Tax Espresso - Deloitte United States · Where the employer is a company or a Labuan company, the...
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Tax Espresso Form E, FAQs on CbCR and others February 2019
Transcript of Tax Espresso - Deloitte United States · Where the employer is a company or a Labuan company, the...
Tax Espresso – February 2019
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Tax Espresso Form E, FAQs on CbCR and others
February 2019
Tax Espresso – February 2019
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Greetings from Deloitte Malaysia Tax Services
Quick links: Deloitte Malaysia
Inland Revenue Board of Malaysia
Takeaways:
1. SKF Bearing Industries (Malaysia) Sdn Bhd v KPHDN (High Court)
2. Income Tax (Exemption) (No. 9) Order 2018 [P.U.(A) 388/2018]
3. IRBM’s updates on Form E (Remuneration for the year 2018)
4. IRBM updated FAQs on Country-by-Country Reporting (CbCR)
Upcoming events:
1. 2018 Employer’s Income Tax Reporting Seminar (14 February 2019)
2. Oil and Gas Tax Seminar (25 February 2019)
3. SST – Get up to speed (28 February 2019)
Important deadlines:
Task 2019 Due Date
28 February 1 March
1. 2020 tax estimates for companies with March year-end √
2. 6th month revision of tax estimates for companies with
August year-end √
3. 9th month revision of tax estimates for companies with
May year-end √
4. Statutory filing of 2018 tax returns for companies with
July year-end √
5. Due date for 2019 CbCR notification for companies with
February year-end √
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SKF Bearing Industries (Malaysia) Sdn Bhd v Ketua Pengarah Hasil Dalam
Negeri (KPHDN) (High Court)
Issue:
Whether the taxpayer’s application for judicial review to cancel the notice of additional
assessment issued by the Director General of Inland Revenue (DGIR) pursuant to the DGIR’s
refusal to abide to the advance ruling dated 13 September 2012 made under Section 138B of the Income Tax Act 1967 (ITA) on the taxpayer’s sale of intangible assets of RM400.7 million
should be allowed.
Decision:
The High Court dismissed the taxpayer’s application for judicial review with the following grounds of judgement:
1. It is clear from Rule 2(3) of the Income Tax (Advance Ruling) Rules 2008 [the Rules 2008]
that an advance ruling should be issued for arrangements that are seriously contemplated by the person applying for the ruling. Furthermore Rule 3(a) of the Rules 2008 provides that the
DGIR shall not make an advance ruling in the circumstances where at which time the
application for advance ruling is made or at any time before the advance ruling is issued, the person applying for the advance ruling has entered into or effected the arrangement for
which the advance ruling is sought.
It is clear that the taxpayer had already entered into a Contract Manufacturing Agreement (CMA) with SKF Sweden on 1 December 2011, i.e. before the advance ruling application was
made by the taxpayer on 6 April 2012. Based on the CMA, the taxpayer became a contract
manufacturer to SKF Sweden and SKF Sweden will gain ownership of the intangible assets on 1 January 2012. With that, arrangement has been entered into and effected prior to the
advance ruling application.
[Note: The taxpayer had on 6 April 2012 applied to the DGIR for an advance ruling under
Section 138B of the ITA pertaining to the income tax treatment for the receipts of RM400.7
million by the taxpayer from SKF Sweden for the sale of the taxpayer’s intangible assets. On
13 September 2012, the DGIR had made an advance ruling that such one-off payment by SKF Sweden to the taxpayer would constitute a capital receipt and not subject to income tax
under the ITA.
Upon the advance ruling, the taxpayer and SKF Sweden entered into a contract of Intangible
Property Sale Agreement (IPSA) dated 26 October 2012, by which the SKF Sweden would
pay RM400.7 million to the taxpayer for its sale of intangible assets. The taxpayer had
thereafter treated the receipt of RM400.7 million as a capital receipt and did not subject it to income tax. Further to the IRBM’s audit on the taxpayer, the DGIR had informed via a letter
dated 4 April 2017 that the taxpayer’s receipt of RM400.7 million constituted income receipts
and was subject to tax under the ITA.]
2. The fact that the taxpayer had already entered into a CMA with SKF Sweden on 1 December
2011, which was not disclosed to the DGIR in the taxpayer’s application for advance ruling,
the taxpayer failed to fulfill the requirements that the issuance of advance ruling was for arrangement seriously contemplated for and not entered into or effected before the
application for the advance ruling made. The taxpayer failed to provide relevant information
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and documents (i.e. information related to the CMA) in its application for advance ruling.
That was a material omission by the taxpayer. Thus the taxpayer fell under the exception
provision of Section 138B(6)(b) of the ITA and the advance ruling did not apply to the arrangement made by the taxpayer.
3. In the taxpayer’s income tax return form (ITRF) for year of assessment (YA) 2012, the taxpayer declared that there was no advance ruling applicable to them. This contradicted
Rule 15 of the Rules 2008 which mandatorily requires the taxpayer to disclose in its ITRF
whether any advance ruling applies to the taxpayer. The taxpayer had violated Rule 2(3),
Rule 3(a) and Rule 15 of the Rules 2008 so the advance ruling made by the DGIR did not apply to taxpayer. The advance ruling also did not apply to the taxpayer since the taxpayer
fell under the exception provision of Section 138B(6)(b) of the ITA.
4. The taxpayer had failed to demonstrate the existence of special or extraordinary
circumstances which made the taxpayer’s application for judicial review an exception for the
High Court to review the decision of the DGIR when there is already an appeal process under Section 99 (Government of Malaysia & Anor v. Jagdis Singh [1987] 2 MLJ 185). There was no
issue of lack of jurisdiction, or a blatant failure by the DGIR to perform some statutory duty
or serious breach of natural justice when DGIR’s refusal to adopt the advance ruling dated 13
September 2012 was within law and reasonable as permitted by Section 138B of the ITA and the Rules 2008. Hence the taxpayer should continue with its appeal via Form Q dated 19
September 2017 to the SCIT for the YAs 2010, 2011 and 2012 instead of filling the
application for judicial review.
The High Court found that the taxpayer’s application for judicial review was an abuse of the
Court's process and hence dismissed the taxpayer’s application.
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Income Tax (Exemption) (No. 9) Order 2018 [P.U.(A) 388/2018]
In Budget 2014, the Government had announced for the provision of green investment
tax allowance for the purchase of green technology assets and income tax exemption on the use of green technology services and system, to further strengthen the development
of green technology.
The Ministry of Finance (MOF) had gazetted the Income Tax (Exemption) (No. 9) Order
2018 (the Order) on 31 December 2018 pertaining to the income tax exemption for green technology services and is effective from YA 2018. As at the date of this publication, the
relevant orders for the Investment Tax Allowance (ITA) of qualifying capital expenditure
incurred on a green technology project and green technology assets listed in MyHijau
Directory have yet to be gazetted.
The Order exempts a qualifying company, i.e. a new or existing locally incorporated resident company which:
Carries on green technology services related to renewable energy, energy efficiency, electric vehicle, green building, green data centre, green certification and verification, or green
township (i.e., the qualifying activity) that has obtained annual verification from the
Malaysian Green Technology Corporation for the purpose of its business;
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Has a green policy related to environmental sustainability;
Has a minimum of one competent personnel in green technology;
Has at least 5 full time employees in Malaysia to carry on the qualifying activity; and
Incurs an approved minimum amount of annual operating expenditure in Malaysia to carry on
the qualifying activity and that expenditure should include local services provided by a local
service provider;
from the payment of income tax in respect of the statutory income derived from a qualifying
activity for a period of five years or until the year of assessment 2020, whichever is earlier.
The Order is in line with the Guidelines for Green Technology issued by the Malaysian
Investment Development Authority (MIDA). The Order also includes provisions for the exclusion
of intellectual property income in ascertaining the statutory income of the above-mentioned
qualifying company.
An application for exemption under the Order should be submitted to MIDA not later than 31
December 2020.
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IRBM’s updates on Form E (Remuneration for the year 2018)
Form E (Remuneration for the Year 2018) has been uploaded on the IRBM’s website and
can be downloaded for submission purposes at: IRBM website > Form > Download Form >
Employer > 2018.
Where the employer is a company or a Labuan company, the use of e-filing (e-E) is
mandatory. Availability of e-filing system for taxpayer and tax agents (TAef) is from 1 March 2019. For employers other than companies and Labuan companies, the use of e-filing is
encouraged. It is also advisable to refer to the 2019 Filing Programme for any important
information on the filing of Form e-E / E.
It is understood that the IRBM will no longer print and post the hardcopy version of Form E to
employers. With effect from the remuneration year 2018, employers other than companies and
Labuan companies who wish to submit the hardcopy version of the Form E are required to download and print the Form E in PDF format from the official website of the LHDNM.
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IRBM updated FAQs on Country-by-Country-Reporting (CbCR)
The IRBM has uploaded Frequently Asked Questions (FAQs) on CbCR, updated as at 8 January
2019 on its website.
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Tax Espresso – February 2019
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We invite you to explore other tax-related information at:
http://www2.deloitte.com/my/en/services/tax.html
Tax Team - Contact us
Service lines / Names Designation Email Telephone
Business Tax Compliance & Advisory Sim Kwang Gek Tan Hooi Beng
Stefanie Low Thin Siew Chi Choy Mei Won Suzanna Kavita
Managing Director
Deputy Managing Director
Executive Director
Executive Director
Director
Director
+603 7610 8849
+603 7610 8843
+603 7610 8891
+603 7610 8878
+603 7610 8842
+603 7610 8437
Business Process Solutions Julie Tan
Loke Chee Kien
Shareena Martin
Executive Director
Director
Director
+603 7610 8847
+603 7610 8247
+603 7610 8925
Capital Allowances Study Chia Swee How Sumaisarah Abdul Sukor
Executive Director
Associate Director
+603 7610 7371
+603 7610 8331
Global Employer Services Ang Weina Chee Ying Cheng
Michelle Lai
Executive Director
Director
Director
+603 7610 8841
+603 7610 8827
+603 7610 8846
Government Grants & Incentives
Tham Lih Jiun
Executive Director
+603 7610 8875
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Thin Siew Chi Peggy Wong
Executive Director
Director
+603 7610 8878
+603 7610 8529
Indirect Tax Tan Eng Yew Senthuran Elalingam Chandran TS Ramasamy Larry James Sta Maria Wong Poh Geng
Executive Director
Executive Director
Director
Director
Director
+603 7610 8870
+603 7610 8879
+603 7610 8873
+603 7610 8636
+603 7610 8834
International Tax & Value Chain Alignment Tan Hooi Beng
Deputy Managing
Director
+603 7610 8843
Mergers & Acquisitions Sim Kwang Gek
Managing Director
+603 7610 8849
Private Wealth Services Chee Pei Pei Gooi Yong Wei
Executive Director
Executive Director
+603 7610 8862
+603 7610 8981
Tax Audit & Investigation Chow Kuo Seng Stefanie Low
Executive Director
Executive Director
+603 7610 8836
+603 7610 8891
Transfer Pricing Theresa Goh Subhabrata Dasgupta Philip Yeoh Gagan Deep Nagpal
Justine Fan
Executive Director
Executive Director
Executive Director
Director
Director
+603 7610 8837
+603 7610 8376
+603 7610 7375
+603 7610 8876
+603 7610 8182
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Vrushang Sheth Anil Kumar Gupta
Director
Director
+603 7610 8534
+603 7610 8224
Sectors / Names Designation Email Telephone
Automotive
Stefanie Low
Executive Director
+603 7610 8891
Consumer Products Sim Kwang Gek
Managing Director
+603 7610 8849
Financial Services
Chee Pei Pei Gooi Yong Wei Mark Chan Mohd Fariz Mohd Faruk
Executive Director
Executive Director
Director
Director
+603 7610 8862
+603 7610 8981
+603 7610 8966
+603 7610 8153
Oil & Gas Toh Hong Peir Kelvin Kok
Executive Director
Director
+603 7610 8808
+603 7610 8157
Real Estate
Chia Swee How Tham Lih Jiun
Executive Director Executive Director
+603 7610 7371
+603 7610 8875
Telecommunications Thin Siew Chi
Executive Director
+603 7610 8878
Other Specialist Groups / Names
Designation Email Telephone
Chinese Services Group
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Tham Lih Jiun
Executive Director
+603 7610 8875
Japanese Services Group
Julie Tan
Executive Director
+603 7610 8847
Korean Services Group
Chee Pei Pei Lily Park Sung Eun
Executive Director
Associate Director
+603 7610 8862
+603 7610 8595
Branches / Names Designation Email Telephone
Penang Ng Lan Kheng
Au Yeong Pui Nee Everlyn Lee Monica Liew Tan Wei Chuan
Executive Director
Director
Director
Director
Director
+604 218 9268
+604 218 9888
+604 218 9913
+604 218 9888
+604 218 9888
Ipoh Ng Lan Kheng Lam Weng Keat
Executive Director
Director
+604 218 9268
+605 253 4828
Melaka Julie Tan Gabriel Kua
Executive Director
Director
+603 7610 8847
+606 281 1077
Johor Bahru
Chee Pei Pei Thean Szu Ping
Executive Director
Director
+603 7610 8862
+607 222 5988
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Kuching Tham Lih Jiun
Philip Lim Su Sing Chai Suk Phin
Executive Director
Director
Associate Director
+603 7610 8875
+608 246 3311
+608 246 3311
Kota Kinabalu Chia Swee How Cheong Yit Hui
Executive Director
Manager
+603 7610 7371
+608 823 9601
Sim Kwang Gek Tan Hooi Beng Stefanie Low Thin Siew Chi Julie Tan
Chia Swee How Ang Weina Tham Lih Jiun Tan Eng Yew Senthuran Elalingam
Chee Pei Pei Gooi Yong Wei Chow Kuo Seng
Theresa Goh
Subhabrata Dasgupta
Philip Yeoh Toh Hong Peir Ng Lan Kheng Choy Mei Won Suzanna Kavita
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Loke Chee Kien Shareena Martin Chee Ying Cheng Michelle Lai Peggy Wong
Chandran TS
Ramasamy
Larry James
Sta Maria Wong Poh Geng
Gagan Deep
Nagpal Justine Fan
Vrushang Sheth Anil Kumar
Gupta Mark Chan
Mohd Fariz Mohd Faruk
Kelvin Kok
Au Yeong
Pui Nee Everlyn Lee Monica Liew Tan Wei Chuan Lam Weng Keat
Gabriel Kua Thean Szu Ping Philip Lim Su Sing
Sumaisarah Abdul Sukor
Lily Park Sung Eun
Chai Suk Phin Cheong Yit Hui
Tax Espresso – February 2019
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Tax Espresso – February 2019
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