Read full Act

1 -1. Short title.

This Act may be cited as the Finance Act 2007 .

2 -2. Amendment of Acts.

The Income Tax Act 1967 [ Act 53 ], the Stamp Act 1949 [ Act 378 ], the Petroleum (Income Tax) Act 1967 [ Act 543 ] and the Labuan Offshore Business Activity Tax Act 1990 [ Act 445 ] are amended in the manner specified in Chapters II , III , IV and V respectively.

3 -3. Commencement of amendments to the Income Tax Act 1967.

(1) Sections 4, 5, 8, paragraphs 10 (a) and (d) , subparagraphs 12 (a) (i) and (iv) in respect of paragraph 46(1) (l) of the Income Tax Act 1967, sections 14, 15, 17, 19, 20, 21, 23, 24, 25, 26, 27, 29, 33, 34, paragraphs 36 (a) and (f) and sections 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56 and 57 have effect for the year of assessment 2008 and subsequent years of assessment.

(2) Sections 6 and 22 come into operation on 1 January 2008.

(3) Subparagraphs 12 (a) (ii), (iii) and (iv) in respect of paragraph 46(1) (k) of the Income Tax Act 1967, section 16 and paragraph 36 (d) have effect for the year of assessment 2007 and subsequent years of assessment.

(4) Sections 7, 9, 11 and 13 are deemed to have effect for the year of assessment 2006 and subsequent years of assessment.

(5) Section 28 comes into operation on 1 August

4 -4. Amendment of section 3B.

The Income Tax Act 1967, which is referred to as the "principal Act" in this Chapter, is amended in section 3b by inserting after the words "offshore company" the words ", other than an offshore company (in this Act referred to as "chargeable offshore company"), which has made an election under section 3A of the Labuan Offshore Business Activity Tax Act 1990".

5 -5. Amendment of section 5.

Subsection 5(1) of the principal Act is amended by substituting for the proviso to that subsection the following proviso:

"Provided that in ascertaining the chargeable income of-

(i) an individual resident in Malaysia there shall be excluded the income consisting of interest accruing in or derived from Malaysia and received from a person referred to in subsection 109C(4) in respect of interest paid or credited to that individual; or

(ii) a participant other than a participant which is a resident company there shall be excluded any income accruing in or derived from Malaysia and received from a takaful operator referred to in subsection 109E(2) in respect of such income paid or credited to that participant.".

6 -6. Amendment of section 6.

Subsection 6(1) of the principal Act is amended-

(a) by substituting for the full stop at the end of paragraph (i) a semicolon; and

(b) by inserting after paragraph (i) the following paragraph:

" (j) subject to the provision of section 109E but notwithstanding any other provisions of this Act, income tax shall be charged for each year of assessment upon the income of a participant, other than a participant which is a resident company, which consists of profits distributed or credited by an operator referred to in section 60AA at the appropriate rate as specified under Part XI of Schedule 1.".

7 -7. Amendment of section 27.

Section 27 of the principal Act is amended-

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

"(1A) Where gross income from a source in Malaysia of a company consists of any amount of discount or premium from the subscription or issuance of bond, as the case may be, and first becomes receivable in the relevant period, that amount shall be deemed to accrue over the whole period of the bond and the gross income of the company for the relevant period that relates to the period of the bond shall be a sum to be determined in accordance with the following formula:

A x C

B

where A is the number of days in the relevant period that falls within the period of the bond;

B is the total number of days of the whole period of the bond; and

C is the total amount of discount or premium in respect of the bond:

Provided that the Director General may allow the company to consistently ap

8 -8. Amendment of section 34.

Subsection 34(6) of the principal Act is amended-

(a) in paragraph (e) , by inserting after the word "equipment" the words ", or on the alteration or renovation of premises,"; and

(b) by inserting after paragraph (h) the following paragraph:

" (ha) an amount equal to the expenditure incurred by a company on the provision of infrastructure in relation to its business which is available for public use, subject to the prior approval of the Minister:

Provided that where a deduction has been made under this paragraph, no further deduction of the same amount shall be allowed under subsection 44(6);".

9 -9. New section 34C.

The principal Act is amended by inserting after section 34B the following section:

"34C. Special provision applicable to adjusted income from a discount or premium

(1) Notwithstanding section 33 but subject to this section, in ascertaining the adjusted income of a company from a source consisting of discount or premium, any expenses in respect of the discount or premium incurred on bond issued or subscribed, as the case may be, by that company is deemed to accrue to the company over the whole period of the bond and the amount to be deducted from the gross income from that source for the basis period for a year of assessment that relates to the period of the bond shall be a sum to be determined in accordance with the following formula:

A x C

B

where A is the number of days in the basis period for the year of assessment that falls within the period of the bond;

B is the total number of days of the

10 -10. Amendment of section 44.

Section 44 of the principal Act is amended-

(a) in the proviso to subsection (6), by substituting for the word "company" wherever appearing the word "person";

(b) in subsection (6A), by substituting for the words "Department of Museum and Antiquities" the words "Department of Museums Malaysia";

(c) by inserting after subsection (6A) the following subsection:

"(6B) Where an institution or organization is aggrieved by the decision of the Director General in respect of an application made under subsection (6), the institution or organization may, within thirty days after being informed of the decision, appeal to the Minister and the Minister may make any decision as he considers fit."; and

(d) in subsection (11A), by inserting after the words "offshore company" the words "excluding chargeable offshore company".

11 -11. Amendment of section 44A.

Paragraph 44A(10) (d) of the principal Act is amended by substituting for the word "2001" the word "2006".

12 -12. Amendment of section 46.

Section 46 of the principal Act is amended-

(a) in subsection (1)-

(i) by substituting for paragraph (f) the following paragraph:

" (f) fees expended in that basis year by that individual on himself for-

(i) any course of study up to tertiary level, other than a degree at Masters or Doctorate level, undertaken for the purpose of acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills or qualifications; or

(ii) any course of study for a degree at Masters or Doctorate level undertaken for the purpose of acquiring any skill or qualification, in any institution or professional body in Malaysia recognized by the Government or approved by the Minister, as the case may be, and the total deduction under this paragraph is subject to a maximum amount of five thousand ringgit;";

(ii) by deleting the word "and" at the end of paragra

13 -13. Deletion of section 46A.

The principal Act is amended by deleting section 46A.

14 -14. Amendment of section 54A.

Subsection 54A(3) of the principal Act is amended-

(a) by inserting after the semicolon at the end of paragraph (d) the word "and";

(b) by substituting for the word "; and" at the end of paragraph (e) a full stop; and

(c) by deleting paragraph (f) .

15 -15. Amendment of section 60AA.

The principal Act is amended by substituting for section 60AA the following section:

"60AA. Takaful business.

(1) This section shall apply for ascertaining the adjusted income for the basis period for a year of assessment from the takaful business of an operator.

(2) For the purposes of this section-

(a) subject to paragraph (b) , where an operator carries on family solidarity business (in this section referred to as "family business") in conjunction with general business, the family business and the general business shall be treated as separate takaful businesses;

(b) where an operator carries on-

(i) an inward re-takaful business, the inward re-takaful business and general business (excluding the inward re-takaful business and offshore takaful business) shall be treated as separate general businesses; and

(ii) an offshore takaful busin

16 -16. New section 60I.

The principal Act is amended by inserting after section 60H the following section:

" 60I. Company that establishes special purpose vehicle

(1) For the purpose of this Act, where a company establishes a special purpose vehicle solely for the issuance of Islamic securities, any source of the special purpose vehicle and any income from that source shall be treated as a source and income of that company and such company shall have the right to receive and utilize any proceeds derived from the issuance of such Islamic securities.

(2) The special purpose vehicle is exempt from the responsibility of doing all acts and things required to be done under this Act.

(3) The company that establishes the special purpose vehicle shall keep and retain in safe custody records and documents in accordance with sections 82 and 82A for the purpose of ascertaining the chargeable income of the company from the source referred to in subs

17 -17. Amendment of section 67.

Subsection 67(4) of the principal Act is amended by deleting the word "108,".

18 -18. Amendment of section 80.

Section 80 of the principal Act is amended-

(a) in subsection (1)-

(i) by substituting for the words "books and other documents" the words "books, documents, objects, articles, materials and things"; and

(ii) by substituting for the words "books or documents" the words "books, documents, objects, articles, materials and things"; and

(b) in subsection (2), by substituting for the words "books or documents" the words "books, documents, objects, articles, materials and things".

19 -19. Amendment of section 107C.

Section 107C of the principal Act is amended-

(a) in subsection (2), by inserting after the words "paragraph (4) (a) "the words "and subsection (4A)";

(b) in subsection (4), by inserting after the word "company" wherever appearing the words ", other than a company to which subsection (4A) applies"; and

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

"(4A) Where a company first commences operation in a year of assessment, subsections (1), (2) and (3) shall not apply to the company-

(a) for that year of assessment and the immediate following year of assessment; or

(b) where the company has no basis period for that year of assessment, for the immediate two following years of assessment:

Provided that at the beginning of the basis period for the years of assessment referred to in paragraph (a) or for the two following years o

20 -20. Amendment of section 108.

The principal Act is amended by substituting for section 108 the following section:

" 108. Non-deduction of tax from dividend

Where a dividend is paid or credited by a company to any of its shareholders in the basis period for a year of assessment, the company shall not be entitled to deduct tax from such dividend paid or credited.".

21 -21. Amendment of section 109.

Subsection 109(1) of the principal Act is amended by substituting for the words "33 or 35" the words "33, 33A, 33B, 35 or 35A".

22 -22. New section 109E.

The principal Act is amended by inserting after section 109D the following section:

" 109E. Deduction of tax on the distribution of income of a family fund, etc .

(1) This section shall only apply to profits distributed or credited out of family fund, family re-takaful fund or general fund under section 60AA.

(2) Where a takaful operator (in this section referred to as "the payer") distributes or credits any amount of income to a participant other than participant which is a resident company which is deemed to be derived from Malaysia, the payer shall upon distributing or crediting the amount-

(a) deduct from the proportion of that amount, tax at the rate applicable to that proportion; and

(b) whether or not that tax is so deducted, within one month after distributing or crediting such amount, render an account and pay the amount of tax to the

Director General.

(3

23 -23. Amendment of section 110.

Section 110 of the principal Act is amended-

(a) by substituting for subsection (1) the following subsection:

"(1) Any tax which is deducted from any interest or royalty under section 109 or from any payment for services, technical advice, assistance, or rental or other income under section 109B (including any amount recovered by the Director General pursuant to subsection 109(2) or 109B(2) but excluding any increase thereof) shall, when the interest, royalty, or payment for services, technical advice, assistance, or rental or other income is gross income of a person from a source of his for the basis period for a year of assessment, be set off against the tax charged on his chargeable income, if any, for that year.";

(b) by deleting subsection (1A);

(c) in subsection (2)-

(i) other than in subparagraph (b) (ii), by deleting the word "dividend,"; and

(ii) in subparagraph

24 -24. Deletion of section 110A.

The principal Act is amended by deleting section 110A.

25 -25. New section 110B.

The principal Act is amended by inserting after section 110A the following section:

" 110B. Set-off for tax charged on actuarial surplus

(1) Notwithstanding section 110, where for a basis period for a year of assessment an amount of actuarial surplus from the life fund of an insurer is transferred to the shareholders' fund pursuant to subsection 60(3A) or (4A), any amount of tax charged on the portion of that surplus shall be set off against the tax charged on the chargeable income from the shareholders' fund of that insurer in respect of the life business.

(2) Where-

(a) tax is set off under this section against the tax charged on the chargeable income of an insurer from its shareholders' fund in respect of life business for a year of assessment and the amount of the tax set-off exceeds the tax charged for that year, the excess shall be disregarded; or

(b) there is no tax charged for th

26 -26. Amendment of section 111.

Section 111 of the principal Act is amended-

(a) in subsection (1a)-

(i) by substituting for the word "company" the word "person"; and

(ii) by inserting after the word "with" the words "subsection 77(1)"; and

(b) by deleting subsection (5).

27 -27. Deletion of section 111A.

The principal Act is amended by deleting section 111A.

28 -28. Amendment of section 120.

Subsection 120(1) of the principal Act is amended-

(a) by inserting after the semicolon at the end of paragraph (e) the word "or";

(b) by substituting for the word "; or" at the end of paragraph (f) a comma; and

(c) by deleting paragraph (g) .

29 -29. Amendment of section 127.

Subsection 127(5) of the principal Act is amended by deleting the word "108," wherever appearing.

30 -30. New section 142A.

The principal Act is amended by inserting after section 142 the following section:

" 142A. Admissibility of electronic record

(1) Notwithstanding any other written law, where in any proceedings under this Act an electronic record of-

(a) any prescribed form is furnished by way of electronic transmission under section 152A; or

(b) any other document is stored or received by or communicated to the Director General on an electronic medium or by way of electronic transmission, the electronic record or the copy or print-out of that electronic record shall be admissible as evidence of the facts stated or

contained therein:

Provided that the record or the copy or print-out is-

(i) certified by the Director General to contain all or any information furnished, stored, communicated or received on an electronic medium or by way of electronic transmission under this section; or

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31 -31. Amendment of section 152A.

Section 152A of the principal Act is amended by inserting

after subsection (2) the following subsections:

"(3) For the purposes of subsection (1), a person may authorize in writing a tax agent to furnish on his behalf any return in the prescribed form in the manner provided for in subsection (1).

(4) A return furnished in accordance with subsection (3) on behalf of any person shall be presumed to have been furnished on that person's authority, until the contrary is proved, and the person shall be deemed to be cognizant of its contents.

(5) Where subsection (3) applies-

(a) the person who authorizes the tax agent shall make

a declaration in the form prescribed under this Act stating that-

(i) the tax agent is authorized to furnish a return to the Director General on his behalf; and

(ii) the information provided by him to the tax agent for the preparation of the return is true and c

32 -32. Amendment of section 153.

Section 153 of the principal Act is amended by substituting for subsection (6) the following subsection:

"(6) An approval or renewal of an approval under this section shall be valid for-

(a) a minimum period of twenty-four months beginning from the date of such approval or renewal; or

(b) any other period as approved by the Minister which shall not be less than twenty-four months beginning from the date of such approval or renewal.".

33 -33. Amendment of Schedule 1.

Schedule 1 to the principal Act is amended-

(a) in Part I-

(i) in paragraphs 2 and 2A, by substituting for the words "27 per cent" wherever appearing the words "26 per cent for the year of assessment 2008 and 25 per cent for the subsequent years of assessment"; and

(ii) by inserting after paragraph 3 the following paragraph:

" 4. Income tax shall be charged for a year of assessment on the chargeable income of an operator from inward re-takaful business or offshore takaful business at the rate of 5 per cent on every ringgit of the chargeable income.";

(b) in Part X in subparagraph 1 (b) , by substituting for the words "27% of gross" the words "26% of gross for the year of assessment 2008 and 25% of gross for the subsequent years of assessment"; and

(c) by inserting after Part X the following Parts:

"Part XI

Notwithstanding Part I, income tax shall b

34 -34. Amendment of Schedule 3.

Schedule 3 to the principal Act is amended-

(a) by inserting after paragraph 38 the following paragraph:

" 38A. (1) Paragraphs 39 and 40 shall apply where a company disposes of an asset in respect of industrial building to a unit trust in relation to which an initial or annual allowance has been made or would have been made, if claimed, to the company.

(2) For the purpose of this paragraph, "unit trust" has the same meaning assigned to it under section 61A."; and

(b) in paragraph 40 by inserting after the word "38," the

word "38A,".

35 -35. Amendment of Schedule 5.

Schedule 5 to the principal Act is amended-

(a) by substituting for subparagraph 1(3) the following subparagraph:

"(3) Two or more hearing of appeals may be heard concurrently at any one time, and if the Chairman of the Special Commissioners-

(a) is presiding at the hearing of one of the appeals, the Special Commissioners present at the hearing of the other appeals; or

(b) has not been appointed or is not present at the hearing of any of the appeals, the Special Commissioners present at the hearing of the appeals, shall choose one of their number (who shall be a person with experience of the kind mentioned in subparagraph (1)) to preside at the hearing of the other appeal or appeals, as the case may be.";

(b) by inserting after paragraph 1 the following paragraph:

" 1A. If any one of the Special Commissioners who has commenced hearing any of the appeals is unabl

36 -36. Amendment of Schedule 6.

Schedule 6 to the principal Act is amended-

(a) by inserting after paragraph 12A the following paragraph:

" 12B. Any dividend paid, credited or distributed to any person where the company paying such dividend is not entitled to deduct tax under this Act and any expenses incurred in relation to such dividend shall be disregarded for the purpose of this Act.";

(b) in subparagraph 13(1), by deleting the words ", other than dividend income,";

(c) in paragraph 17-

(i) by substituting for the colon a full stop; and

(ii) by deleting the proviso;

(d) in subsubparagraph 25(1) (c) -

(i) by substituting for the colon a full stop; and

(ii) by deleting the proviso;

(e) in paragraph 26-

(i) by substituting for the colon a full stop; and

(ii) by deleting the proviso; and

(f) by inserting after par

37 -37. Amendment of Schedule 7A.

Schedule 7A to the principal Act is amended-

(a) by deleting subparagraph 5(7);

(b) in paragraph 7-

(i) by inserting after the semicolon at the end of

subparagraph (d) the word "or";

(ii) by substituting for the word "; or" at the end of subparagraph (e) a full stop; and

(iii) by deleting subparagraph (f) ; and

(c) in subparagraph 8 (d) -

(i) by substituting for the full stop a colon; and

(ii) by inserting after subparagraph (d) the following proviso:

"Provided that this subparagraph shall not apply from the year of assessment 2011 and subsequent years of assessment.".

38 -38. General provisions.

(1) The principal Act shall apply for the purposes of this Part unless otherwise provided.

(2) Where there is any inconsistency between any provision of this Part and any provision of the principal Act, that provision of the principal Act shall be void to the extent of the inconsistency.

39 -39. Balance for credit.

(1) For the purposes of this Part, the balance for the credit of a company as at 31 December 2007 (hereinafter referred to in this Part as "108 balance") shall consist of-

(a) the amount of the balance for the credit of that company at the end of the basis period for a year of assessment 2007 ascertained under subsection 108(8) of the principal Act prior to the coming into operation of this Act;

(b) the amount of the balance for the credit of that company ascertained under section 23 of the Income Tax (Amendment) Act 2000 [ Act A1093 ] as at 31 December 2007; and

(c) where the basis period of the company for the year of assessment 2007 ends-

(i) on a day other than 31 December 2007, any tax paid during the period from the first day of the basis period of that company for the year of assessment 2008 to 31 December 2007; or

(ii) on 31 December 2007, the final instalment paid under

40 -40. Dividend paid by company.

(1) Where-

(a) a dividend is paid by a company to any of its shareholders at any time during the period from 1 January 2008 to 31 December 2013; and

(b) the company has a 108 balance or revised 108 balance on the day before the dividend is paid, and, if the dividend is deemed by virtue of section 14 of the principal Act to be derived from Malaysia, the company shall be entitled to deduct tax at the rate applicable to the company at the date the dividend is paid.

(2) The dividend paid under subsection (1) shall consist of dividend paid in cash in respect of ordinary shareholding.

(3) In this Part, "ordinary shareholding" means holding of share other than share which carries only a right to any dividend which is of a fixed amount or at a fixed rate per cent of the nominal value of the shares, or a fixed rate per cent of the profits of the company.

41 -41. Dividend paid on or before 31 December 2007.

Where the basis period of a company for the year of assessment 2007 ends on a day other than 31 December 2007 and the company paid dividend to its shareholders during the period from the first day of the subsequent basis period to 31 December 2007, then, if the dividend is deemed by virtue of section 14 of the principal Act to be derived from Malaysia, the company shall be entitled to deduct tax at the rate applicable to the company at the date the dividend is paid.

42 -42. Tax deemed deducted.

Where a company pays or distributes without deduction of tax a dividend from which it is entitled to deduct tax under this Part, the dividend shall be deemed to be dividend of such gross amount as determined in accordance with the formula-

1 x B

(1-A)

where A is the rate applicable to the company at the time of payment or distribution of dividend;

B is the amount in fact paid or where section 41 applies and the dividend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

43 -43. Revision in tax rate.

Notwithstanding any other provision of this Part, where a dividend is paid or distributed with or without deduction of tax under this Part, and there is a revision in the rate of tax for companies for any year of assessment (in this section referred to as the "revised rate"), the amount of the dividend received by the shareholder shall be deemed to be a dividend of such gross amount as determined in accordance with the formula-

1 x B

(1-A)

where A is the revised rate applicable to the company at the time of payment or distribution of dividend;

B is the amount in fact paid or where section 41 applies and the dividend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

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44 -44. Certificate to shareholder.

Every company shall upon paying or distributing to a shareholder a dividend of a kind to which section 40 or 41 applies (whether tax is deducted therefrom or not) furnish the shareholder with a certificate setting forth in respect of the dividend-

(a) the gross dividend paid to the shareholder;

(b) the amount of tax-

(i) which the company is entitled to deduct under section 40 or 41; or

(ii) deemed to have been deducted by the company under section 42; and

(c) the amount in fact paid or where section 41 applies and the dividend consists of property other than money, the amount of the market value of that property at the time of distribution of the dividend.

45 -45. Statement to Director General.

(1) Where-

(a) section 40 applies, the company shall-

(i) within 30 days from the date dividend is paid to its shareholders, furnish to the Director General a statement in the prescribed form containing such particulars as may be required for the purpose of ascertaining the 108 balance or revised 108 balance; and

(ii) notwithstanding subparagraph (i), within 7 months following the close of the accounting period which constitutes the basis period of the company for year of assessment 2008, 2009, 2010, 2011, 2012, 2013, or 2014 (if applicable) furnish to the Director General a statement in the prescribed form containing particulars as may be required for the purpose of determining the 108 balance or revised 108 balance, or any excess under section 48 at the end of that basis period;

(b) section 41 applies, the company shall within 30 days from 31 December 2007 furnish to the Director General a statement i

46 -46. Revised 108 balance.

Where during the period from the first day of the basis period for year of assessment 2008 to 31 December 2013-

(a) the tax charged on the chargeable income of a company for the year of assessment 2000 on a current year basis and prior year of assessment is discharged or remitted; or

(b) any amount of tax paid by that company which has been taken into account for the purpose of computing the 108 balance is refunded, the 108 balance of the company, shall on the day the tax is discharged, remitted or refunded, be reduced by such amount of tax discharged, remitted or refunded (in this Part referred to as "revised 108 balance").

47 -47. Reduction of 108 balance.

Where a company has paid dividend to any of its shareholders-

(a) on any date during the period from the first day of the basis period for year of assessment 2008 to 31 December 2007, in the case where the basis period of a company for the year of assessment 2007 ends on a day other than 31 December 2007; or

(b) on any date during the period from 1 January 2008 to 31 December 2013, from which tax has been deducted or deemed to have been deducted in accordance with this Part, the 108 balance or revised 108 balance shall be reduced first by the amount of tax so deducted or deemed to have been deducted in respect of paragraph (a) until the 108 balance or revised 108 balance is reduced to nil.

48 -48. Dividend paid in excess of revised 108 balance.

(1) Where section 41 or 46 applies and a company has deducted tax on any dividend paid to its shareholders in accordance with this Part, and the amount deducted exceeds the revised 108 balance, the excess shall be a debt due from the company to the Government and that debt shall be due and payable on the due date.

(2) Where any excess due and payable by a company under subsection (1) has not been paid by the due date, that excess as is unpaid upon the expiration of that date shall, without any further notice being served, be increased by an amount equal to ten per cent of the excess so unpaid, and the amount unpaid and the increase on the amount unpaid shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General.

(3) In this section, "due date" means the last day of the seventh

month from the date following the close of the accounting period

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49 -49. Non-deduction of tax.

(1) A company shall not be entitled to deduct tax from any

dividend paid to its shareholder if-

(a) as at 31 December 2007 the 108 balance of that company

is nil;

(b) as at any date from 1 January 2008 to 31 December 2013

the 108 balance or reduced 108 balance is reduced to

nil pursuant to section 47; or

(c) the company has exercised an irrevocable option under

section 50.

(2) Where a company-

(a) is not entitled to deduct tax under this section from a

dividend paid to any of its shareholders; and

(b) issues to any of its shareholders certificates which purport

to show that an amount of tax has been deducted under

this Part from dividend paid to the shareholders,

an amount equal to what would have been the total amount of

tax deducted or deemed to have been deducte

50 -50. Option to disregard balance.

Notwithstanding that a company has a 108 balance or revised

108 balance at any time during the period from 1 January 2008

to 31 December 2013, the company may in that period exercise

an irrevocable option in the prescribed form not to deduct tax

under section 40 and where such option is made, the company

shall not be entitled to deduct tax under that section upon the

exercise of the option.

51 -51. Set-off under section 110.

(1) Section 110 of the principal Act, prior to the amendment

of that section under this Act, shall apply to a person other than

an offshore company (excluding chargeable offshore company)

in respect of any tax deducted under this Part:

Provided that that person shall not be entitled to any set-off

under that section if-

(a) in the case where section 40 applies, dividend is paid to

that person during the period from the date that person

acquires the shares from which such dividend is paid to

the date of the disposal of such shares and that period

is less than 90 days; or

(b) the dividend paid is not in respect of dividend derived

from ordinary shareholding.

(2) For the purpose of this section-

(a) any reference in subsection 110(1) of the principal Act

prior to the amendment of that secti

52 -52. 108 balance or revised 108 balance after 31 December 2013.

Notwithstanding any other provision of this Part, if the 108

balance or revised 108 balance of the company has not been

utilized in part or in full as at 31 December 2013, such balance

shall be disregarded.

53 -53. Statutory income deemed total income.

Where for the basis period for a year of assessment, gross

income of a company is from a source consisting of dividend

paid to that company under this Part, the statutory income of that

company for that year in respect of that source is deemed to be

the total income or part of the total income of that company for

that year.

54 -54. Debt discharge.

A payment made in discharge or partial discharge of debt of

the kind mentioned in sections 48 and 49 shall be regarded as

a payment of tax for the purpose of section 111 of the principal

Act.

55 -55. Power to remit.

Notwithstanding the foregoing sections of this Part,

where-

(a) the excess is increased by an amount under

section 48; or

(b) the amount due is increased by an amount under

section 49,

the Director General may in his discretion, for any good cause

shown, remit the whole or any part of that amount and, where

the amount remitted has been paid, the Director General shall

repay the same.

56 -56. Tax shall be deducted.

Every company which has a 108 balance or revised 108

balance and has paid dividend at any time during the period from

1 January 2008 to 31 December 2013 shall deduct tax from the

dividend in accordance with section 40 unless the company has

exercised an irrevocable option under section 50.

57 -57. Non-applicability.

This Part shall not apply in respect of any dividend or part

thereof which is debited to the exempt account or in respect of

any dividend or part thereof which is exempt under subparagraph

5(6) of Schedule 7a of the principal Act.

58 -58. Commencement of amendments to the Stamp Act 1949.

This Chapter comes into operation on 1 January 2008.

59 -59. Amendment of section 2.

The Stamp Act 1949, which is referred to as the "principal

Act" in this Chapter, is amended in section 2 by substituting for

the definition of "duly stamped" the following definition:

" "duly stamped", as applied to an instrument, means that

the instrument bears an adhesive or impressed stamp of not less

than the proper amount or the amount of initial duty paid under

paragraph 37(1) (c) and that such stamp has been affixed or

used in accordance with the law for the time being in force:

Provided that an official receipt for the proper amount or

amount of initial duty may be affixed to any instrument in lieu

of the stamp, and the instrument shall then be deemed to be

duly stamped;".

60 -60. New sections 36a and 36b.

The principal Act is amended by inserting after section 36

the following sections:

" 36a. Initial duty

(1) Notwithstanding section 36 but subject to section

36b, the Collector may, on an application made by any person

in respect of an instrument for the transfer of an immovable

property, assess the initial duty for which the instrument is

chargeable.

(2) The application made under subsection (1) shall contain

particulars or evidence deemed necessary to prove the facts

affecting the liability of the instrument to duty and any valuation

report, prepared by a person privately practising as a valuer, on

the market value of the immovable property shall for the purposes

of this section be sufficient evidence for the Collector to make

an assessment on the initial duty for which the instrument is

chargeable.

(3)

61 -61. Amendment of section 37.

Section 37 of the principal Act is amended by substituting

for subsection (1) the following subsection:

"(1) When an instrument brought to the Collector under

section 36 or 36a is in his opinion one of a description

chargeable with duty, and-

(a) the Collector determined that it is already fully

stamped;

(b) the duty assessed by the Collector under such section,

or such a sum as, with the duty already paid in

respect of the instrument, is equal to the duty so

assessed, has been paid; or

(c) the initial duty assessed by the Collector has been

paid,

the Collector shall certify by indorsement on such instrument

that the full duty, or initial duty, stating the amount, with

which it is chargeable, has been paid.".

62 -62. Amendment of section 38.

Section 38 of the principal Act is amended by inserting after

the word "36" the word ", 36a".

63 -63. Amendment of section 38a.

Section 38a of the principal Act is amended-

(a) by substituting for subsection (1) the following

subsection:

"(1) Any person who is dissatisfied with an assessment

or additional assessment of the Collector under section

36 or 36a may, by written notice (referred to in this

Act as "notice of objection"), object to the assessment

or additional assessment and apply to the Collector

to review the assessment or additional assessment.";

(b) in subsection (2), by inserting after the word "assessment"

wherever appearing the words "or additional

assessment";

(c) in subsection (4), by inserting after the word "assessment"

the words "or additional assessment";

(d) by substituting for subsection (6) the following

subsection:

"(6) Where, on review, it appears to the Collector

64 -64. Amendment of section 39.

Section 39 of the principal Act is amended-

(a) in subsection (4), by inserting after the words "that the

assessment" the words "or additional assessment"; and

(b) in subsection (5), by inserting after the word "assessment"

the words "or additional assessment".

65 -65. Commencement of amendments to the Petroleum (Income Tax) Act 1967

Section 66 has effect for the year of assessment 2009 and

subsequent years of assessment.

66 -66. Amendment of section 16.

The Petroleum (Income Tax) Act 1967, which is referred

to as the "principal Act" in this Chapter, is amended in section

16-

(a) in subsection (7a), by inserting after the word "equipment"

the words ", or on the alteration or renovation of

premises"; and

(b) by inserting after subsection (7b) the following

subsection:

"(7ba) An amount equal to the expenditure incurred

by a chargeable person on the provision of infrastructure

in relation to his business which is available for public

use, subject to the prior approval of the Minister:

Provided that where a deduction has been made

under this paragraph, no further deduction of the same

amount shall be allowed under subsection 22(1).".

67 -67. Amendment of section 22.

Subsection 22(1a) of the principal Act is amended by substituting

for the words "Department of Museums and Antiquities" the

words "Department of Museums Malaysia".

68 -68. Amendment of section 33.

Section 33 of the principal Act is amended-

(a) in subsection (1)-

(i) by substituting for the words "books and other

documents" the words "books, documents, objects,

articles, materials and things"; and

(ii) by substituting for the words "books or documents"

the words "books, documents, objects, articles,

materials and things"; and

(b) in subsection (2), by substituting for the words "books

or documents" the words "books, documents, objects,

articles, materials and things".

69 -69. Amendment of Third Schedule.

The Third Schedule to the principal Act is amended-

(a) by substituting for subparagraph 1(3) the following

subparagraph:

"(3) Two or more hearing of appeals may be heard

concurrently at any one time, and if the Chairman of the Special

Commissioners-

(a) is presiding at the hearing of one of the appeals, the

Special Commissioners present at the hearing of the

other appeals; or

(b) has not been appointed or is not present at the hearing of

any of the appeals, the Special Commissioners present

at the hearing of the appeal,

shall choose one of their number (who shall be a person with

experience of the kind mentioned in subparagraph (1)) to preside

at the hearing of the other appeals or appeals, as the case may

be.";

(b) by inserting after paragraph 1 the following paragraph:

70 -70. Commencement of amendments to the Labuan Offshore Business Activity Tax Act 1990.

This Chapter has effect for the year of assessment 2009 and

subsequent years of assessment.

71 -71. Amendment of section 2.

The Labuan Offshore Business Activity Tax Act 1990, which

is referred to as the "principal Act" in this Chapter, is amended

in subsection 2(3)-

(a) by deleting the word "or" at the end of paragraph (a) ;

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

(c) the word "; or"; and

(c) by inserting after paragraph (c) the following

paragraph:

" (d) an offshore business activity carried on by an

offshore company which makes an election under

section 3a.".

72 -72. New section 3a.

The principal Act is amended by inserting after section 3

the following section:

" 3a. Offshore business activity chargeable to Income Tax Act 1967 upon election

(1) Notwithstanding any other provision of this Act, an

offshore company carrying on an offshore business activity

may make an irrevocable election in the prescribed form

that any profit of the offshore company for any basis period

for a year of assessment and subsequent basis period to be

charged to tax in accordance with the Income Tax Act 1967

in respect of that offshore business activity.

(2) The election referred to in subsection (1) shall be made

and furnished to the Director General three months after the

beginning of the basis period for a year of assessment:

Provided that for the basis period ending on a day in the

year of assessment 2008, the election under this sec