and 4(d). Unit trust also enjoys various exemption and deductions. (Appendix 7) Tax rates Unit trust is subject to income tax at a prevailing companys tax rate.

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1.2.2 Close-End Fund Company

A public limited company incorporated in Malaysia and engaged wholly in the business of investing its funds in securities for the purpose of: a. b. spreading investment risks; and managing a portfolio of investments.

Exemption and deductions Gains from the realisation of investments of a close-end fund shall be exempted from tax and the distributions from such gains are tax exempt in the hand of the shareholders. Interest received by listed close-end funds in respect of bonds or securities issued or guaranteed by the Government, Bon Simpanan Malaysia issued by the Central Bank Of Malaysia and debentures (other than convertible non stock) approved by the Securities Commission is exempt from tax and distributions from such exempt income are also tax exempt in the hands of the shareholders. Qualifying expenses are determined in a similar manner as for unit trusts.

1.2.3 Foreign Fund Management Company

A foreign fund management company is a company incorporated in Malaysia and licensed under the Security Industry Act 1983. With effect from the year of assessment 1996 a foreign fund management company is given a concessionary tax treatment as follows:
Income arising from services rendered by a foreign fund management company to clients outside Malaysia will be subject to tax at a concessionary rate of 10 per cent, while income arising from services rendered to local clients will be subject to the prevailing corporate tax rate. Clients outside Malaysia can either be individuals, companies or trust funds who are not residents of Malaysia for tax purposes. Income received by the clients outside Malaysia will be treated in the following manner: i. foreign sourced income such as dividend and interest and gains arising from realisation of investment outside Malaysia by a foreign fund management company on behalf of its clients(foreign) will not be subject to tax; dividend income arising from investment in Malaysia will not subject to a further tax; interest income derived from Malaysia will be exempt from tax in the following circumstances:

ii.

iii.

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a.

interest paid to foreign clients (individuals) in respect of securities or bonds issued by the Government and bonds, other than convertible loan stocks, issued by public companies listed on the Kuala Lumpur Stock Exchange or a company rated by Rating Agency Malaysia Berhad or Malaysian Rating Corporation Berhad; interest paid to foreign clients ( non-resident) by any person carrying on the business of banking in Malaysia and licensed under the Banking and Financial Institutions Act 1989.

b.

Other than the above, interest income will be taxed at the prevailing tax rate, that is the domestic tax rate or the rate under the Double Taxation Agreements. iv. gains arising from the realisation of investments in Malaysia, other than real property, is not liable to tax.

v.

all fees received from managing Islamic funds of local and foreign investors approved by the Securities Commission are exempted from income tax.

1.2.4 Real Estate Investment Trust (REIT)

REIT is a vehicle which mobilizes funds from the unit holders comprising individuals and companies for investments in real estate. With effect from year of assessment 2007: REIT is exempted from tax on all income provided that at least 90% of their total income is distributed to the investors. If the 90% distribution condition is not complied with, REIT then is subject to income tax, while all their investors are eligible to claim tax credit. Resident individuals, non-resident individuals and other local entities that receive income distributed from REIT listed on Bursa Malaysia are subject to a final withholding tax of 15% for 5 years; Foreign institutional investors (pension funds and collective investment funds) that receive income distributed from REIT listed on Bursa Malaysia are subject to a final withholding tax of 20% for 5 years; Local and foreign corporate investors are subject to existing tax treatment and tax rate at 27%; With effect from year of assessment 2008: Disposal of buildings from companies to REITs is not subject to a balancing charge. REITs are now eligible to claim the balance of unclaimed industrial buildings allowance of the disposer. REITs history (Appendix 8)

1.3 (i)

Withholding Tax (Income Tax Act 1967) Special classes of income under section 4A a. The withholding tax is imposed on income of person not resident in

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Malaysia in respect of amount paid in consideration of services rendered in Malaysia as follows: i. Services rendered in connection with the use of property or rights belonging to or for the installation or operation of plant machinery, or other apparatus purchased from such person; Technical advice, assistance, service for technical management or administration of any scientific, industrial commercial ventures or scheme; Rent or other payments not being payments of film rentals made under any agreement for use of movable property. The liability of tax is on the recipient but it is the responsibility of the payer of such payment to withhold the tax and pay such tax to the Inland Revenue Board.

ii.

iii.

(ii)

Deduction of tax from contract payment under section 107A. Any person liable to make contract payment to a non-resident contractor for services under a contract is required to deduct the tax and pay such tax to the Inland Revenue Board. This is not a final tax and will be adjusted against the final tax liability of the non-resident contractor. Director General of Inland Revenue may give notice in writing to the payer to deduct and pay tax at other rates or to make the contract payment without any deduction of tax.

Withholding tax rates There are certain incomes subject to various withholding tax rates. (Appendix 9)

1.4

Taxation of Cooperative Societies

Cooperative societies are taxed on income derived from Malaysia. Various exemption and deductions (Appendix 10) are also granted to cooperative societies. Cooperative societies are subject to progressive tax rates. (Appendix 11)

1.5

Taxation on Petroleum Companies (Petroleum Income Tax Act 1967)

Income tax is levied annually on the chargeable income derived by any person carrying on petroleum operations in Malaysia. Petroleum operations mean the searching for and the winning or obtaining of petroleum and any sale or disposal of petroleum so won or obtained. Petroleum operations are conducted within the framework of the production sharing agreements which are entered into between PETRONAS, and the petroleum companies (Production Sharing Companies). Under the agreement, 10% of petroleum produced goes to the Government (5% to the

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Federal Government and 5% to the State Government) while the remaining production is divided between PETRONAS and the Production Sharing Companies in accordance to an agreed formula. PETRONAS as well as Production Sharing Companies are chargeable to tax on their respective shares of production. Miscellaneous receipts incidental to and arising from petroleum operations are also subject to petroleum income tax. Various deductions (Appendix 12) are also given to petroleum companies. Petroleum companies are subject to a flat tax rate of 38%. However income derived from refining or liquidifying of petroleum and any activity dealing with refined products is subject to the normal company tax as provided under the Income Tax Act 1967 (see 1.2 above). 2. Stamp Duties (Stamp Act 1949 effective 5.12.1949)

Stamp duties are imposed ad valorem on certain written documents varying according to the nature of the documents and values referred to. However some documents attract specific rates (Appendix 13) of stamp duties. Various exemptions (Appendix 14) are also given.
3. Taxation on Property (Real Property Gains Tax Act 1976)

Suspended with effect from 1 April 2007. Details of the tax structure. (Appendix 15)

4.

Entertainment Duty (Entertainment Duty Act 1953 - effective 1.10.53)

Before 1 October 2001, entertainment duty is levied on admission ticket to any place of entertainment. Beginning from 1 October 2001, entertainment duty is extended to include the use of the facilities at any place of entertainment.

Exemption and Deductions: (i) (ii) Admission tickets for stage plays organized by local theatre groups. Admission tickets for cultural and arts show, exhibitions, festivals and sports competitions of international standard held in the National Sports, the National Theatre, the National Arts Gallery and Petronas Philharmonic Hall.

Tax Rates Beginning 1 October 2001, the rate of entertaining duty is standardized at 25 % of payment charged for admission to any place of entertainment and for the use of the facilities at any place of entertainment.

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Taxes on International Trade and on Goods and Services

5.1

Tax on Import (Custom Act 1967)

Import duty is mostly ad valorem although some specific duties are imposed on a number of items. Exemption and Deductions Various exemptions (http://tariff.customs.gov.my - refers) are allowed in accordance with investment incentives policies. Ad valorem rates of import duty vary from Nil on basic foods to 60% on jars made of glass. Under CEPT, import duty for 80% of the products is 0% while 98.99% of the products is 0% to 5% as at 1 January 2007. About 0.71% of the products is in the exclusion list (i.e. subject to MFN rate) for example alcoholic beverages and ammunition. Some unprocessed products for example pineapple and bananas are subject to high import duty ranging from 40% to 100%.

5.2

Tax on Export (Export Duty, Custom Act 1967)

5.2.1 Crude Palm Oil Export duty is based on the gazetted value of crude palm oil. It is only levied at a price level exceeding RM650 per tonne which is estimated to be the cost of production. Exemption and Deductions:

Crude palm oil exports from Sabah and Sarawak are subjected to 70% exemption of the current rate of export duty.
Tax Rates On the first RM 650 per tonne Plus on the next RM 50.00 per tonne Plus on the next RM50.00 per tonne Plus on the next RM50.00 per tonne Plus on the next RM50.00 per tonne Plus on the balance 5.2.2 Processed Palm Oil Process palm oil is exempted from export duty. Nil 10% a.v. 15% a.v. 20% a.v 25% a.v 30% a.v

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5.2.3

Palm Kernel Oil/ Olein/ Stearin

Palm Kernel Oil/ Olein/ Stearin Palm kernel oil, crude Palm Kernel oil, RBD Palm kernel olein, crude Palm kernel olein, RBD Palm kernel stearin, crude Palm kernel stearin RBD Palm kernel olein, Hydrogenated &RBD Palm kernel stearin, Hydrogenated &RBD Crude Palm Stearin The export of palm kernel oil / olein / stearin from Sabah and Sarawak are allowed a rebate of 30 % on dutiable products.

Export Duty 10 % 5% Nil Nil Nil Nil Nil Nil Nil Nil

5.2.4 Crude Oil Export duty is based on the gazetted value of crude oil. Exemptions are given as follows: (i) (ii) 10% to Petronas cost of oil of 20% under old Production Sharing Contract (PSC) and percentage of actual cost up to a maximum of 50% under new PSC

The tax rate is 10% ad valorem. 6. Excise Duty (Excise Act 1976)

Effective 1.1.2004, excise duty is levied on selected locally manufactured and imported goods at various rates. (Appendix 16)

Exemptions Excise Duty (Exemption) Order 1977 (http://tariff.customs.gov.my - refers) lists out the groups of people exempted from excise duties. Taxi and cars-for-hire operators on the purchase of national cars. Motor vehicles for providing mobile libraries and clinics services. The physically disabled persons on the purchase of national motorcars and motorcycles. (50% exemption-2001 Budget).

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Tour operator on the purchase of locally assembled 4WD vehicles (50% exemption Budget 2007).

7.

Sales Tax (Sales Tax Act, 1972)

This is an ad valorem single stage tax imposed at the import and manufacturing levels except petroleum products where the rates are specific. Exemption Manufacturers whose sale values of taxable goods do not exceed RM100,000 per annum. Basic food-stuffs, basic building materials, certain agricultural implements and machinery, certain tourist and sports goods, books, newspapers, other reading materials and computers. All exports. Certain privileged persons, diplomats and Government agencies. Raw materials and machinery for manufacturing of taxable goods. Inputs for selected non-taxable goods. (Schedule C - Sales Tax Exemption Order 1980). (http://tariff.customs.gov.my - refers) Motor vehicles for providing mobile libraries and clinics services. To stabilise the prices of petroleum products at the controlled level, partial or full exemption on sales tax are granted under the Automatic Price Mechanism.

Rates Current rates are as follows: general rate on all goods fruits, certain foodstuffs and building materials cigarettes and tobacco products alcoholic beverages Petrol Diesel - 10 % - 5% - 5% - 5% - RM 0.5862 per litre - RM 0.1964 per litre

8.

Service Tax (Service Tax Act, 1975 )

Service tax is a form of indirect tax imposed on taxable services as prescribed under Second Schedule of the Service Tax Regulations 1975 the (http://tariff.customs.gov.my - refers) and applicable throughout Malaysia excluding Langkawi, Labuan, Tioman, Free Zones and Joint Development Area.

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Various exemptions (Appendix 17) are also granted.

9.

Levy on Goods Vehicles (Goods Vehicles Levy Act, 1983)

This is levied on all goods vehicles leaving the country (whether laden or empty) entering the country ( laden).

Exempted from levy are:Goods vehicles carrying selected perishable goods exclusively for the Singapore market; All goods vehicles leaving for Thailand; Government vehicles, goods vehicles used for the purpose of a funeral and goods vehicles within the scope of the Memorandum of Understanding between Malaysia and Thailand. 50% exemption for goods vehicles carrying selected construction materials. Full exemption for goods vehicles carrying ISO containers from Port of Tanjung Pelepas.

Rates (i) RM 200 for each goods vehicle leaving the country (whether laden or empty).

(ii)

RM 100 for each goods vehicle entering the country (laden).

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Appendix 1 INDIVIDUAL INCOME TAX RELIEFS AND REBATES WITH EFFECT FROM YA 2008 TAX RELIEFS 1. Taxpayer Disable (additional) Spouse Disable (additional) RM 8,000 6,000 3,000 3,500

2.

3.

Child 1,000 Per child (below 18 years of age) Prior to year of assessment 2006, per child (over 18 years of age), unmarried and receiving higher education or studying under articles or indentures in trade or profession 4,000 - in Malaysia 1,000 - outside Malaysia with effect for year assessment 2006 and thereafter, per child (over 18 years of age) receiving full-time instruction in respect of: 4,000 - diploma level and above in Malaysia 4,000 - degree level and above outside Malaysia Per physically / mentally disabled child (unmarried) 5,000

Additional relief for physically / mentally disabled child 4,000 (over 18 years of age) receiving full-time instruction at institution of higher education or serving under articles of indentures in trade or profession 6,000 (maximum) 1,000 (maximum) 3,000 (maximum) 5,000 5,000 (maximum) 5,000 (maximum) 1

4.

Life insurance premiums and EPF contributions

5.

Premium on annuity purchased under EPF annuity scheme Insurance premiums for education or medical benefits Medical expenses for: parents self, spouse or child suffering from a serious disease (including fees of up to RM500 incurred by self, spouse or child for complete medical examination) Fee expended on approved courses

6. 7.

8.

TAX RELIEFS 9. Purchase of supporting equipment for self (if a disabled person) or for disabled spouse, child or parent Cost incurred for the purchase of books, journals, magazines and other similar publications for the purpose of enhancing knowledge Purchase of personal computer (claimed once every 3 years) Purchase of sports and exercise equipment

RM 5,000 (maximum) 1,000 (maximum)

10.

11.

3,000 (maximum) 300 (maximum) 3,000 (maximum)

12.

13.

Deposits made by an individual for his child in a Skim Simpanan Pendidikan Nasional account established under the Perbadanan Tabung Pendidikan Nasional Act 1997.

TAX REBATES 16. Rebate for resident individuals If resident individuals chargeable income is less than RM35,000, rebate granted is deducted from tax charged and any excess is not refundable. Amount of rebate: where husband and wife are jointly assessed: Individual Wife where husband and wife are separately assessed: Individual Wife 17. Rebate for Zakat, Fitrah or other Islamic dues paid

350 350

350 350 Actual amount expended Actual amount expended

18.

Rebate for levies paid for employment pass, visit pass (temporary employment), or work pass

Appendix 2 INDIVIDUAL INCOME TAX EXEMPTIONS AND DEDUCTIONS

DEDUCTIONS RESIDENT INDIVIDUALS

i)

Cash contributions by a maximum amount of RM20,000 made by individuals not having business income to build or equip libraries of school and institutions of higher education. Cash contributions or any gifts of medical equipment by a maximum amount of RM20,000 made by individuals to any health care facilities approved by the Ministry of Health. An amount equal to the value as determined by the department of Museum and antiquities or the National Archives of any gift of artifact, manuscript or painting to the Government or State Government. An amount equal to the value of any gift of painting to the National Art Gallery or State Gallery. Expenses incurred by individuals in setting up facilities for the benefits of the disabled persons in public places. Such expenses need to be approved by the relevant local authorities. Donations by individuals towards medical expenses of a seriously ill person needing financial assistance provided that the donations are deposited into an account approved by the IRB. An amount equal to the expenditure incurred in the relevant period on the provision of services, public amenities and contributions to a charity or community project pertaining to education, health, housing infrastructure and information and communication technology approved by the Minister of Finance. Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under section 44(6) of the Income Tax Act 1967. Gifts in the form of a new computer and subscription fee for broadband from the employer (2008 Budget).

ii)

iii)

iv)

v)

vi)

vii)

viii)

EXEMPTIONS RESIDENT INDIVIDUALS

i)

royalties or payments of up to RM 20,000 in respect of the publication, use or the right to use any literary work or any original paintings; royalties of up to RM6,000 in respect of recording discs or tapes; payments of up to RM12,000 received for translation of books or literary works at the specific request of any agency of the Ministry of Education or the Attorney Generals Chambers; payments of up to RM20,000 received in respect of musical compositions; leave passages received by the employee and his immediate family members for one overseas trip and three local trips (including meals & accommodation) in a calendar year. For overseas trip, tax exemption is capped at RM3,000 effective from 24 October 1998; the employment income of a person derived from serving on board a ship used in a business operated by person being a registered owner of ship under the Merchant Shipping Ordinance 1952 who is resident in Malaysia; compensation received for loss of employment of up to RM6,000 for each completed year of service; gratuity and cash award in lieu of leave received by public servants upon retirement; gratuity received on retirement from an employment due ill-health or retirement takes place on reaching of age 55 or compulsory age of retirement pursuant to a contract of employment or collective agreement at the age of 50 but before 55 and that employment has lasted for 10 years with the same employer or with the companies in the same group; certain official emoluments and disability pensions; perquisite consisting of long service, past achievement or service excellence award received by an employee limited to a maximum amount or value of RM1,000 for each employee for a year of assessment. interest received from banks; savings account and "Save As You Earn" scheme with Bank Simpanan Nasional. interest from deposits of RM100,000 in any savings account with a registered co-operative society, Bank Pertanian Malaysia, MBSB, Borneo Housing Mortgage Finance Bhd. or with any approved institution. bonus from money deposited in any savings account with Lembaga Tabung Haji. interest from deposits of up to RM100,000 in any savings account with a bank or finance company licensed under the BAFIA 1989. gains or profits from deposits of RM100,000 in any savings account

ii) iii)

iv) v)

vi)

vii)

viii)

ix)

x) xi)

xii)

under the Interest-Free Banking Schemes with a bank or finance company licensed under BAFIA 1989 or the Islamic Banking Act 1983. interest from a fixed deposit of up to RM100,000 for a period not exceeding 12 months with Bank Pertanian Malaysia, Bank Kerjasama Rakyat Malaysia Bhd., Bank Simpanan Nasional, Borneo Housing Mortgage Finance Bhd., MBSB or banks or finance companies licensed under BAFIA 1989. interest from a fixed deposit for a period of 12 months or more with Bank Pertanian Malaysia, Bank Kerjasama Rakyat Malaysia Bhd., Bank Simpanan Nasional, Borneo Housing Mortgage Finance Bhd., MBSB or banks or finance companies licensed under BAFIA 1989. gains or profits from money deposited in any investment account of up to RM100,000 for a period not exceeding 12 months under interest free banking scheme with a bank or finance company licensed under BAFIA 1989 or the Islamic Banking Act 1983. gains or profits from money deposited in any investment account for a period of 12 months, or more under Interest-Free Banking Scheme with a bank or finance company licensed under BAFIA 1989 or the Islamic Banking Act 1983.

xiii)

interest or discount received in respect of bonds/securities issued by the Government or guaranteed by the Government, Bon Simpanan Malaysia issued by the Central Bank Of Malaysia and debentures (other than convertible loan stock) approved by the Securities Commission. Interest received in respect of Islamic securities originating from Malaysia (other than convertible loan stock) issued in any currency other than Ringgit and approved by the Securities commission. income earned by the drivers and riders participating in car and motorcycle racing of an international standard held in Malaysia. fees or honorarium received by lecturers/experts from the National Accreditation Board (LAN) to provide services in the validation, moderation or accreditation process of franchised education programs. honorarium or royalty received by researchers from the commercialisation of their research findings is given 50% tax exemption effective YA 2004. Income arising from sources outside Malaysia and received in Malaysia by individual. dividend received by individuals under Single-Tier tax system effective YA 2008.

xiv)

xv)

xvi)

xvii)

xviii)

xix)

EXEMPTIONS - NON-RESIDENT INDIVIDUALS

i)

income earned by employees who exercise an employment in Malaysia for a period which do not exceed 60 days in a calendar year. interest received from deposits with banks or finance companies licensed under BAFIA 1989 or the Islamic Banking Act 1983 or any other institution approved by the Minister. interest received in respect of securities issued by the Government or guaranteed by the Government, Bon Simpanan Malaysia issued by the Central Bank Of Malaysia and debentures (other than convertible loan stock) approved by the Securities Commission. income earned by the drivers and riders participating in car and motorcycle racing of an international standard held in Malaysia. Income received by Non-Resident experts in Islamic Finance.

ii)

iii)

iv)

v)

Appendix 3 INDIVIDUAL TAX RATE

Resident Individuals Effective from the year of assessment 2003, the income tax rates for resident individuals are as follows:

On the first On the next On the first On the next On the first On the next On the first On the next On the first On the next On the first On the next On the first On the next On the first Above

Chargeable Income (RM) 2,500 2,500 5,000 15,000 20,000 15,000 35,000 15,000 50,000 20,000 70,000 30,000 100,000 150,000 250,000 250,000

Rates (%)

Tax Payable (RM) 0 25 25 450 475 1,050 1,525 1,950 3,475 3,800 7,275 7,200 14,475 40,500 54,975

0 1 3 7 13 19 24 27 28

Interest received by a resident from licensed banks and financial institutions in Malaysia is subject to withholding tax at the rate of 5 percent and it is a final tax, unless specifically exempted.

Non Resident Individuals Effective from the year of assessment 2002, non-residents are subject to a flat rate of 28%. Other sources of income received by non-residents are subject to withholding tax at the following rates: Royalties Rental of movable properties Technical fees Interests 10% 10% 10% 15%

Non-resident public entertainers are taxed at 15% of gross income.

Appendix 4 COMPANY INCOME TAX EXEMPTIONS AND DEDUCTIONS

EXEMPTIONS

i)

Income arising from sources outside Malaysia and received in Malaysia by a resident company (other than a company carrying on a business of banking, insurance, sea and air transport) and dividend distributed from such income. Income of foreign companies derived from trading in Malaysia through consignees in commodities (rubber, copra, pepper, tin, tin ore, gambier, sago flour or cloves) produced outside Malaysia. Income of a resident shipping company derived from the operation of Malaysian Ships. Rental income derived by Malaysian resident from time and voyage charter basis of a Malaysian Ship. Income from the rental of ISO containers received by non-residents from shipping companies in Malaysia. Interest or profit received by non-resident company from deposit with a bank and finance company licensed under the Banking and Financial Institution Act 1989, Islamic Banking Act 1983 or any other financial institution approved by the Minister. 50% exemption on income earned by the organisers of motorcycle and car racings of international standard held in Malaysia. Income earned from repair and maintenance of luxury boats and yachts undertaken in Langkawi for a period of 5 years. (effective from 23 October 1998). Income derived by a company in providing chartering services of luxury yachts for a period of 5 years. (effective for applications received by Ministry of Finance on and after 20.10.2001). Income derived from the business of operating domestic tour packages with at least 1,200 local tourists per year. (effective from YA 2002 until 2006).

ii)

iii)

iv)

v)

vi)

vii)

viii)

ix)

x)

xi)

Royalty income received by non-resident franchisor from franchised education schemes approved by the Ministry of Education.

xii)

Income earned from organising international trade exhibitions approved by MATRADE held in Malaysia and the organiser of the international trade exhibition brings in at least 500 foreign visitors per year effective from YA 2002. Interest received from bonds and securities issued within and outside Malaysia by Pengurusan Danaharta Nasional Bhd effective from YA 1999. Income equivalent to 50% of the value of increased exports of qualifying services provided in or from Malaysia to foreign clients but not exceeding 70% of statutory income for a YA effective from YA 2002. Income of resident conference promoters derived from organizing conference held in Malaysia with at least 500 foreign participants effective from YA 1997.

xiii)

xiv)

xv)

DEDUCTIONS i) Revenue expenditure (all outgoings and expenses) incurred wholly and exclusively in the production of income. Entertainment expenditure such as: a. b. Expenses incurred for employees; Entertainment provided by a business which consists of or includes the provision for payment of entertainment to clients or customers where the nature of business is to provide entertainment for payments; Expenses on promotional gifts at trade fairs or exhibitions held outside Malaysia for the promotion of export; Expenses on promotional samples of products of the business; Expenses for cultural or sporting events open to the public wholly to promote the business; Expenses on promotional gifts within Malaysia consisting of articles incorporating a conspicuous advertisement or logo of the business. Expenses incurred on sales promotions; and Other expenses in relation to business activities are allowed 50%

ii)

c.

d. e.

f.

g. h.

deduction. iii) Contribution to EPF or an approved fund in respect to an employee is subject to maximum contribution of 19%. Companies are allowed single deduction on pre-operational training expenses. Bonus paid to employees. Interest paid on money borrowed and employed in producing income. Expenses on audit fees. Exploration cost is deductible from aggregate income or allowed as mining allowance when the prospecting is successful, provided the cost is added back to the aggregate income. Cost of the equipment supplied by the employer for the disabled employee to perform his duties. Expenses on publication in the national language of cultural, literary, professional, scientific or technical books approved by Dewan Bahasa dan Pustaka. Gift of money for the provision of public libraries, libraries of schools or institutions of higher education. Revenue expenditure on the provision and maintenance of a child care centre for the benefits of employees. Expenditure in providing services, public amenities and contributions to a charity or community project pertaining to education, health, housing infrastructure and information and communication technology approved by the Minister of Finance. Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under section 44(6) of the Income Tax Act 1967.

iv)

v) vi) vii) viii)

ix)

x)

xi)

xii)

xiii)

xiv)

Expenditure in establishing and managing a musical or cultural group approved by the Minister. Expenditure for sponsoring local maximum up to RM300,000 or foreign arts or cultural activity restricted to RM200,000. The activities must be approved by the Minister of Culture, Arts and Heritage. Expenditure incurred equal to the value as determined by the

xv)

xvi)

department of Museum and Antiquities or the National Archives of any gift of artifact, manuscript or painting to the Government or State Government. xvii) Cash contributions to the Government, a State Government and a Local Authority or an approved institution/organisation provided that the amount to be deducted shall not exceed 7 % of the aggregate income of the company. Tax deduction on zakat not exceeding 2.5% of aggregate income of the a company. Interest in suspense in the case of bank and financial institution is allowed as deduction. However, the income will be taxed when the interest was received. An amount equal to the value of any gift of painting to the National Art Gallery or State Gallery. Scholarships granted to needy full-time students in local institutions. Expenses in providing practical training to residents who are not employees of the company. Revenue expenditure for obtaining accreditation for a laboratory or as a certification body evidenced by certificate issued by Department of Standards. Double deduction on expenses incurred for obtaining certification for recognized quality systems and standards, halal certification body as determined by the Minister. Expenditure for participating in international standardization activities approved by Department of Standards. Donation towards the medical expenses of a seriously ill person needing financial assistance, provided the donations are deposited into an account approved by the Inland Revenue Board. Incorporation expenses such as registration fees and preparation of memorandum of incorporation for a company with authorised share capital not exceeding RM2.5 million. Double deduction to the remuneration paid to disable employees. Double deduction to the premium paid on export credit insurance taken with a company approved by the Minister.

xviii)

xix)

xx)

xxi) xxii)

xxiii)

xxiv)

xxv)

xxvi)

xxvii)

xxviii) xxix)

xxx)

Double deduction on freight charges paid by manufacturers exporting rattan and wood-based products excluding sawn timber and veneer. Double deduction on expenditure incurred in carrying business of providing higher education in Malaysia for the purpose of promoting the export of higher education. Double deduction for the cash contributions to approved research institutions on payments for use of the services of: a. Approved research institutes or companies; and b. A research and development company or a contract research and development company. Double deduction for approved R&D expenditure incurred during Pioneer period. Double deduction for overseas expenses incurred by hotel and tour operators for promotion of tourism. Double deduction for expenses incurred on approved training by : a. manufacturing company; b. non-manufacturing company; c. companies carrying on hotel or tour operating business; and d. companies that train handicapped persons. Double deduction on freight charges for shipping goods from Sabah and Sarawak to Peninsular Malaysia. Double deduction for expenses incurred on advertising Malaysian Brand names registered locally or overseas and professional fees paid to companies and companies within the same group for promoting Malaysian brand names.

xxxi)

xxxii)

xxxiii)

xxxiv)

xxxv)

xxxvi)

xxxvii)

xxxviii) Double deduction for outgoing and expenses incurred for promotion of export of professional services. xxxix) Double deduction for 3 years on allowances paid to participants under Unemployed Graduates Training Programme certified by Security Commission from 1.10.05 to 31.12.08. Double deduction for 3 years on allowances paid to participants attending in-house training schemes for graduates certified by Security Commission from 2.9.06 to 31.12.08. Expenses on issuance of Islamic Securities products based on Ijarah, Istisna, Mudharabah, and Musyarakah approved by Security Commission effective from YA 2003 to YA 2010. Expenses on development of new courses and compliance with

xl)

xli)

xlii)

regulatory requirements for introducing new courses incurred by private higher education institutions are allowed for 3 years effective from YA 2006 to YA 2008. xliii) Expenses incurred by the employers on new computers and broadband subscription fees for their employees (Budget 2008).

TAX RELIEFS 9. Purchase of supporting equipment for self (if a disabled person) or for disabled spouse, child or parent Cost incurred for the purchase of books, journals, magazines and other similar publications for the purpose of enhancing knowledge Purchase of personal computer (claimed once every 3 years) Purchase of sports and exercise equipment

RM 5,000 (maximum) 1,000 (maximum)

10.

11.

3,000 (maximum) 300 (maximum) 3,000 (maximum)

12.

13.

Deposits made by an individual for his child in a Skim Simpanan Pendidikan Nasional account established under the Perbadanan Tabung Pendidikan Nasional Act 1997.

TAX REBATES 16. Rebate for resident individuals If resident individuals chargeable income is less than RM35,000, rebate granted is deducted from tax charged and any excess is not refundable. Amount of rebate: where husband and wife are jointly assessed: Individual Wife where husband and wife are separately assessed: Individual Wife 17. Rebate for Zakat, Fitrah or other Islamic dues paid

350 350

350 350 Actual amount expended Actual amount expended

18.

Rebate for levies paid for employment pass, visit pass (temporary employment), or work pass

(Appendix 5) GROUP RELIEF

With effect from the Year of Assessment 2006 locally incorporated companies are allowed to claim group relief. The group relief is limited to 50% of current year unabsorbed losses to be set-off against the income of another company within the same group (including new companies activities in approved food production, forest plantation, biotechnology, nanotechnology, optics and photonics) subject to the following conditions:

i.

the claimant and the surrendering companies each has paid-up capital of ordinary shares exceeding RM2.5 million;

ii.

both the claimant and the surrendering companies must have the same accounting period;

iii.

the shareholding, whether direct or indirect of the claimant and surrendering companies in the group must not be less than 70%;

iv.

the 70% shareholding must be on a continuous basis during the preceding year and the relevant year;

v.

losses resulting from the acquisition of proprietary rights or a foreign-owned company should be disregarded for the purpose of group relief; and

vi.

companies currently enjoying the following incentives are not eligible for group relief:

a. b. c. d. e.

Pioneer Status; Investment Tax Allowance /Investment Allowance; Reinvestment Allowance; Exemption of shipping profits; Exemption of income tax under Section 127 of the Income Tax Act 1967; and

f.

Incentive Investment company

With the introduction of the above incentive, the existing group relief incentive for approved food production, forest plantation, biotechnology, optics and photonics will be discontinued. However, companies granted group relief incentive for the above

activities shall continue to set off their income against 100% of the losses incurred by their subsidiaries.

Appendix 6

CURRENT COMPANY TAX RATE A tax rate of 26% is applicable to both resident and non-resident companies with effect from YA 2008.

- However, companies with paid-up capital of RM2.5 million and below are subject to a company tax of 20% on chargeable income of up to RM500,000. The company income tax rate on the remaining chargeable income is maintained at the prevailing tax rate for year of assessment.

Effective YA 2008, dividends are exempted in the hands of the shareholders.

- In case of company carrying on petroleum production, the applicable tax rate is 38%.

Insurance or Takaful business is taxed as follows : i. 8% on the investment income of life fund or a family fund

ii. The prevailing company income tax rate (26 %) on the income of a shareholders fund (includes surplus actually transferred from the life fund).

Appendix 7 UNIT TRUST

Exemption and Deductions i. Any income distributed to unit holders out of realisation of investments; gains arising from the

ii. iii.

Interest income received by unit trusts and property unit trusts; Permitted expenses which are deductible are : managers' remuneration maintenance of register of unit holders share registration expenses secretarial, audit and accounting fees telephone charges, printing and stationery cost and postage.

The amount to be deducted is determined according to the formula: A x (B/4C) A= B= total of the permitted expenses incurred for that basis period gross income consisting of dividend, interest and rent chargeable to tax for that basis period the aggregate of the gross income consisting of dividend (whether exempt or not), interest and rent, and gains made from the realisation of investments (whether chargeable to tax or not) for that basis period.

C=

The amount of deduction is subject to a minimum of 10% of the total permitted expenses. Any unabsorbed expense is not allowed to be carried forward to the subsequent year.

iv.

Qualifying capital expenditure of a property unit trust which are deductible: expenditure incurred on the alteration of an existing building; provided that such expenditure does not exceed 75% of the total qualifying expenditure. preparation or levelling of land; provided that such expenditure does not exceed 10% of the total qualifying expenditure. The deduction will be in the form of an annual allowance equal to 10% of the qualifying capital expenditure. Any unabsorbed allowances will not be allowed to be carried forward to a subsequent year.

Appendix 8 REITs History With effect from year of assessment 2004: Real Property Gains Tax and stamp duty exemption for acquisition of real estates by REIT. With effect from year of assessment 2005: REITs income is tax exempt if it is distributed to unit holders. Unit holders are taxed at their respective income tax rate (i.e. tax transparency). For non-resident unit holders, the tax rate imposed is at 28% and such tax is paid by REIT through the withholding tax mechanism. However, REITs income not distributed is taxed at 28%. Tax credit is given to unit holders on the accumulated income of REIT which was subject to tax and subsequently distributed to unit holders With effect from year of assessment 2006: Fees for consultancy, legal and valuation incurred in establishing a REIT be allowed as deductions.

Appendix 9 WITHHOLDING TAX RATE

The following payments to non-resident companies are subject to deduction for withholding tax as follows:

Royalties Rental of movable properties Technical or management services fees Interests

10% 10%

10% 15%

The above rates shall prevail unless concessionary rates are specified by the Agreement for the Avoidance of Double Taxation.

Appendix 10 TAXATION OF COOPERATIVE SOCIETIES

Exemption and Deductions

Special deductions are granted to cooperative societies as follows: a deduction up to a maximum of 25% of net income for contribution to statutory reserve fund required to be created under the Cooperative Society Ordinance . an amounts equal to 8% of the members' funds.

Tax exemption for a period of 5 years from the date of registration is allowed to enable new cooperative societies to establish themselves during the initial stage of establishment. After the 5th years, cooperatives having members fund of RM750,000 or less will continue to be tax exempted. Dividends paid by co-operative societies to their members are exempt from tax.

Appendix 11

TAX RATES OF COOPERATIVE SOCIETIES Chargeable Income

For every ringgit of the first RM20,000 For every ringgit of the next RM10,000 For every ringgit Of the next RM10,000 For every ringgit of the next RM10,000 For every ringgit of the next RM25,000 For every ringgit of the next RM25,000 For every ringgit of the next RM50,000 For every ringgit of the next RM100,000 For every ringgit of the next RM250,000 Above RM500,000 28%

Tax Rates

0%

3%

6%

9%

12%

16%

20%

23%

26%

Appendix 12 TAXATION ON PETROLEUM COMPANIES (PETROLEUM INCOME TAX ACT 1967)

Tax Deductions Deductions are allowed for normal business expenses. Other business expenses allowed are as follows: monies donated to approved institutions and the Government. contribution to abandonment cess (or removal of installations) under the Production Sharing Contract. (effective from YA 1994) Exploration expenses qualify for depletion allowances. The rates for initial allowance are 10% for primary exploration expenditure and 20% for exploration expenditure incurred for secondary recovery activities. In both instances, the annual allowance which is computed on the units of production basis is subject to a minimum of 15% of the residual qualifying exploration expenditure. Capital allowances are also granted for qualifying capital expenditure on industrial building, plant and machinery and fixed offshore platforms. Except for fixed offshore platforms, which are granted an annual allowance of 10%, the rates for initial and annual allowances vary between the classes of assets mentioned above as well as between those incurred for primary and secondary activities. All petroleum assets are amortised on a straightline basis.

Appendix 13 STAMP DUTY RATES

Beginning 1.1.2001, the specific stamp duty is standardized to RM10 except for cheques (RM0.15) and Memorandum & Articles of Association of company (RM 100). The stamp duties for certain instruments are as follows:

Conveyance or transfer
Conveyance/transfer property except stock shares, marketable securities and account receivable or book debts -

1% on first RM100,000 2% on the next RM400,000

3% on the remaining market value.

Transfer of low cost house

Shares -

Maximum of RM100 where a contract of sale & purchase is executed not later than 31.12.2000. Restricted to first purchaser only.
0.3% of the consideration

Agreement
Agreement or memorandum of agreement under hand only and not specifically charged with any duty Deed of any kind not described in the First Schedule RM10.00

RM10.00

Contract notes Contract notes for sale of any shares, stocks, or marketable securities RM10.00 for every RM1,000 or part thereof

Counterpart of duplicate Counterpart of duplicate of any instrument chargeable with duty and in respect of which the proper duty has been paid:-

Duty on original is RM10.00 or less

the same duty as original

Other cases Charge or mortgage

RM10.00

Charge or Mortgage, Agreement for a Charge or Mortgage (including that under the Syariah, Bond, Covenant, Debenture (not being a marketable security, Bill of Sale by way of security and Warrant of Attorney.
Being the only or principal or primary Security (other than loan for for SME)

For each RM1,000.00 or part thereof RM5.00

Being the only or Principal security for Loan to small and medium enterprise (SME) or financing to SME according to the Syariah:Not exceeding RM250,000 of the aggregate loans in a calendar year. For each additional RM1,000 not exceeding RM1,000,000 RM0.50 for every RM1,000.00 or fractional thereof RM2.50 for every RM1,000.00 or fractional thereof RM5.00

For each additional RM1,000 or part thereof

Being the only or principal security where the loan is a foreign currency loan or financing was made according to the Syariah in currencies other than the Ringgit. Being a collateral or additional security

RM5.00 for every RM1,000.00 or part thereof but the total duty payable not exceed RM500.00.

One fifth of the duty on the principal but not to exceed RM10.00

Agreement i. instruments of loan agreement for the purchase of goods made under the principle of Al Bai Bithaman Ajil of the Syariah Law are subjected to stamp duty of RM10.00 only if executed under seal and the excess duty is remitted.

ii.

lease or agreement for lease under the principles of Al-Ijarah of the Syariah Law for the Purpose of financing or securing repayment of money will be subjected to the same advalorem duty as charge or mortgage for such total amount (to equate the rate with that paid by similar product under conventional banking)

Appendix 14 STAMP DUTY Exemption/Remission

i) Certain instruments are exempted under the Stamp Act, 1949: reconstructions or amalgamations of companies; transfer of property or share between associated companies; all instruments in the nature of securities for money granted to finance the purchase of a low cost housing unit in a Low Cost Housing Project. Premium life insurance policy not exceeding RM5, 000. Instruments relating to corporate bonds.

ii)

Instruments Under Interest-Free Banking Scheme stamp duties on loan instruments executed following the conversion from conventional financing scheme to Syariah financing scheme are exempted from stamp duty on the balance of the principal amount of the existing loan. stamp duty exempted on all new agreements for the sale of purchase of assets required for the financing facilities under the Islamic banking as follows: a) the restructuring and rescheduling of the existing financing, limited to the outstanding balance; and the renewal of financing facilities on the Islamic revolving financing facility.

b)

iii)

Additional instrument executed pursuant to a scheme of financing which is in accordance with the principle of Syariah.

iv)

With effect from 24 October 1998, stamp duty is exempted on refinancing instrument with respect to term loans subject to the following conditions: (i) the refinancing facility represents a term loan for the purpose of funding the original loan. Refinancing for the purpose of funding an overdraft facility and for the working capital is not eligible for such exemption; the exemption is limited for the purpose of funding the balance of the original loan; and for syndicated loan, the amount of refinancing loan given by each bank has to be stipulated on the refinancing loan agreement.

(ii)

(iii)

v)

With effect from 1.7.2002, stamp duty is exempted on all documents related

to the purchase of low-cost houses. vi) With effect from 1 January 2003, stamp duty on instruments of transfer of property without any monetary consideration between husband and wife and between parents and children be remitted by 50%. Effective from 8 September 2007, full stamp duty exemptions are given for transfer of properties between husband and wife. Instruments of transfer of real property from individuals or companies to Property Trust Funds (PTF) and Real Estate Investment Trusts (REITs) are exempt from stamp duty. Instruments relating to mergers of Petronas Vendors involved in upstream activities. Instruments relating to mergers and acquisition of listed companies from 1 October 2005 until 31 December 2010 provided that such mergers and acquisitions must be completed not later than 31 December 2011. Stamp duties on bills of exchange, bills of lading and receipts were abolished from 1.1.1992. Instrument of transfer for purchase of a house not exceeding RM250,000 be given a 50% stamp duty exemption.

Vii)

viii)

ix)

x)

xi)

Appendix 15 TAXATION ON PROPERTY REAL PROPERTY GAIN TAX

Real property gains tax (RPGT) is charged on gains accruing on the disposal of any real property situated in Malaysia or an interest, option or right in or over a real property company (RPC). A RPC is a controlled company which owns real properties or RPC shares with a defined value of not less than 75% of its total tangible assets. Every person whether or not resident in Malaysia is chargeable to RPGT in respect of any gain accruing on the disposal of any real property or RPC shares in Malaysia. A chargeable gain arises if the disposal price exceeds the acquisition price plus allowable expenses.

Exemption and Deduction i) An amount of RM5,000 or 10% of gains whichever is greater. (restricted to Malaysian or permanent resident only) A gain accruing to the Government, a State Government or a local authority. Gains from compulsory acquired properties. Gains from disposal of one (1) house for each house owner once in his life time. (restricted to Malaysian or permanent resident only) Gifts from husband to wife, parent to child or grand-parent to grandchild. Transfers between spouses. A gain equal to the amount of estate duty payable in respect of a disposal of a chargeable asset of an estate. A Malaysian citizen or permanent resident wife married to non-citizen is exempted from tax in respect of the disposal by her of her private residence. Cross transfers between co-proprietors arising from partition of land. Gains from disposal of real property by individuals or companies to Property Trust Funds (PTF) and Real Estate Investment Trusts (REITs) are exempt of RPGT.

ii) iii) iv)

v) vi) vii)

viii)

ix) x)

Tax Rates

The rate of RPGT is dependent on the period of ownership of the property or RPC shares as follows: Category of residents Disposal within 2 years Disposal in 3rd year Disposal in 4th year Disposal in 5th year Disposal in 6th year & subsequent years Citizens disposal & permanent 30% Company

30%

20% 15% 5% Nil

20% 15% 5% 5%

These rates are applicable to disposals made on or after 27 October 1995 by citizen and permanent residents. With effect from 17 October 1997, disposals within 5 years from the date of the acquisition of chargeable assets by a non-citizen and a non-permanent resident are subject to 30% and that disposals after the 5th years are subject to a rate of 5%.

(Appendix 16) EXCISE DUTY RATES

Some of the excise rates; Cigarettes : RM 150.00 per kg.

Beer & Stout based on fixed rate and alcohol content. Import duty for beer & stout based on the fixed rate will be at RM3 RM58 and on the alcohol content will be at RM 25.50 RM 108.50 per 100% vol per litre. Excise duty for beer & stout based on the fixed rate and advolerum rate will be at RM0.10 RM34.00 and 15% ad volerum. Excise duty based on the alcohol content and advolerum rate will be at RM25.50 RM108.50 per 100% vol per litre and 15% ad volerum.

Motorcars (CBU & CKD) Engine Capacity < 1800 1800 - < 2000 2000 - < 2500 2500 - < 3000 = > 3000 Rate (%) 75 80 90 105 105

Van (CBU & CKD) Engine Capacity < 1500 1500 - < 1800 1800 - < 2000 2000 - < 2500 2500 - < 3000 = > 3000 Rate (%) 60 65 75 90 105 105

4WD (CBU & CKD) Engine Capacity < 1800 1800 - < 2000 2000 - < 2500 2500 - < 3000 = > 3000 Rate (%) 65 75 90 105 105

Motorcycles (CBU & CKD) Engine Capacity < 150 151 - < 200 200 - < 250 251 - < 500 501 - < 800 = > 800 Rate (%) 20 30 30 30 30 30

Appendix 17 SERVICE TAX

Exemption Exempted from the service tax are: 1.

2.

Hotels having not more than 25 rooms. Hostels for pupils or for students of education institutions. Hostels established and run by public institutions or bodies. A canteen located in an educational institution, A canteen operated by a religious institution or body, A company in a group of companies provides any professional services (such as accounting auditing, book-keeping, legal, engineering, architectural, surveying, valuation, appraisal, estate agency, consultancy and management services) to any company within the same group of companies. Provision of insurance policy to cover risks relating to the international transportation of goods, services or investment:
i) from a place outside Malaysia to a place outside Malaysia; or ii) from a place within Malaysia to a place outside Malaysia, or iii) from a place outside Malaysia to a place within Malaysia.

3. 4. 5.
6.

7.

8.

Provision of courier delivery services for documents or parcels not exceeding 30kg:
i)

from a place outside Malaysia to a place outside Malaysia; or

ii) from a place within Malaysia to a place outside Malaysia, or iii) from a place outside Malaysia to a place within Malaysia. 9. 10. 11.

Subsidiary company involved in the consolidation of management of smallholdings or idle land Provision of security services to guards or protect person, property or business situated outside Malaysia Provision of employment services in the form of secondment or supplying employees to work for another person for a period of time or for employment outside Malaysia Provision of accounting, auditing, book keeping, consultancy services in connection with business organisations situated outside Malaysia

12.

13.

Provision of legal services in connection with goods or land situated outside Malaysia or where subject matter related to a country outside Malaysia Provision of engineering consultancy services in connection with goods or land situated outside Malaysia Provision of architectural services in connection with goods or land situated outside Malaysia Provision of all types of surveying services in connection with goods or land situated outside Malaysia Provision of consultancy services relating to medical and surgical treatment or supplied in connection of goods or land situated outside Malaysia Provision of all types of management services in connection with goods or land situated outside Malaysia.
Provision of advertising services for promotion outside Malaysia

14. 15. 16. 17.

18.

19.