Tag: Chargeable Income

  • Tax Exemption in relation to Late Life Asset Production Sharing Contract (PSC)

    Tax Exemption in relation to Late Life Asset Production Sharing Contract (PSC)

    Late Life Asset Production Sharing Contract (PSC)

    The Late Life Asset (LLA) PSC was adopted by Petronas in 2019 for specific oil and gas fields nearing the end of their productive life with resources of less than 30 MMstb.

    These PSCs have better terms for Contractors, intending to extend the value of the fields until abandonment.

    The first two LLA fields (the Tembungo and the MASA Cluster) were offered in the 2020 Malaysian Bidding Round.

    Proposed Incentives for Late-Life Assets (LLA) Projects

    In Budget 2022, some measures have been suggested to persuade oil and gas investors to participate in LLA projects. To read more:

    Petroleum (Income Tax) (Exemption) Order 2022

    IN exercise of the powers conferred by subsection 65C(1) of the Petroleum (Income Tax) Act 1967 [Act 543], the Minister makes the Petroleum (Income Tax) (Exemption) Order 2022, which was gazetted on September 27, 2022.

    This Order is deemed to have come into operation on 1 January 2020.

    162.1-Petroleum-Income-Tax-Exemption-Order-2022-P.U-A-302Download

    Tax Exemption

    The Minister may determine a project as a Late-Life Assets project which is a brownfield oil or gas field [an oil or gas field that has been developed and has reached a peak level of oil or gas production rate] and has an economic lifespan not exceeding ten years commencing from the year a Late-Life Assets production sharing contract is signed.

    Under this Order:

    • Petroleum Income Tax Exemption in respect of statutory income derived from petroleum operations concerning Late-Life Assets production sharing contract is granted, provided
      • a Late-Life Assets production sharing contract with Petroliam Nasional Berhad (“PETRONAS“) has been signed from 1 January 2020 to 31 December 2029.
    • The Statutory Income shall be determined per the formula provided in the Order.

    In determining the Chargeable Income referred to in the formula, the statutory income shall be ascertained in accordance with Chapter 4 of Part III of the Act and by having regard to the Petroleum (Income Tax) (Accelerated Capital Allowances) (Late-Life Assets Production Sharing Contract) Rules 2022 [P.U. (A) 301/2022]

    Non-application

    These Rules shall not apply to a chargeable person in the basis period for a year of assessment where the chargeable person—

    • has been granted accelerated capital allowance under the Petroleum (Income Tax)(Accelerated Capital Allowances) (Marginal Field) Rules 2013 [P.U. (A) 119/2013];
    • has been granted an investment allowance under the Petroleum (Income Tax) (Investment Allowance) Regulations 2013 [P.U.(A) 120/2013];
    • has been granted tax exemption under the Petroleum (Income Tax) (Exemption) Order 2013 [P.U. (A) 122/2013];
    • has been granted accelerated capital allowance under the Petroleum (Income Tax) (Accelerated Capital Allowances) (PETRONAS Marginal Field) Rules 2014 [P.U. (A) 304/2014];
    • has been granted tax exemption under the Petroleum (Income Tax) (Exemption) Order 2014 [P.U. (A) 305/2014];
    • has been granted an investment allowance under the Petroleum (Income Tax) (Investment Allowance for PETRONAS) Regulations 2021 [P.U.(A) 336/2021];
    • carries on petroleum operations in the Joint Development Area; or
    • carries on petroleum operations in an area under any agreement or arrangement made by the Government with any government of any territory outside Malaysia for the joint exploration and exploitation of petroleum in overlapping areas.
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  • Ascertaining Chargeable Income

    Ascertaining Chargeable Income

    1. Individual tax residents must subtract personal reliefs — such as those for the individual taxpayer, children, and so on — from their Total Income to arrive at Chargeable Income.

    2. Next, it is necessary to apply the appropriate tax rates to the Chargeable Income, which are determined by:

    👉 the type of taxpayer in question (for example, a knowledge worker in Iskandar Malaysia is taxed at 15%.) and

    👉 the rate of tax applicable to that person (Graduated Tax Rates apply to resident individuals).

    👉 Since non-individuals are not eligible for personal exemptions, the chargeable income of non-individuals (including companies, Limited Liability Partnership, etc.) will be the same as total income.

    3. As to how to Determine the Basis Period for each Source, Determine Gross Income from each Source, Compute Adjusted Income / Loss from each Business Source, Compute Statutory Income from each Source, Compute Aggregate Income, and Compute Total Income, are other stories.

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    1. 个人税收居民必须从其总收入（Total Income）中减去个人减免 — 如针对其本身、子女等的减免，以得出应征税收入（或称之为“课税收入”）。

    2. 接下来，有必要对应征税收入（或称之为“课税收入”，Chargeable Income）施予适当的税率，这一点由以下因素决定： 👉 有关纳税人的类型（例如，马来西亚伊斯干达的知识工作者的税率为15%）；和 👉 适用于该人的税率（累进税率 (Graduated Tax Rates) 仅适用于税务居民个人）。 👉 由于非个人不能享受个人减免的待遇，非个人（包括公司、有限责任合伙公司等）的应征税收入（或称之为“课税收入”）将与总收入 （Total Income）相同。

    3. 至于如何确定每个来源的基准期，确定每个来源的毛收入 (Gross Income)，计算每个业务来源的调整收入/损失 （Adjusted Income / Loss），计算每个来源的法定收入 (Statutory Income)，计算总收入（Total Income），以及计算课税收入 （Chargeable Income），是另一个故事

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