Tax Espresso Form E, FAQs on CbCR and others February 2019 1
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: 2019 Due Date Task 28 February 1 March 1. 2020 tax estimates for companies with March year-end 2. 6 th month revision of tax estimates for companies with August year-end 3. 9 th 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 2
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 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 3
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. Back to top 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 y 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; 4
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. Back to top 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. Back to top 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. Back to top 5
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 Managing kgsim@deloitte.com +603 7610 8849 Tan Hooi Beng Deputy Managing hooitan@deloitte.com +603 7610 8843 Stefanie Low Executive gelow@deloitte.com +603 7610 8891 Thin Siew Chi Executive sthin@deloitte.com +603 7610 8878 Choy Mei Won mwchoy@deloitte.com +603 7610 8842 Suzanna Kavita sukavita@deloitte.com +603 7610 8437 Business Process Solutions Julie Tan Executive jultan@deloitte.com +603 7610 8847 Loke Chee Kien cheloke@deloitte.com +603 7610 8247 Shareena Martin sbmartin@deloitte.com +603 7610 8925 Capital Allowances Study Chia Swee How Executive swchia@deloitte.com +603 7610 7371 Sumaisarah Abdul Sukor Associate sabdulsukor@deloitte.com +603 7610 8331 Global Employer Services Ang Weina Executive angweina@deloitte.com +603 7610 8841 Chee Ying Cheng yichee@deloitte.com +603 7610 8827 Michelle Lai michlai@deloitte.com +603 7610 8846 Government Grants & Incentives Tham Lih Jiun Executive ljtham@deloitte.com +603 7610 8875 6
Thin Siew Chi Executive sthin@deloitte.com +603 7610 8878 Peggy Wong pwong@deloitte.com +603 7610 8529 Indirect Tax Tan Eng Yew Executive etan@deloitte.com +603 7610 8870 Senthuran Elalingam Executive selalingam@deloitte.com +603 7610 8879 Chandran TS Ramasamy ctsramasamy@deloitte.com +603 7610 8873 Larry James Sta Maria lstamaria@deloitte.com +603 7610 8636 Wong Poh Geng powong@deloitte.com +603 7610 8834 International Tax & Value Chain Alignment Tan Hooi Beng Deputy Managing hooitan@deloitte.com +603 7610 8843 Mergers & Acquisitions Sim Kwang Gek Managing kgsim@deloitte.com +603 7610 8849 Private Wealth Services Chee Pei Pei Executive pechee@deloitte.com +603 7610 8862 Gooi Yong Wei Executive ygooi@deloitte.com +603 7610 8981 Tax Audit & Investigation Chow Kuo Seng Executive kuchow@deloitte.com +603 7610 8836 Stefanie Low Executive gelow@deloitte.com +603 7610 8891 Transfer Pricing Theresa Goh Executive tgoh@deloitte.com +603 7610 8837 Subhabrata Dasgupta Executive sudasgupta@deloitte.com +603 7610 8376 Philip Yeoh Executive phyeoh@deloitte.com +603 7610 7375 Gagan Deep Nagpal gnagpal@deloitte.com +603 7610 8876 Justine Fan jufan@deloitte.com +603 7610 8182 7
Vrushang Sheth vsheth@deloitte.com +603 7610 8534 Anil Kumar Gupta anilkgupta@deloitte.com +603 7610 8224 Sectors / Names Designation Email Telephone Automotive Stefanie Low Executive gelow@deloitte.com +603 7610 8891 Consumer Products Sim Kwang Gek Managing kgsim@deloitte.com +603 7610 8849 Financial Services Chee Pei Pei Executive pechee@deloitte.com +603 7610 8862 Gooi Yong Wei Executive ygooi@deloitte.com +603 7610 8981 Mark Chan marchan@deloitte.com +603 7610 8966 Mohd Fariz Mohd Faruk mmohdfaruk@deloitte.com +603 7610 8153 Oil & Gas Toh Hong Peir Executive htoh@deloitte.com +603 7610 8808 Kelvin Kok kekok@deloitte.com +603 7610 8157 Real Estate Chia Swee How Executive swchia@deloitte.com +603 7610 7371 Tham Lih Jiun Executive ljtham@deloitte.com +603 7610 8875 Telecommunications Thin Siew Chi Executive sthin@deloitte.com +603 7610 8878 Other Specialist Groups / Names Designation Email Telephone Chinese Services Group 8
Tham Lih Jiun Executive ljtham@deloitte.com +603 7610 8875 Japanese Services Group Julie Tan Executive jultan@deloitte.com +603 7610 8847 Korean Services Group Chee Pei Pei Executive pechee@deloitte.com +603 7610 8862 Lily Park Sung Eun Associate lipark@deloitte.com +603 7610 8595 Branches / Names Designation Email Telephone Penang Ng Lan Kheng Executive lkng@deloitte.com +604 218 9268 Au Yeong Pui Nee pnauyeong@deloitte.com +604 218 9888 Everlyn Lee evelee@deloitte.com +604 218 9913 Monica Liew monicaliew@deloitte.com +604 218 9888 Tan Wei Chuan wctan@deloitte.com +604 218 9888 Ipoh Ng Lan Kheng Executive lkng@deloitte.com +604 218 9268 Lam Weng Keat welam@deloitte.com +605 253 4828 Melaka Julie Tan Executive jultan@deloitte.com +603 7610 8847 Gabriel Kua gkua@deloitte.com +606 281 1077 Johor Bahru Chee Pei Pei Executive pechee@deloitte.com +603 7610 8862 Thean Szu Ping spthean@deloitte.com +607 222 5988 9
Kuching Tham Lih Jiun Executive ljtham@deloitte.com +603 7610 8875 Philip Lim Su Sing suslim@deloitte.com +608 246 3311 Chai Suk Phin Associate spchai@deloitte.com +608 246 3311 Kota Kinabalu Chia Swee How Executive swchia@deloitte.com +603 7610 7371 Cheong Yit Hui Manager yicheong@deloitte.com +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 10
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 11
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