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The Malaysian Inland Revenue Board (“MIRB”) has issued Guidelines on the application for stamp duty relief.  A number of Orders in respect of the Income Tax Act 1967 and Stamp Act 1949 have also been gazetted.

MIRB’s Guidelines on the Application for Stamp Duty Relief under Section 15 and 15A of the Stamp Act 1949

Amendments to the Income Tax Exemption Orders on Principal Hub Incentives

Stamp Duty Remission for Purchase of First Residential Property

Income Tax and Stamp Duty Exemptions in relation to Malaysia Japanese Yen Bonds – Series A (2019)

Income Tax Exemption on Rental Income from Residential Property Received by Malaysian Resident Individuals

 

MIRB’s Guidelines on the Application for Stamp Duty Relief under Section 15 and 15A of the Stamp Act 1949

The Guidelines issued by the MIRB (available in Malay language only) are in relation to the following application for stamp duty relief:

Both Guidelines explain the application procedures by setting out prescribed conditions for approval, documents requirement and circumstances that could result in the withdrawal of the stamp duty relief granted.  A sample copy of the statutory declaration that is required to be submitted for the application of the above stamp duty relief is also attached in the respective Guidelines.

One of the additional conditions for applying Section 15A stamp duty relief is that the transfer of property must be for the purpose of achieving greater efficiency in operation.  A 3-year operational plan showing greater efficiency to be achieved by the transferor and transferee companies is required to be submitted together with the statutory declaration for the application of the stamp duty relief.  The operation plan should include:

  • Explanation on how the “greater efficiency in operation” is going to be achieved in the form of narrative, graph, chart, schedule and etc.  Examples include increase in input, output or profit of the Company;
  • Clear explanation of the objectives and plans to achieve greater efficiency in operation in 3 years; and
  • Relevant supporting documents that may support and show annual increase in efficiency.

In the event that greater efficiency in operation or the percentage of increase in efficiency cannot be achieved, the Company is required to set out reasonable reasons for the MIRB’s consideration.

Source for the Guidelines: Official portal of MIRB

Amendments to the Income Tax Exemption Orders on Principal Hub Incentives

The following Amendments Orders have been gazetted to amend the Income Tax Exemption Orders issued earlier on Principal Hub incentives:

The amendments are as follows:

  • Removal of the location requirement (outside Malaysia) for network companies receiving qualifying services or qualifying trading activities from a principal hub pursuant to the above 3 Amendment Orders.  With this removal, a company may be eligible for principal hub incentive even when all its network companies are located in Malaysia;
  • Amendment of the timing for fulfilling the conditions on extension of principal hub incentive for companies which have been granted approved OHQ / IPC / RDC status. The full-time employees and annual operating expenditure requirements are to be fulfilled at the time when the first application is made to the Malaysian Investment Development Authority between 1 January 2018 and 31 December 2020, instead of at the end of the last year of the exempt years of assessment (“YAs”). This amendment is made to ensure consistency with the other 2 Orders on principal hub incentive;
  • Rectification of the typo error on the condition of minimum amount of annual operating expenditure from RM13,000,000,00.00 to RM13,000,000.00 in the Income Tax (Exemption) (No. 8) 2018 (Amendment) Order 2019. 

The above amendments are effective from YA 2018.

Stamp Duty Remission for Purchase of First Residential Property

Stamp Duty (Remission) Order 2019 has been released and gazetted.  It provides for stamp duty remission of RM5,000 on the instrument of transfer executed for the purchase of first residential property more than RM300,000 but not exceeding RM500,000.  The stamp duty shall only apply for sale and purchase agreement executed from 1 July 2019 to 31 December 2020 by an eligible Malaysian citizen.  

Income Tax and Stamp Duty Exemptions in relation to Malaysia Japanese Yen Bonds – Series A (2019)

The following exemptions are available in respect of Malaysia Japanese Yen Bonds – Series A (2019) guaranteed by Japan Bank for International Cooperation (for qualified institutional investor only) (Tekikaku Kikan Toshika Gentei) issued by the Government of Malaysia (“Bonds”):

  • Stamp duty exemption on any instrument in respect of the issuance, guarantee and services in relation to the issuance of the Bonds which is executed between 26 February 2019 and 31 December 2019 pursuant to the Stamp Duty (Exemption) Order 2019;
  • Income tax exemption on interest income and technical services fee derived from Malaysia by a non-resident in Malaysia in relation to the issuance of the Bonds with nominal value up to two hundred billion Yen, other than convertible loan stock, for a period of 10 years commencing from YA 2019 pursuant to the Income Tax (Exemption) Order 2019.

Income Tax Exemption on Rental Income from Residential Property Received by Malaysian Resident Individuals

It was proposed in 2018 Budget that a 50% tax exemption be given on rental income received by Malaysian resident individuals subject to conditions.

Income Tax (Exemption) (No. 2) Order 2019 has been gazetted to effect the above.  However, there are slight variances from the conditions set out in 2018 Budget proposal.  Below is a summary of the comparison of conditions:

Conditions set out in:

2018 Budget Proposal

Income Tax (Exemption)
(No. 2) Order 2019

Eligible person is a Malaysian resident individual.

The landlord shall be an individual citizen who resides in Malaysia and is the registered proprietor of the residential property.

Rental income received not exceeding RM2,000 per month for each residential home

As per 2018 budget proposal.

Residential home must be rented under a legal tenancy agreement between the owner and the tenant.

The tenancy agreement between landlord and the tenant which has been executed and stamped comes into effect on or after 1 January 2018.

Tax exemption is given for a maximum period of 3 consecutive YAs.

Tax exemption is given for a residential property that is rented out between 1 January 2018 to 31 December 2018 only.

The 50% tax exemption is given on statutory income derived from the rental of the residential property.  Each residential property shall be treated as a separate and distinct source of the rent.

The exemption is for YA 2018 only.

Source for the Orders: Official portal of e-Federal Gazette

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 or require further clarification, 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 organisation at the following telephone numbers for respective offices:

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
lsoh@kpmg.com.my
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
nicholascrist@kpmg.com.my
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
leannekoh@kpmg.com.my
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
bneoh@kpmg.com.my
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
guanhengong@kpmg.com.my
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
meiseenchang@kpmg.com.my
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
ivangoh@kpmg.com.my
+ 603 7721 7012

 

 

 

Evelyn Lee 
Executive Director –
Penang Tax
evewflee@kpmg.com.my
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
reglau@kpmg.com.my
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
titustseu@kpmg.com.my
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
flng@kpmg.com.my
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
ycchuah@kpmg.com.my
+605 253 1188 (ext. 320)