Act 53 - AGC

1 LAWS OF MALAYSIAREPRINTPUBLISHED BYTHE COMMISSIONER OF LAW REVISION, MALAYSIAUNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968IN COLLABORATION WITH MALAYAN LAW JOURNAL SDN BHD AND PERCETAKAN NASIONAL MALAYSIA BHD2006 Act 53 INCOME TAX ACT 1967 Incorporating all amendments up to 1 January 2006053e .FM Page 1 Thursday, April 6, 2006 12:07 PMPREPARED FOR PUBLICATION BYMALAYAN LAW JOURNAL SDN BHDAND PRINTED BYPERCETAKAN NASIONAL MALAYSIA BERHAD KUALA LUMPUR BRANCH20062 INCOME TAX ACT 1967 First (Act No. 47 of 1967) (Act 53 October 1971)PREVIOUS REPRINTSF irst Reprint ..1980 Second Reprint ..1993 Third Reprint ..2002053e .FM Page 2 Thursday, April 6, 2006 12:07 PM3 LAWS OF MALAYSIAAct 53 ARRANGEMENT OF SECTIONSINCOME TAX ACT 1967 PART title and IIIMPOSITION AND GENERAL CHARACTERISTICSOF THE of income tax3A.(Deleted) to tax in respect of offshore business activity3C.(Deleted) of income on which tax is classes of income on which tax is in which chargeable income is to be of rebate on loan to a small rebate on : : companies and bodies of persons9.

2 (Deleted)10.(Deleted)053e .FM Page 3 Thursday, April 6, 2006 12:07 PM4 Laws of MalaysiaACT 53 Section11.(Deleted) of business income in certain provisions as to employment income13A.(Deleted) provisions as to dividend of interest and royalty income in certain of special classes of income in certain pensions, of pensions, IIIASCERTAINMENT OF CHARGEABLE INCOMEC hapter 1 of Part provisions for the interpretation of Part IIIC hapter 2 Basis years and basis period of a person other than a company, trust body or period of a company, trust body or co-operative societyChapter 3 Gross income of sections 24 to period to which gross income from a business is period to which gross income from an employment is period to which gross income in respect of dividend is period to which gross income in respect of interest, etc., is period to which gross income not provided for by sections 24 to 27is period to which income obtainable on demand is provisions applicable to gross income from a business053e.

3 FM Page 4 Thursday, April 6, 2006 12:07 PMIncome Tax5 Section31.(Deleted) provisions applicable to gross income from an employmentChapter 4 Adjusted income and adjusted income provisions applicable to adjusted income from a deduction for research deduction for contribution to an approved research institute orpayment for use of services of an approved research institute or in to direct special treatment in the computation of business incomein certain cases37.(Deleted) provisions applicable to adjusted income from an on deduction of entertainment not of adjusted income or adjusted loss from a business for anaccounting periodChapter 5 Statutory incomeChapter 6 Aggregate income and total relief for companiesChapter 7 Chargeable income and aggregation of husband s and wife s for for individual and Hindu joint for individual on interest for wife or former wife053e .FM Page 5 Thursday, April 6, 2006 12:07 PM6 Laws of MalaysiaACT for for insurance of section 49 where husband and wife are living must be claimedChapter 8 Special of Part III in certain special and air transport of shipping profits54B.

4 (Deleted) applicable where partnership is a partner in another receivable by partnership otherwise than from re-insurance: chargeable income, reduced rate and of sections 60 and 60A to a takaful income of life fund subject to insurance: chargeable income, reduced rate and exempt business60D.(Deleted)60E.(Deleted) holding holding company listed on Bursa fund management fund generally053e .FM Page 6 Thursday, April 6, 2006 12:07 PMIncome of Real Estate Investment Trust of Property Trust deduction for qualifying capital deduction for treatment on rent from the letting of real property of a Real EstateInvestment Trust or Property Trust of a unit trust from the letting of real property is not income froma under SocietiesPART IVPERSONS chargeability: general responsibility and to appoint of ships and captains of joint and bodies of s and Ruling ChiefsPART of income by a person other than a company, trust body or co-operative society053e.

5 FM Page 7 Thursday, April 6, 2006 12:07 PM8 Laws of MalaysiaACT of income by every company, trust body or co-operative to call for specific returns and production of to call for statement of bank accounts, of access to buildings and documents, to call for to keep records and give to keep documents for ascertaining chargeable income and by concerning persons other than the maker of the by by to call for further deemed to be made with due of addressPART VIASSESSMENTS AND APPEALSC hapter 1 and additional assessments in certain and making of of of double of of assessmentChapter 2 Special Commissioners and the Clerk053e .FM Page 8 Thursday, April 6, 2006 12:07 PMIncome of of time for by Director of appealsPART VIICOLLECTION AND RECOVERY OF of tax103A.(Deleted) from persons leaving of customs clearance in certain by of tax from emoluments and of tax from contract by of tax payable and payment by instalments for of tax from of tax from interest or royalty in certain of sections 109 and 110 to income derived by a of tax from special classes of income in certain cases derivedfrom of tax from interest paid to a of tax on the distribution of income of a unit for tax of an offshore company for of of an offshore company to refundPART VIIAFUND FOR TAX of fund for Tax applicability of section 14A of the Financial Procedure Act 1957053e.

6 FM Page 9 Thursday, April 6, 2006 12:07 PM10 Laws of MalaysiaACT 53 PART VIIIOFFENCES AND to furnish return or give notice of Malaysia without payment of of of by to keep provisions as to offences under sections 113, 115, 116, 118 , etc., payable notwithstanding institution of proceedings123.(Deleted) to compound offences and abate or remit of penalties imposed under Part of subordinate courtPART IXEXEMPTIONS, REMISSION AND OTHER from tax: of exemption128.(Deleted) of citizen in respect of error or taxation relief from double taxation053e .FM Page 10 Thursday, April 6, 2006 12:07 PMIncome Tax11 PART IXASPECIAL INCENTIVE incentive reliefPART XSUPPLEMENTALC hapter 1 Director General and his of Minister to give directions to Director of Director General s of materials to be treated as confidentalChapter 2 Controlled companies and powers to protectthe revenue in case of certain to disregard certain regarding certain transactions by non-residentsChapter 3 and defects in assessments, notices and other to direct where returns, etc.

7 , are to be of of notices and other as to approvals and directions given by Minister or of rules and orders laid before Dewan to approve pension or provident fund, scheme or for making refunds and .FM Page 11 Thursday, April 6, 2006 12:07 PM12 Laws of MalaysiaACT on persons holding themselves out as tax agents, taxconsultants, to make to enter into an agreement with regard to tax and saving provisionsSCHEDULE 1 SCHEDULE 2 SCHEDULE 3 SCHEDULE 4 SCHEDULE 4A (Deleted)SCHEDULE 4B SCHEDULE 4C (Deleted)SCHEDULE 5 SCHEDULE 6 SCHEDULE 7 SCHEDULE 7 ASCHEDULE 7 BSCHEDULE 8 SCHEDULE 9053e .FM Page 12 Thursday, April 6, 2006 12:07 PM13 LAWS OF MALAYSIAAct 53 INCOME TAX ACT 1967An Act for the imposition of income tax.[Throughout Malaysia 28 September 1967]PART IPRELIMINARYS hort title and commencement1.(1) This Act may be cited as the Income Tax Act 1967.(2)(Omitted).(3) This Act shall have effect for the year of assessment 1968and subsequent years of (1) In this Act, unless the context otherwise requires adjusted income , in relation to a source and a basis period,means the Employees Provident Fund adjusted income ascertainedin accordance with this Act; adjusted loss , in relation to a source and a basis period, meansadjusted loss ascertained in accordance with this Act; aggregate income , in relation to a person and a year ofassessment, means aggregate income ascertained in accordancewith this Act; approved loan means (a)any loan or credit made to the Government, StateGovernment (including any loan or credit made to aperson other than the Government or StateGovernment where the loan or credit is guaranteed bythe Government or State Government), local authorityor statutory body; or053e.

8 FM Page 13 Thursday, April 6, 2006 12:07 PM14 Laws of MalaysiaACT 53(b)any loan or credit other than a loan or credit of thekind specified in paragraph (a), made to a personpursuant to an application received prior to 25 October1996 where the amount of such loan or credit exceedstwo hundred and fifty million ringgit,by a person pursuant to an application received prior to 25 October1996 not resident in Malaysia:Provided that (i) the loan or credit has been approved by the Ministerof Finance; and(ii) the loan or credit agreement was executed inMalaysia or where the loan or credit agreement withthe prior approval of the Minister was executedoutside Malaysia; approved operational headquarters company has the meaningassigned thereto by section 60E; approved scheme means the Employees Provident Fund orany pension or provident fund, scheme or society approved by theDirector General under section 150; assessment means any assessment or additional assessmentmade under this Act; authorized officer means, within the scope of his authority (a)an officer authorized by subsections 136(1) to (4) toexercise any function of the Director General; or(b)an officer authorized under subsection 136(5) toexercise or assist in exercising any such function; basis period , in relation to a person, a source of his and a yearof assessment, means such basis period, if any, as is ascertained inaccordance with section 21 or 21A; basis year has the meaning assigned by section 20; body of persons means an unincorporated body of persons(not being a company), including a Hindu joint family butexcluding a partnership.

9 Building includes any structure erected on land (not beingplant or machinery);053e .FM Page 14 Thursday, April 6, 2006 12:07 PMIncome Tax15 business includes profession, vocation and trade and everymanufacture, adventure or concern in the nature of trade, butexcludes employment; Central Bank means the Central Bank of Malaysia establishedunder section 3 of the Central Bank of Malaysia Act 1958 [Act519]; chargeable income in relation to a person and a year ofassessment, means chargeable income ascertained in accordancewith this Act; Clerk means the Clerk to the Special Commissioners; company means a body corporate and includes any body ofpersons established with a separate legal identity by or under thelaws of a territory outside Malaysia; composite assessment means a composite assessment made inaccordance with section 96A; controlled company means a company having not more thanfifty members and controlled, in the manner described by section139, by not more than five persons; co-operative society means any co-operative societyregistered under any written law relating to the registration ofco-operative societies in Malaysia; director , in relation to a company, includes any personoccupying the position of director (by whatever name called), anyperson in accordance with whose directions or instructions thedirectors are accustomed to act and any person who (a)is a manager of the company or otherwise concernedin the management of the company s business;(b)is remunerated out of the funds of that business.

10 And(c)is, either on his own or with one or more associateswithin the meaning of subsection 139(7), thebeneficial owner of (or able directly or through themedium of other companies or by any other indirectmeans to control) twenty per cent or more of theordinary share capital of the company ( ordinary sharecapital here meaning all the issued share capital ofthe company, by whatever name called, other thancapital the holders whereof have a right to a dividend053e .FM Page 15 Thursday, April 6, 2006 12:07 PM16 Laws of MalaysiaACT 53at a fixed rate but have no other right to share in theprofits of the company); Director General means the Director General of InlandRevenue referred to in section 134; employee , in relation to an employment, means (a)where the relationship of master and servant subsists,the servant;(b)where that relationship does not subsist, the holder ofthe appointment or office which constitutes theemployment; employer , in relation to an employment, means (a)where the relationship of master and servant subsists,the master;(b)where that relationship does not subsist, the personwho pays or is responsible for paying anyremuneration to the employee who has theemployment, notwithstanding that that person and theemployee may be the same person acting in differentcapacities.