things you need to know about tax for …...things you need to know about tax for sdn bhd 7 june...

Going beyond numbers

THINGS YOU NEED TO KNOW ABOUT TAX

FOR SDN BHD

7 JUNE 2016, WEDNESDAY 12:30 PM – 2 PM

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We are a Chartered Accountants firm that provides the full range of

services in audit, accounting, taxation and advisory for companies local

and international.

The constantly evolving business environment demands that we not only

audit the past and present but take a peek into the future. We do so by

anticipating challenges and sharing of knowledge and experience for

the continuous growth of our employees, clients and the community.

The constant pursuit in going beyond numbers in our capabilities and

service delivery have won us business recognition in prestigious awards:

Enterprise 50 • SME Service Excellence • Malaysia HR Award - Bronze

Medal • Golden Bull Award • Golden Eagle Award.

We are extremely proud to be accredited an ACCA Employer-Platinum Level.

Due recognition is given to our exceptional team of more than 100 dedicated

and enthusiastic professionals.

About AdrianYeo

Going beyond numbers 2


HIGHLIGHTS

Company Income Tax

Residence Status

Income Tax Rate

Profit Distribution by Company

Business Losses

Capital Gains

Investment Holding Company (IHC)

Tax Incentives

Withholding Tax

Others

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SDN BHD

Type of Business Structure SENDIRIAN BERHAD

Liability status Limited

Income Tax No. C

Chargeable Person (Tax) Yes

Tax Basis Period Year End

Tax Rate

(Resident SME : - Incorporated in Malaysia

- paid-up SC RM2.5 mil or less)

Flat Rate

First RM500k : 20% (19%) On subsequent : 25% (24%)

**YA2016 1% reduction

Tax Return Form Form C

Due Date 7th months after the Year End

Estimate of Tax (CP204) Yes Self estimation

Revision of tax estimation (CP204A) In 6th & 9th month

Instalment Scheme (CP205) Yes. CP205 (via 12 instalments)

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HIGHLIGHTS

Company Income Tax (Basis)

Residence Status

Income Tax Rate

Profit Distribution by Company

Business Losses

Capital Gains

Investment Holding Company (IHC)

Tax Incentives

Withholding Tax

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COMPANY INCOME TAX (BASIS)

Corporations are taxed on income derived from Malaysia. “Territorial Scope” <Section 3 of ITA>

Foreign-source income is exempt**. <Para 28 Sch 6>

** Unless the corporation is carrying on a business in the banking, insurance, air transport or shipping sectors. “World-wide Scope”

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RESIDENCE STATUS

A corporation is tax resident in Malaysia if its management and control are exercised in Malaysia. <Section 8 of ITA> <PR No. 5/2011>

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INCOME TAX RATE

The standard corporate tax rate is :-

- YA 2015 25%

- w.e.f. YA2016 24%

Small and Medium Enterprise (SME)**

YA2015 YA2016

First RM500k 20% 19%

Subsequent on 25% 24%

**An SME is redefined as a company which is tax resident and incorporated in Malaysia.

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PROFIT DISTRIBUTION BY COMPANY

All corporations in Malaysia are required to adopt the single-tier system (STS).

Tax on a company’s profit is a final tax and dividends paid by companies under the STS are not taxable in the hand of shareholders.

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BUSINESS LOSSES

Current year business loss can be set off against income from all source in the current year.

Any unutilised losses can be carried forward to be utilised against business income only.

**Losses may be c/f indefinitely (except where there is a substantial change in ownership of a dormant co.

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Set Off against Unutilised Losses

Other biz Income Non Biz Income C/F **

Current Yr

business loss YES YES YES

Unutilised

business loss YES NO YES


CAPITAL GAINS

In general, capital gains are not taxed in Malaysia, except for gains derived from the disposal of:-

Real property e.g. land or building

Shares in a RPC**

**RPC is a controlled company holding real property or shares in another RPC as a major asset

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CAPITAL GAINS

In general, capital gains are not taxed in Malaysia, except for gains derived from the disposal of:-

Real property e.g. land or building

Shares in a RPC**

**RPC is a controlled company holding real property or shares in another RPC as a major asset

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REAL PROPERTY GAINS TAX

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Holding Period Companies Individual (Citizen & PR)

Individual (Non Citizen or

Non PR)

Up to 3 years 30% 30% 30%

Up to 4 years 20% 20% 30%

Up to 5 years 15% 15% 30%

Exceeding 5

years

5% 0% 5%


INVESTMENT HOLDING COMPANY

IHC means a company whose activities consist mainly in the holding of investments and not less than 80% of its gross income other than gross income from a source consisting of a business of holding of an investment (whether exempt or not) is derived from the holding of those investments.

Generally, only expenses falling within the definition of “Permitted Expenses” qualify for a tax deduction.

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Permitted expenses incurred by an IHC consist of–

(a) directors’ fees;

(b) wages, salaries and allowances;

(c) management fees;

(d) secretarial, audit and accounting fees, telephone charges, printing and stationery costs and postage; and

(e) rent and other expenses incidental to the maintenance of an office,

which are not deductible under subsection 33(1) of the ITA.

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The prescribed formula to determine the amount of permitted expenses which is allowable as a deduction is as follows:

A X B

4C

where:

A is the total of the permitted expenses incurred for a basis period reduced by any receipts of a similar kind;

B is the gross income consisting of dividend, interest and rent chargeable to tax for a basis period;

C is the aggregate of the gross income consisting of dividend and interest (whether such dividend or interest is exempt or not) and rent, and gains from realisation of investments for a basis period

** The amount allowable as a deduction should not exceed 5% of the gross income consisting of dividend, interest and rent for that basis period.

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TAX INCENTIVES

A wide range of incentives are available for certain industries:-

Pioneer Status (PS)

Investment Tax Allowance (ITA)

Accelerated Capital Allowance <PR No. 4/2013 >

Double Deductions <www.hasil.gov.my>

Reinvestment Allowance <PR No. 6/2012>

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<www.mida.com.my>


TAX INCENTIVES

A wide range of incentives are available for certain industries:-

•Pioneer Status (PS)

• Investment Tax Allowance (ITA)

•Accelerated Capital Allowance <PR No. 4/2013 >

•Double Deductions <www.hasil.gov.my>

•Reinvestment Allowance <PR No. 6/2012>

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<www.mida.com.my>


WITHHOLDING TAX (WHT)

WHT is imposed on non-residents (NR) who has business dealing in Malaysia. Payer as an appointed agent to collect income taxes from such NR, to withhold a portion of the payment and remit to the tax authorities.

Withholding tax is only restricted to the following types of payments made to NR

a) Special classes of income <PR No. 1/2014>

b) Interest

c) Royalties

d) Contract payments

e) Public entertainer

f) Other income <PR No. 1/2010> 19


OTHERS

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ADVANCE RECEIPTS (BUSINESS INCOME)

Proposed

•Deferred income or advance receipts should be taxable in year of

receipts.

•The sum receive from:

1) Services to be rendered

2) Use or enjoyment of property

•No debt arisen or created

•If the sum is refunded, deduction is allowed for relevant gross

income.

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INCOME TAX DEDUCTIBILITY ON GST EXPENSE

Effective date : Year of assessment 2015

The input tax paid or to be paid by any person are not

tax deductible if he :

i. Is liable to be registered under the Good and Service

Tax Act 2014 (GSTA) but has failed to do so; or he

ii. Is entitles to the input tax credit under GSTA

The output tax paid or to be paid which is borne by the

person who is registered or liable to be registered under

the GSTA, will not be allowed for deduction.

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INCOME TAX DEDUCTIBILITY ON GST EXPENSE

INPUT TAX ENTITLED BUT NOT

CLAIMED BLOCKED

INCOME TAX

DEDUCTIBLITY NO

YES (subject to

source of

expenses)

OUTPUT TAX ABSORBED BY

OPERATOR

ABSORBED BY

CLIENT

INCOME TAX

DEDUCTIBILITY NO N/A

• Company not GST registered, but liable to register i) Input tax – Not tax deductible


• For GST registered companies:

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QUESTIONS ?

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Tel: 03 – 7802 3333

www.adrianyeo.com

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