Day: February 17, 2024

  • Customs (Amendment) Regulations 2024

    Customs (Amendment) Regulations 2024

    The Customs (Amendment) Regulations 2024 [P.U (A) 53/2024] amends the Customs Regulations 2019 to gazette the Terengganu Silica Port in Setiu, Terengganu as a new customs port and legal landing place for all goods.

    This amendment inserts the Terengganu Silica Port, Setiu, into the First Schedule Part II to specify its location and working hours.

    It also inserts the Terengganu Silica Port into the Second Schedule Part I on customs ports to legally designate the geographical boundaries of its wharf area where goods can be landed.

    In effect, this opens up the Terengganu Silica Port for importing and exporting goods by allowing it to operate as an entry point for customs clearance and cargo handling.

    Companies shipping goods there can follow customs regulations when the port commences operations on 22 February 2024.

    In conclusion, the Customs (Amendment) Regulations 2024 formally endorses the new Terengganu Silica Port as a customs port and landing area for goods in line with customs requirements.

    This facilitates trade through the port by enabling customs supervision and procedures for goods there. We encourage readers to download the Customs (Amendment) Regulations 2024 by clicking the attachment below for a comprehensive look at the contents:-

    313.1-P.U-A-53_2024-Customs-Amendment-Regulations-2024Download
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  • Income Tax (Exemption) Order 2024

    Income Tax (Exemption) Order 2024

    The Income Tax (Exemption) Order 2024 [P.U. (A) 37/2024] provides tax exemptions for IDR-status companies undertaking qualifying activities in approved nodes within the Iskandar Development Region (“IDR“)

    This Order aims to promote investments in certain sectors to drive regional economic growth.

    The Order defines an IDR status company and specifies the qualifying activities across sectors like creative industries, education, healthcare, logistics, tourism, global business services and digital business that are eligible for the 100% income tax exemption.

    The exemption is for a period of 5 consecutive years. It applies to statutory income equivalent to capital allowances on qualifying capital expenditure incurred for buildings, machinery or plants used to carry out the approved qualifying activities.

    Companies must meet certain conditions to qualify, and the Minister can withdraw the exemption if conditions are breached.

    Provisions are also included to avoid double tax benefits.

    Except for subitem 3(e) and items 6 and 7 of the Schedule, this Order is deemed to have come into operation on 24 October 2013.

    Subitem 3(e) and item 7 of the Schedule are deemed to have come into operation on 1 January 2021.

    Item 6 of the Schedule is deemed to have come into operation on 1 November 2016.

    In conclusion, the Income Tax (Exemption) Order 2024 grants attractive tax incentives for IDR-status companies to spur investments and economic activities in targeted sectors within the Iskandar Development Region between 24 October 2013 and 31 December 2024. We encourage readers to download the Income Tax (Exemption) Order 2024 by clicking the attachment below for a comprehensive look at the contents:-

    311.1-P.U-A-37_2024-Income-Tax-Exemption-Order-2024Download
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  • Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024

    Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024

    The Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024 [P.U. (A) 45/2024] amends the Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) Rules 2012 to extend the tax incentives provided under the Returning Expert Programme. The Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) Rules 2012 provide the framework and details for the tax incentives under the Returning Expert Programme.

    Some key points on the 2012 Rules:

    1. It sets out the criteria for an “approved individual” to qualify for the tax incentives under the Programme. This includes being a Malaysian citizen who has been working overseas for at least 3 years and meets the expert criteria specified by the Minister.
    2. The tax incentive is a preferential flat tax rate of 15% on employment income for a period of 5 consecutive years. This is known as the “specified years of assessment”.
    3. The chargeable income subject to the 15% flat tax rate is calculated based on a formula that apportions the chargeable income from eligible Malaysian employment over the individual’s total aggregate income.
    4. Individuals have to apply and be approved under the Programme to qualify. The application window is from 12 April 2011 to 31 December 2023, per the Rules before this latest Amendment.
    5. The Rules will cease to apply if the individual stops employment in Malaysia during the incentive period.

    In summary, the 2012 Rules govern the eligibility conditions, calculation of chargeable income and operational details on the Returning Expert Programme tax incentives.

    These Amendment Rules simply amend rule 4(b) of the 2012 Rules to replace the expiry date of “31 December 2023” with “31 December 2027”.

    This effectively extends the period that Malaysian citizens working overseas can apply to return under the programme and be eligible for the preferential 15% flat tax rate incentive for another 4 years till 31 December 2027.

    In conclusion, the Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024 allows the Returning Expert Programme tax incentives to continue for another 4 years till the end of 2027 to attract more Malaysian talent abroad to return and contribute to the country’s economic growth.

    We encourage readers to download the Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024 [P.U. (A) 45/2024] and the Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) Rules 2012 by clicking the attachments below for a comprehensive look at the contents:-

    312.1-P.U.-A-45_2024-the-Returning-Expert-Programme-Rules-2024Download
    312.2-P.U.-A-151_2012-the-Returning-Expert-Programme-Rules-2012Download
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  • e-Invoice Guideline Version 2.2：Acquiring Goods or Services from Individuals who are not conducting Business

    e-Invoice Guideline Version 2.2：Acquiring Goods or Services from Individuals who are not conducting Business

    Here is a brief overview of the e-invoice impact when acquiring goods or services from individuals who are not conducting business:

    1）Self-billed e-invoice needs to be issued by the business acquiring goods/services from the individual

    2）For example, if Company XYZ buys used furniture from John, an individual selling some household items, Company XYZ has to issue a self-billed e-invoice to John

    3）The self-billed e-invoice should capture John’s details, like name, TIN, address, etc., as the ‘Supplier’. Other details like item description, amount, tax etc., are also captured

    4）By issuing this self-billed e-invoice and submitting it to IRBM for validation, Company XYZ complies with the e-invoicing requirement

    5）The validated self-billed e-invoice serves as proof of income for John and proof of expense for Company XYZ

    Key Points:

    1) Business transacting with non-business individuals must issue self-billed e-invoice

    2) Individual becomes a ‘Supplier’ in this self-billed e-invoice

    3) Procedures are the same as those for issuing other self-billed e-invoices

    下面简要介绍向非经商的个人购买商品或服务时，其电子发票的影响：

    1）自开电子发票需要由向非经商的个人购买商品或服务的企业开出。

    2）例子：如果 XYZ 公司从出售一些家庭用品的个人 John 处购买二手家具，XYZ 公司必须向 John 开具自开票电子发票

    3）作为 “供应商”，自开电子发票应记录 John 的详细信息，如姓名、税务号码、地址等。其他详细信息，如项目描述、金额、税金等，也会被记录下来。

    4）通过开具自开电子发票并提交给 IRBM 进行验证，XYZ 公司符合电子发票要求

    5）经过验证的自开电子发票可作为 John 的收入证明和 XYZ 公司的支出证明。

    要点：

    1）与非企业个人进行交易的企业，必须开具自开电子发票

    2) 该非企业个人成为该自开电子发票的 “供应商

    3) 程序与开具其他自开电子发票的相同

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  • Understanding Audit Exemption in Malaysia: New Criteria

    Understanding Audit Exemption in Malaysia: New Criteria

    Audit exemption in Malaysia allows certain private companies not to have their financial statements audited annually.

    Here is an overview:

    • Audit exemption is voluntary for eligible private companies in Malaysia. It exempts them to get their financial statements audited each year.
    • It aims to reduce regulatory compliance costs and administrative burdens for smaller companies that meet certain criteria related to their size and complexity.
    • The current criteria are based on the following companies:
      • being dormant,
      • having zero revenue, or
      • meeting thresholds for annual revenue, total assets, and number of employees.
    • Companies fulfilling the criteria can get audit exemption. However, their financial statements will still need to be prepared and submitted annually.
    • Certain types of companies, like publicly listed companies and subsidiaries of public companies, do not qualify for audit exemption.
    • The criteria and thresholds are reviewed over time to keep them relevant. SSM has issued this consultative document proposing revised criteria and higher thresholds to enable more SMEs to qualify for exemption.

    So, in essence, audit exemption allows eligible private companies in Malaysia to skip the statutory audit requirement to ease their regulatory compliance burden. It is time to review the current framework. The Companies Commission of Malaysia (SSM) has recently published this consultative document to propose new audit exemption criteria for private companies and seek public feedback by 8 March 2024.

    The objective is to review and revise the current criteria to reduce regulatory burden while ensuring financial accountability.

    The current criteria based on dormant, zero-revenue, and threshold-qualified companies will be replaced with criteria based on annual turnover, assets, and number of employees.

    The thresholds will be increased as follows:

    1. Annual turnover and assets below RM3 million for the current and past 2 financial years
    2. Not more than 30 employees at the end of current and past 2 financial years
    3. Fulfilling any 2 out of the 3 criteria

    The revised criteria aim to align with international practices, provide more opportunities for audit exemption to SMEs, address shortage of auditors, and balance between business reliefs and financial governance.

    Conclusion

    The proposed new audit exemption criteria intends to facilitate business growth while upholding accountability standards. SSM welcomes public feedback on the proposal by 8 March 2024 to develop an optimal solution. Companies Commission of Malaysia (SSM) is now inviting comments on the questions as set out in this Consultative Document on the Proposal of the New Audit Exemption Criteria for Private Companies in Malaysia.

    Please provide your name and the organisation you represent (where applicable) together with your comments. SSM welcomes comments to be submitted by email by 8 March 2024 to [email protected].

    We encourage readers to download this consultative document for full context on the proposal to revise Malaysia’s audit exemption criteria by clicking the attachment below:-

    314.1-Audit-ExemptionDownload
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