Malaysia: Finance Act 2021, effective date 1 January 2022

The tax measures in the Finance Act are substantially similar to the tax provisions as provided in the Finance Bill 2021.

Tax measures substantially similar to tax provisions in the Finance Bill 2021

The Finance Act 2021 was published 31 December 2021, and the effective date is 1 January 2022.

Read a January 2022 report prepared by the KPMG member firm in Malaysia

The tax measures in the Finance Act are substantially similar to the tax provisions as provided in the Finance Bill 2021 (November 2021) including:

  • Repeal of income tax exemption on foreign-source income
  • Impose a special one-time “prosperity tax” (Cukai Makmur) at a rate of 33% on companies with chargeable income exceeding RM100 million
  • Extend the time period for carrying forward unabsorbed business losses, to 10 years (from seven years)
  • Extend the time period to carry forward and use special reinvestment allowances for an additional two years (from the standard 15-year period)
  • Extend the tax rebate available for certain small and medium-sized enterprises (SMEs) and limited liability partnerships (LLPs) for an additional year, through 31 December 2022
  • Provide an exemption for interest income from a unit trust that is an RMMF (republic money market fund) and distributed to certain unit holders
  • Address the tax exemption on interest when asset-backed securities are involved
  • Impose withholding tax at a rate of 2% on payments made to an agent, dealer or distributor
  • Requirements for research and development (R&D) companies and contract R&D companies to obtain certain administrative approval

 

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