Today, we have an important update from the Ministry of Finance (MOF) that aims to promote sustainable practices through the use of Smart Artificial Intelligence (AI)-Driven Reverse Vending Machines (RVMs). So, let’s get right into it! The MOF has recently issued guidelines for applying tax deductions on contributions or sponsorships for Smart AI-Driven RVMs.
These guidelines serve as a roadmap for individuals and businesses interested in participating in this innovative initiative.
Objective
The purpose of these guidelines is to provide an explanation regarding the criteria and general procedures for applying for income tax deductions under section 34(6)(h) of the Income Tax Act 1967 for contributions/sponsorships of smart artificial intelligence (AI)-driven reverse vending machines (RVMs) for the purpose of income tax computation.
Background
The tax deduction incentive for the sponsorship of smart AI-driven reverse vending machines (RVMs) was announced through the 2023 Budget under section 34(6)(h) of the Income Tax Act 1967.
The rapid urban development and population growth have resulted in an increase in domestic and industrial solid waste, especially plastics, which have had a detrimental impact on Malaysia’s socio-economic development.
In addition to affecting the quality of life for the people, poorly managed plastic waste has significant implications for the economy and the country’s environment.
The Malaysia Plastic Sustainability Roadmap 2021-2030 has outlined strategies and action plans to address this plastic pollution issue sustainably, ensuring the country’s economic prosperity, health, and social well-being.
It also guides all stakeholders in ensuring that plastic sustainability reaches Malaysia’s larger plastic circular ecosystem.
One of the strategies in this Roadmap is to ensure that plastic materials are recycled and reused for as long as possible, which can be achieved through strengthening plastic waste collection and segregation activities.
In line with this Roadmap, the Government has targeted to increase the plastic collection rate for recycling by 40% by 2025. Therefore, AI technology has been adopted for plastic waste collection within the local community to encourage a shift towards recycling through education and to prevent plastic and aluminium pollution.
Eligible Forms of Contributions for Tax Deductions
Cash or financing for smart vending machines incorporating smart artificial intelligence (AI) technology.
Eligible Parties to Apply for Tax Deductions
Companies and non-companies, including individuals, partnerships, trusts, and cooperatives with business income.
Verification of Contributions
Cash/Financing
- The contributor must submit an official receipt/acknowledgement letter/financing agreement and verify the value of cash/equipment/services from the Ministry of Natural Resources, Environment and Climate Change, along with an official stamp based on the format provided in Appendix I and II; and
- The financing agreement must state the supplied equipment’s duration, location, and serial number.
General Procedure for Applying for Approval from the Minister of Finance
Contributors must submit a written application for tax deduction approval from the Minister of Finance, providing information based on the format in Appendix III to: Setiausaha
- Bahagian Cukai
- Perbendaharaan Malaysia
- Tingkat 6, Blok Tengah,
- Kompleks Kementerian Kewangan Presint 2,
- Pusat Pentadbiran Kerajaan Persekutuan
- 62592, Putrajaya.
Procedure to Enjoy Tax Deductions from the Inland Revenue Board
Claims for deductions on contributions to community/charity projects that have been approved must be made in the Income Tax Return Form for the relevant assessment year.
The following documents should be kept well for audit purposes by the Inland Revenue Board:
- Original approval letter from the Minister of Finance;
- Official receipt or acknowledgement letter of the contribution from the receiving organisation;
- Confirmation letter of the value of services/project costs from the relevant Government agency.
Effective Date
For contributions/sponsorships and applications received by the Ministry of Finance from April 1, 2023, to December 31, 2024.
Reference
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