Income Tax (Exemption) (No. 3) Order 2024

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The Income Tax (Exemption) (No. 3) Order 2024, which takes effect from 1 January 2024 to 31 December 2026, provides tax exemptions for certain entities in Malaysia on gains or profits received from the disposal of foreign-sourced capital assets.

Key points from the order:

1. Companies, limited liability partnerships, trust bodies, and co-operative societies resident in Malaysia are exempted from income tax on gains or profits from disposing of capital assets arising from outside Malaysia, which are received in Malaysia.

2. To qualify for the exemption, these entities must meet conditions set by the Minister, including employing an adequate number of employees and incurring sufficient operating expenditures in Malaysia.

3. Gains or profits from the disposal of intellectual property rights are excluded from this exemption.

4. The order does not apply to entities in the banking, insurance, sea transport, or air transport businesses.

Advice for businesses:

1. Assess whether your business qualifies for this tax exemption based on the criteria mentioned in the order.

2. Ensure compliance with the conditions set by the Minister, such as maintaining adequate employment and operational expenditure in Malaysia.

3. Keep accurate records of foreign-sourced capital asset disposals and related gains or profits received in Malaysia during the relevant period.

4. Consult with tax professionals to determine the applicability and implications of this order for your specific business situation.

By taking advantage of this tax exemption, eligible businesses can potentially reduce their tax liabilities and improve their financial position. However, it is crucial to carefully review the order’s provisions and seek professional advice to ensure compliance and maximize benefits.


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