FINANCE ACT 2012

Section 5 comes into operation from 1 January 2012 until 31 December 2016.

Sections 8, 13, 15, 16, 17 and 19 come into operation on 1 January 2012.

Section 10 comes into operation from the year of assessment 2012 until the year of assessment 2021.

Section 18 has effect from the year of assessment 2013.

Section 14 comes into operation on the coming into operation of this Act.

Section 20 comes into operation on the coming into operation of the amendment to section 6a of the Inland Revenue

Board of Malaysia Act 1995 [Act 533].

Paragraph 23(b) is deemed to have effect from the year of assessment 2011.

Amendment of section 2

in subsection 2(1)—

in the definition of “approved scheme”, by inserting after the words “Employees Provident Fund” the words “, private retirement scheme”; and

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in subsection 2(8), by substituting for the words “or the Labuan Offshore Financial Services Authority” the words “, the Labuan Financial Services Authority or the

Malaysia Co-operative Societies Commission”.

Amendment of section 6

by substituting for paragraph (c) the following paragraph:

“(c) a “contract research and development company”

and a “research and development company” have the same meaning assigned thereto in section 2

of the Promotion of Investments Act 1986 and fulfills the conditions specified by the relevant

Ministry;”; and

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by inserting after paragraph (c) the following paragraph:

“(d) a “related company” has the meaning assigned to it in section 2 of the Promotion of Investments

Act 1986.”.

Amendment of section 39

or subsection 127(3a) or the Promotion of Investments Act 1986, in respect of all income of that person from all sources not being exemption on income equal to capital expenditure incurred.”.

Amendment of section 45

in subsection (1)—

in paragraph (a), by deleting the words “or deferred annuity”; and

in subsection (1a)—

by deleting paragraph (a); and

paid any deferred annuity; or

made or suffered the making of a contribution to a private retirement scheme, there shall be allowed for that year of assessment a deduction of the aggregate amount of the payments or contribution or both or a deduction of three thousand ringgit whichever is the less.

by inserting after subsection (1c) the following subsections:

“(1d)  In the case of an individual resident for the basis year for a year of assessment who has—

For the purposes of subsection (1d), where subsection 50(2) or (3) applies, the total deduction under that subsection shall not exceed three thousand ringgit.”.

Amendment of section 54a

in subsection (1), by substituting for the words “the statutory income” the words “seventy per cent of the statutory income of that person”; and

by substituting for subsection (2) the following subsection:

“(2)  Notwithstanding the provisions of this Act—

the income derived from each Malaysian ship referred to under subsection (1) shall be treated as income from a separate and distinct business source of that person;

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the adjusted loss (if any) of the person for any year of assessment in respect of a source consisting of a Malaysian ship shall not be available as a deduction in arriving at the total income of that person for that year of assessment;

an amount of statutory income of a person from a source consisting of a Malaysian ship referred to in paragraph (b) which is exempt under this section for the following year of assessment shall be reduced by the adjusted loss referred to in that paragraph, and if by reason of insufficiency or absence of that statutory income, the amount of adjusted loss which has not been so utilized shall further reduce the amount of statutory income of that person from that source which is exempt under this section for any subsequent years of assessment until the amount of adjusted loss is fully utilized;

and

an amount of statutory income of a person for a year of assessment from a source consisting of a Malaysian ship which is not exempt under this section shall be deemed to be the total income of that person.”.

Amendment of section 60

by substituting for subsection (10a) the following subsection:

“(10a)  Notwithstanding subsections (10), 43(2) and 44(2), any adjusted loss of the life fund for the basis period for a year of assessment of an insurer shall only be available as a deduction against the statutory income of the life fund of the insurer for subsequent years of assessment until fully utilized.”; and

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by inserting after subsection (10c) the following subsection:

“(10d)  In arriving at the total income of an insurer for a year of assessment, the adjusted loss from a source or sources of an insurer for that year of assessment other than from a source consisting of a life fund, shall be available as deduction against the aggregate statutory income (excluding the statutory income from a source consisting of a life fund) of an insurer, and any unabsorbed loss ascertained under subsection 44(4) or (5) for that year of assessment shall not be deducted against the statutory income of the life fund of the insurer for the subsequent years of assessment.”.

Amendment of section 67

particulars of payment (whether in monetary form or otherwise) made during that year of assessment to that agent, dealer or distributor;

name and address of that agent, dealer or distributor;

and

such other particulars as may be required by the

Director General.

For the purpose of subsection (1), the prescribed form shall be provided to the agent, dealer or distributor not later than 31 March in the year immediately following the year mentioned in that subsection.

The company shall keep and retain the prescribed form in safe custody and shall make it readily accessible to the Director General.

In this section, “agent”, “dealer” or “distributor”

means any person who is authorised by a company to act as its agent, dealer or distributor, and who receives payment

(whether in monetary form or otherwise) from the company arising from sales, transactions or schemes carried out by him as an agent, dealer or distributor.”.

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Amendment of section 97a

no assessment shall be made in respect of that person for any year of assessment by reason of—

absence of adjusted income, statutory income, aggregate income or total income of a person from any of his sources of income; or

assessment has been made in respect of that person, but that person has no statutory income from a source consisting of a business, the Director General may notify that person in writing—

in respect of paragraph (a), that no assessment shall be made for that year of assessment and provide a computation with regard to it; or

ninety days from the date a return for that year of assessment is required to be furnished under this

Act, in the case of return furnished by way of electronic transmission; or

one hundred and twenty days from the date a return for that year of assessment is required to be furnished under this Act, in any other case.

For the purposes of this section—

C is the number of days in a year.

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Without prejudice to sections 91 and 113, where the

Director General discovers that the whole or part of the compensation—

This section shall not apply—

in subsection (1a), by substituting for the words

“section 6a” the words “subsection 6a(1)”;

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by inserting after subsection (1a) the following subsection:

“(1b)  The deputy chief executive officers of the

Inland Revenue Board of Malaysia appointed under subsection 6a(1a) of the Inland Revenue Board of

Malaysia Act 1995 shall be the Deputy Directors

General of Inland Revenue.”; and

in subsection (2)—

by substituting for the words “Minister” the words

“Inland Revenue Board of Malaysia”; and

an approved individual and the specified year of assessment referred to in paragraph 1; and

where the individual has income from a source other than the employment referred to in paragraph 1 or where subsection 45(2) applies, the chargeable income of the individual referred to in that paragraph, shall be as determined by the Minister by rules made under this

Act.”.

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Amendment of Schedule 4b

in the proviso to paragraph 3, by deleting the words

“where the qualifying project is located within the States of Sabah, Sarawak, the Federal Territory of Labuan,

Perlis, the Eastern Corridor of Peninsular Malaysia and such other areas which the Minister may from time to time determine or”;

in paragraph 7—

by substituting for subparagraph (b) the following subparagraph:

“(b) for the basis period for which the company has been granted approval for investment tax allowance under the Promotion of Investments Act 1986

in respect of a promoted activity or promoted product for the period prescribed under the relevant provisions of that Act;”;

in paragraph 9—

by deleting the definition of “Eastern Corridor of

Peninsular Malaysia”; and

For the purpose of subsection (1), where the balance of allowances referred to in that subsection is in respect of more than one Malaysian ships, such balance of allowances shall be apportioned to each of the ships in accordance with the following formula:

A x C

B where A is the gross income of a person in respect of a

Malaysian ship for the year of assessment 2011;

B is the total gross income of a person in respect of all Malaysian ships for the year of assessment 2011;

and

C is the balance of allowances for the year of assessment 2011 in respect of any Malaysian ship referred to under paragraph 54a(2)(a) of the principal Act prior to the amendment of that paragraph under section 11

of this Act, and the amount apportioned to each of the ships shall be made to that person in ascertaining the statutory income of that person from a source consisting of the same ship in the year of assessment 2012, and if by reason of an insufficiency or absence of that statutory income of that person from that source, effect cannot be given or cannot be given in full to any of the apportioned sum, so much of the sum which has not been so made shall be made in arriving at the statutory income of that person from that source for the year of assessment 2013 and so on for subsequent years of assessment until the whole amount of the apportioned sum is fully made to that person.

Subject to subsection (4), the balance of adjusted loss in respect of any Malaysian ship for the year of assessment 2011

referred to under paragraph 54a(2)(b) of the principal Act prior to the amendment of that paragraph under section 11 of this

Act, shall be deducted against the statutory income of a person which is exempt for the year of assessment 2012 from a source consisting of that ship only.

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For the purpose of subsection (3), where the balance of adjusted loss referred to in that subsection is in respect of more than one Malaysian ships, such balance of adjusted loss shall be apportioned to each of the ships in accordance with the following formula:

A x C

B where A is the gross income of a person in respect of a

Malaysian ship for the year of assessment 2011;

B is the total gross income of a person in respect of all Malaysian ships for the year of assessment 2011;

and

C is the balance of loss for year of assessment 2011

in respect of any Malaysian ship referred to under paragraph 54a(2)(b) of the principal Act prior to the amendment of that paragraph under section 11 of this Act, and the amount apportioned to each of the ships shall be deducted against the statutory income of that person which is exempt from a source consisting of the same ship in the year of assessment 2012 and if by reason of an insufficiency or absence of that statutory income, effect cannot be given or cannot be given in full to any of the apportioned sum, so much of the sum which has not been so deducted shall be deducted against the statutory income of that person from that source which is exempt for the year of assessment 2013 and so on for subsequent years of assessment until the whole amount of the apportioned sum is fully deducted.

in the shoulder note, by inserting after the words “in that behalf” the words “or rights subscription forms supplied by Bursa Malaysia”;

in subsection (1)—

by deleting the word “and”; and

by substituting for paragraph (a) the following paragraph:

“(a) that the said cheques, contract notes, policies of insurance or rights subscription forms be drawn or drawn up and issued on forms to be supplied or adopted by the said banker, dealer, insurer or Bursa Malaysia;”;

by substituting for paragraph (b) the following paragraph:

“(b) that the said banker, dealer, insurer or Bursa

Malaysia do levy upon or charge to the person to whom such cheques, contract notes, policies of insurance or rights subscription forms are issued the stamp duty mentioned in the First Schedule;”;

by substituting for paragraph (c) the following paragraph:

“(c) that the said banker, dealer, insurer or Bursa Malaysia do pay on the 1st day of each calendar month in each year to the Collector the amount due and collected thereon as duties on such unstamped cheques, contract notes, policies of insurance or rights subscription forms, and where he fails to pay the amount due on each date specified or within fourteen days immediately thereafter, he shall in addition to the amount due pay a further

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amount of two hundred ringgit or ten per centum of the amount due whichever is the greater and any amount due shall be recoverable as a debt due to the Government;”;

in paragraph (d), by substituting for the words “or insurer”

the words “, insurer or Bursa Malaysia”;

by substituting for subsection (2) the following subsection:

“(2)  Cheques, contract notes, policies of insurance or rights subscription forms drawn or drawn up and issued on forms supplied or adopted by such banker, dealer, insurer or Bursa Malaysia in accordance with this section shall be deemed to be duly stamped.”;

by substituting for subsection (3) the following subsection:

“(3)  Where a banker, dealer, insurer or Bursa

Malaysia has been authorized to compound for the payment of duty on unstamped cheques, contract notes, policies of insurance or rights subscription forms as provided in subsection (1), the Collector or any person authorized by him in writing, may at all reasonable times, inspect any stocks of unstamped cheques, contract notes, policies of insurance or rights subscription forms held by the banker, dealer, insurer or Bursa Malaysia and any books, records and documents kept by him in connection with the issue of such cheques, contract notes or policies of insurance, or supply of such rights subscription forms.”; and

by substituting for subsection (4) the following subsection:

“(4)  For the purpose of subsection (3), the banker, dealer, insurer or Bursa Malaysia shall keep and retain the books, records and documents in connection with the issue of such cheques, contract notes or policies of insurance, or supply of such rights subscription forms for a period of seven years from the year in which such cheques, contract notes, policies of insurance are issued or rights subscription forms are supplied.”.

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Amendment of First Schedule

in subitem 2(iii), by deleting the words “or of the Malayan

Railway”;

in subitem 2(iv), by deleting the words “or of the Malayan

Railway”;

in item 23—

in paragraph (a), by deleting the words “or of the

Malayan Railway”; and

in item 32, under “Exemptions”, in subparagraph (b)(v), by deleting the words “or of the Malayan Railway”;

in paragraph 1, under “GENERAL EXEMPTIONS”, by deleting the words “or the Malayan Railway” wherever appearing; and

in paragraph 6, under “GENERAL EXEMPTIONS”, by inserting after the words “the Labuan Financial Services

Authority” the words “, the Malaysia Co-operative

Societies Commission”.

Amendment of Second Schedule

by substituting for item 19 the following item:

“19

ANY BOND furnished to

An immigration the Director General of officer”; and

Immigration in connection with the grant of any pass or permit issued under the

Immigration Act 1959/63

[Act 155]

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by inserting after item 19 the following item:

“19a EMPLOYMENT CONTRACT

An immigration issued to the Immigration officer”.

Department for the purpose of securing a pass

in paragraph (1)(a), by inserting after the words “double taxation arrangements” the words “or tax information exchange arrangements”; and

by substituting for subsection (2) the following subsection:

“(2)  For the purpose of subsection (1)—

“double taxation arrangement” means an arrangement between the Government of Malaysia and the Government of any territory outside Malaysia under section 132

of the Income Tax Act 1967;

“tax information exchange arrangements” means an arrangement between the Government of Malaysia and the Government of any territory outside Malaysia under section 132a of the Income Tax Act 1967.”.