FINANCE ACT 1995

Section 6 (except for subparagraph 6(a)(i)) shall have effect for the year of assessment 1994 and subsequent years of assessment.

Subparagraph 6(a)(i) shall be deemed to have come into force for the year of assessment 1991.

Paragraphs 19(c) and (e) shall come into force on 28

October 1994.

Amendment of section 3

in paragraph (a) by substituting for the word “ninety”

the words “one hundred and ten”; and

in paragraph (b) by substituting for the word “fifty” the word “sixty”.

Amendment of section 34b

in subsection (1)—

by substituting for the words “subsection (3)” the words “subsection (2)”;

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by substituting for the full stop at the end of subsection (2)

a colon and inserting thereafter the following proviso:

“Provided that no deduction in respect of that expenditure shall be made under this section to a person being a related company of a research and development company which has been given approval under subsection 27d(1)

of the Promotion of Investments Act 1986 and whose period as prescribed under paragraph 29e(2)(b) of that

Act has not ended.”; and

by substituting for the full stop at the end of paragraph

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

“related company” and a “research and development company” have the meaning assigned thereto in section 2 of the Promotion of Investments Act 1986.”.

Amendment of section 39

by deleting the word “or” at the end of subparagraph

by inserting after subparagraph (v) the following subparagraph:

“(vi) the provision of promotional gifts within Malaysia consisting of articles incorporating a conspicuous advertisement or logo of the business; or”.



Act 531

Amendment of section 44

in subsection (1)—

by deleting the word “and” at the end of paragraph

;

in the proviso to subsection (6) by substituting for the words “31 January 1994” the words “30 June 1994”;

in subsection (7), in the definition of “institution”—

by deleting the word “or” at the end of paragraph

;

; and

by inserting after subsection (7) the following subsection:

“(8)  There shall be deducted pursuant to this subsection from the aggregate income of a person to whom paragraph 34(6)(g) does not apply, for the relevant year reduced by any deduction for that year pursuant to subsection (2) or Schedule



Finance 4, 4a or 4b, an amount equal to any gift of money made by him in the basis year for that year, for the provision of library facilities which are accessible to the public and in respect of contributions to public libraries and libraries of schools and institutions of higher education, not exceeding twenty thousand ringgit.”.

Amendment of section 46

by deleting the word “and” at the end of paragraph (c);

by substituting for the full stop at the end of paragraph (d)

a semicolon; and

by inserting after paragraph (d) the following paragraphs:

“(e) a further five thousand ringgit for that individual if he is a disabled person; and

an amount limited to a maximum of two thousand ringgit on fees expended in that basis year by that individual for any course of study in any institution in Malaysia recognized by the Government undertaken for the purpose of acquiring technical, vocational or industrial skills.”.

Amendment of section 47

by substituting for subsection (1) the following subsection:

“(1)  In the case of an individual resident for the basis year for a year of assessment who in that basis year had a wife living together with him, there shall, subject to subsections (3) and (4), be allowed for that year of assessment a deduction of—

three thousand ringgit for the wife; and

a further two thousand five hundred ringgit for the wife if she is a disabled person.”; and

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Act 531

in subsection (3) by substituting for the words “subsections

and (2)” the words “paragraph (1)(a) and subsection

”.

Amendment of section 48

in paragraph (2)(a) by deleting the words “for the first five children in order of age,”; and

by deleting subsection (7).

Amendment of section 60

by substituting for the full stop at the end of subparagraph

“(c) where an insurer carries on life business, the income of the life fund shall be treated as a separate source of income from the income of the shareholders’ fund in respect of the life business.”;

The adjusted income of the shareholders’ fund for the basis period for a year of assessment of an insurer resident for the basis year for that year of assessment shall be ascertained by—

The adjusted income of the shareholders’ fund for the basis period for a year of assessment of an insurer not resident for the basis year for that year of assessment shall, where that business is wholly or partly carried on in Malaysia, be ascertained by—

The adjusted income as ascertained under subsections (3a) and (4a) shall be deemed to be the statutory income from that source.”;

Notwithstanding paragraph 75 of Schedule 3, any unabsorbed allowances of the life business shall only be available for deduction against the adjusted income for the basis period for a year of assessment and subsequent years of assessment in respect of the life fund of the insurer.

Allowances under Schedule 3 shall only be available for deduction against the adjusted income of the life fund and the balance of such allowances shall not be available as a deduction against the adjusted income of the shareholders’ fund.”.

New section 60ab

by deleting subsection (5);

in subsection (6) by deleting the words “or income exempt under subsection (5)”; and

in subsection (7)—

by substituting for the definition of “approved operational headquarters company” the following definition:

“approved operational headquarters company”

means a company—

which carries on a business in Malaysia of providing qualifying services to its offices outside Malaysia or to its related companies outside Malaysia; and

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which is approved by the Minister for the purposes of this section;”;

by inserting after subsection (2c) the following subsection:

“(2d)  Notwithstanding any other provision of this

Act, where a dividend is paid, credited or distributed with or without deduction of tax during the basis year for the year of assessment 1995, the amount of the dividend received by the shareholder shall be deemed to be a dividend of such a gross amount as after deduction of tax at the rate of thirty per cent would be equal to—

the amount in fact paid or credited; or

where the dividend consists of property other than money, the amount of the market value of that property at the time of the dividend’s distribution, and a sum equal to the difference between that gross amount and the amount mentioned in paragraph (a)

or (b), as the case may be, shall be deemed to have been deducted from the dividend as tax.”;

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Act 531

by inserting after subsection (4c) the following subsection:

“(4d)  In any case where tax has been deducted or deemed to have been deducted at the rate of thirty-two per cent on any dividend paid, credited or distributed during the basis year for the year of assessment 1995

to which subsection (2d) applies, the compared total shall be determined at the rate of thirty per cent.”;

and

in subsection (11)—

by substituting for the full stop at the end of subparagraph (b)(ii) the punctuation mark and word “; or”; and

shall be the sum deemed to be the tax deducted from such dividend under subsection 108(2d).”.

Amendment of section 154

in paragraph 1 of Part I by substituting for the rates the following rates:

“Chargeable Income

RM

Rate of

Income Tax

For every ringgit of the first 2,500 0 per cent

For every ringgit of the next 2,500 3 per cent

For every ringgit of the next 5,000 6 per cent

For every ringgit of the next 10,000 7 per cent

For every ringgit of the next 15,000 12 per cent

For every ringgit of the next 15,000 18 per cent

For every ringgit of the next 20,000 23 per cent

For every ringgit of the next 30,000 28 per cent

For every ringgit of the next 50,000 31 per cent

For every ringgit exceeding 150,000 32 per cent”;

in paragraph 2 of Part I by substituting for the words

“32 per cent” the words “30 per cent”;

in paragraphs 1 and 2 of Part II by substituting for the words “20% of gross” and “15% of gross” appearing under the column “Rate of income tax” the words “15%

of gross” and “10% of gross” respectively;

in Part IV by substituting for the rates the following rates:

“Chargeable Income

RM

Rate of

Income Tax

For every ringgit of the first 10,000 1 per cent

For every ringgit of the next 10,000 3 per cent

For every ringgit of the next 10,000 6 per cent

For every ringgit of the next 10,000 9 per cent

For every ringgit of the next 10,000 12 per cent

For every ringgit of the next 25,000 16 per cent

For every ringgit of the next 25,000 20 per cent

For every ringgit of the next 50,000 24 per cent

For every ringgit of the next 100,000 27 per cent

For every ringgit of the next 250,000 30 per cent

For every ringgit exceeding 500,000 32 per cent”;

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Act 531

in Part V by substituting for the words “15% of gross”

the words “10% of gross”; and

by inserting after Part VII the following Part:

“Part VIII

Notwithstanding Part I and Part II, income tax shall be charged on the chargeable income of a life fund of a resident or non-resident insurer at the rate of

……………………… 8 per cent.”.

Amendment of Schedule 3

in paragraph 37b—

by substituting for subparagraph (c) the following subparagraph:

“(c) industrial, technical or vocational training approved by the Minister;”;

in paragraph 62 by inserting after subparagraph (3) the following subparagraph:

“(4)  Notwithstanding paragraph 62(1) where an asset in relation to which the person has incurred qualifying plant expenditure for the purposes of a business of his is disposed of by way of gift, its disposal value shall be deemed to be zero if the gift is made to—

a technical or vocational training institute established and maintained by the government or a statutory body;

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a technical or vocational training institute as approved by the Minister; or

an approved research institute as defined in section 34b.”.

Amendment of Schedule 6

Section 23 shall be deemed to have come into force on 1

June 1991.

Amendment of section 2

by substituting for the full stop at the end of subsection (1)

a colon; and

by inserting after subsection (1) the following proviso:

“Provided that in respect of any gift of money made by that chargeable person during the period from 1

November 1993 to 30 June 1994 to the Government low-cost housing fund managed by the Central Bank of

Malaysia, there shall be given a further deduction of an amount equal to one half of that gift of money.”.

Where the transaction effected by the instrument forms part of a larger transaction or series of transactions, ad valorem duty upon that instrument and upon every other instrument following shall be calculated on the aggregate of the consideration or market values of the separate parts or parcels being conveyed, whichever is the higher, at the rates specified under of subitem 32(a) in the First Schedule.”.

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by substituting for the words “Tourist Development

Corporation of Malaysia” appearing in the definitions of “hotel” and “tourist project” the words “Ministry of

Culture, Arts and Tourism”; and

by inserting after the definition of “tax relief period” the following definition:

“ “technical or vocational training company” means a company which provides technical or vocational training in Malaysia;”.

Amendment of section 4b

An application made under subsection (1) shall be in accordance with such regulations as may be made under this Act.”.

New section 27g

The Minister may vary the terms and conditions imposed under subsection (1).

In exercising his powers under subsections (1) and

, the Minister shall act with the concurrence in writing of the Minister of Finance.”.

Amendment of section 28

in subsection (1)—

by substituting for the words “or 27f” the words

“, 27f or 27g”; and

in subsection (2)—

by substituting for the words “or 27f(1)” the words

“, 27f(1) or 27g(1)”; and

An allowance for expenditure given under subsection

—

Where an allowance is given to a company under subsection (1) for a year of assessment, so much of the statutory income of the business of the company in respect of an activity relating to technical or vocational training for that year of assessment as is equal to the amount of the allowance (or to the aggregate amount of any such allowance, as the case may be) shall be exempt from tax under the principal Act:

Provided that the amount so exempt shall not exceed seventy per cent of the statutory income of that business of the company for that year of assessment.

Where, by reason of an insufficiency or absence of statutory income of the business of the company in respect of an activity relating to technical or vocational training for a year of assessment, effect cannot be given or cannot be given in full to any allowance or allowances to which the company is entitled under this section for that year in relation to the source consisting of that business, then, notwithstanding subsections (1), (2) and (3), so much of the allowance or allowances in question as cannot be given for that year shall be deemed to be an allowance to be given to the company under this section for the first subsequent year of assessment for which there is statutory income from that business, and so on for subsequent years of assessment until the company has received the whole of the allowance or allowances to which it is so entitled.

Where any income is exempt from tax by virtue of subsection (3), section 23 shall apply to that income (with any necessary modifications) as it applies to income exempt under section 22.

For the purposes of this section and subject to subsection (7), “capital expenditure”, in relation to technical or vocational training, means capital expenditure incurred on a building or on any plant and machinery used in Malaysia in connection with and for the purposes of an activity relating to training.

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Notwithstanding subsection (6), “capital expenditure”

shall not include capital expenditure incurred on buildings

(which are used as living accommodation for persons), plant and machinery where such buildings, plant or machinery are provided wholly or partly for the use of a director or an individual who is a member of the management, administrative or clerical staff.”.

Amendment of section 37