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To effect the 2018 Budget proposal for expenditure incurred on the purchase of ICT equipment and computer software packages to be eligible for an accelerated CA, the Ministry of Finance released the Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment) Rules 2018 (“the ACA Rules”).  The ACA Rules allows for an accelerated CA to be fully claimed in four years by a resident in Malaysia based on initial allowance of 20% and annual allowance of 20%.  The ACA Rules was gazetted on 5 July 2018 and is effective from Year of Assessment (“YA”) 2017. 

A copy of the ACA Rules is available at http://www.federalgazette.agc.gov.my.

The 2018 Budget also proposed for a similar accelerated CA for expenditure incurred on the development of customised software comprising of consultation fee, licensing fee and incidental fee related to software with effect from YA 2018.  However, no further Income Tax Rules or new legislation has been issued to effect the above proposal.

Practical Issue

A Company which has filed its Tax Return for YA 2017 may revise its tax computation and submit an amended Tax Return in order to claim the accelerated CA rate of 20% (higher than the current annual CA rate claimed at 10%) on the expenditure incurred on the purchase of ICT equipment and computer software package, to accelerate the CA claim. The revision must be made within five years after the end of the year the ACA Rules is published in the Gazette i.e. by 31 December 2023.  

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

 

Contact KPMG

Should you have any questions, please do not hesitate to contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization at telephone number (603) 7721 3388.