november 2008 examination - The Malaysian Institute Of Certified ...

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via a withholding tax charge. To enhance skills in theIslamic Financial sector to promote Malaysia as an Islamicfinancial hub, an exemption from withholding tax is givento non-resident individuals in respect of income arisingfrom the provision of technical advice, assistance orservices rendered in relation to Islamic Finance as proposedin the 2008 Budget and enacted in the Income Tax(Exemption) (No. 3) Order 2008. To qualify for thiswithholding tax exemption, the non-resident individualmust be verified by the Malaysia International IslamicFinancial Centre Secretariat as an expert in the field ofIslamic finance. This exemption is in force from September8, 2007 until December 31, 2016.Islamic Fund Management ServicesThe exemption from tax on income from the provision ofIslamic fund management services to foreign investors hasbeen widened to the provision of such services to localinvestors pursuant to the Income Tax (Exemption) (No. 6)Order 2008. The exemption is available to licensedMalaysian incorporated fund management companies.Accelerated Capital Allowances onSecurity Equipmentthis new provision, the 2007 Order referred to above is nolonger required and has been revoked by the Income Tax(Exemption) (Revocation) Order 2008. It should be notedthat revocation is effective from the year of assessment 2007.Revocation of Income Tax (AcceleratedCapital Allowance) Renewable EnergyRules (2005)The 2008 Budget proposed that companies generatingrenewable energy for their own consumption be granted100% investment tax allowance on their qualifying capitalexpenditure over a period of 5 years. Accordingly, thepreviously available accelerated capital allowances forsuch expenditure will no longer be available. Therefore the2005 Rules mentioned above have been revoked by thenew Income Tax (Accelerated Capital Allowance)(Renewable Energy) (Revocation) Rules 2008. Note that theinvestment tax allowance will only be available forapplications made to the Malaysian Industrial DevelopmentAuthority (MIDA) up to December 31, 2010.Withholding Tax Exemption forNon-Resident Experts in Islamic FinanceNon-resident consultants who provide technical advice,assistance or services in Malaysia are generally subject totax on the income arising therefrom. The tax is imposedThe Income Tax (Accelerated Capital Allowance) (SecurityControl Equipment or Monitor Equipment) Rules 2008have been gazetted and are effective for the years ofassessment 2008 to 2012. Accelerated capital allowanceswill be given in respect of specified equipment installed forsecurity in factories and for monitor equipment installed inspecified lorries. An initial allowance of 20% and anannual allowance of 80% will be given in relation to suchequipment. Effectively therefore, the equipment will befully depreciated for tax purposes in the first year.Non-Profit Oriented SchoolsIncome derived by qualifying persons from themanagement of registered non-profit oriented schools willbe exempt from tax pursuant to the Income Tax(Exemption) (No. 5) Order 2008 with effect from the yearof assessment 2008.Gifts of Personal Computers toEmployees and Payment ofBroadband SubscriptionsPursuant to the Income Tax (Exemption) (No. 4) Order2008, employees will not be taxed on gifts of personalcomputers from employers and on the payment by theiremployers of monthly broadband subscription fees(registered in the name of the employer). The exemptionapplies from the year of assessment 2008 to 2010. It4 | The Malaysian Accountant | August 2008 www.micpa.com.my
should be noted that hand phones with computer facilitiesare excluded from the exemption. From the employer’sperspective, the cost of providing these benefits will be taxdeductible pursuant to the Income Tax (Deduction for Giftsof New Personal Computers and Monthly BroadbandSubscription fees to Employees) Rules 2008.Accelerated Agriculture AllowanceQualifying agricultural expenditure incurred on anagricultural project or on a forest plantation project forrubber wood will be eligible for a 100% allowance (subjectto conditions) pursuant to the Income Tax (AcceleratedAgriculture Allowance) (Plantation of Rubber Wood Tree)Rules 2008.Public Ruling No. 2/2008 –Reinvestment AllowanceA Public Ruling on Reinvestment Allowance (RA) hasfinally been issued. RA claims have often been the focusof tax audits and it is therefore useful to have a PublicRuling to provide clarification on the IRB’s view of thefollowing:- projects that qualify for RA;- expenditure that qualifies for RA;- the period of eligibility for RA; and- the computation of RA.Taxpayers in the manufacturing and agriculturalsectors should familiarise themselves with Public RulingNo. 2/2008.Guidelines on the Income TaxTreatment From Adopting FRS 139 –Financial Instruments: Recognition andMeasurementLabuan Offshore CompaniesElection for Labuan Offshore Companies to beTaxed under the Income Tax Act, 1967 (ITA)The 2008 Budget proposed a change in the law allowingLabuan offshore companies (OCs), which have been taxedunder the Labuan Offshore Business Activity Tax Act, 1990(LOBATA) to elect irrevocably to be taxed under the ITA.The Finance Act 2007 amended the ITA and LOBATA toallow for this. The Labuan Offshore Business Activity Tax(Forms) (Amendment) Regulations 2008 were recentlygazetted, to provide for a prescribed form on which theelection is to be made. In addition, the Inland RevenueBoard has issued guidelines on the tax treatment of OCswhich elect to be taxed under the ITA.Liberalisation of Rules in Relation to LabuanOffshore CompaniesThe Labuan Offshore Financial Services Authority (LOFSA)has recently announced a liberalisation in the rulespertaining to OCs. LOFSA has granted a blanket approvalto allow OCs to:i) carry on business with Malaysian residents,ii) invest into domestic companies (so long as the holdingdoes not amount to a controlling holding); andiii) wholly own a domestic company to carry on an offshorebusinessIt should be noted however that where approvals arerequired from other regulatory authorities, such as BankNegara Malaysia, the Securities Commission and the ForeignInvestment Committee (FIC), such approvals must still beobtained. Further, LOFSA has issued a notification form whichOCs are required to submit when undertaking (i) – (iii) above.The Ministry of Finance (MOF) has issued the aboveguidelines which are applicable to financial institutionsonly and are effective from the year of assessment 2008.FRS 139 relates to the recognition and measurement offinancial instruments for accounting purposes. Althoughthe effective date for the implementation of FRS 139 hasbeen deferred by the Malaysian Accounting StandardsBoard, Bank Negara Malaysia (BNM) has incorporated asignificant portion of the FRS 139 into its reportingrequirements as per the BNM guidelines and directives onfinancial assets and liabilities. The purpose behind theMOF’s guidelines is to address the income tax treatmentarising from the adoption of FRS 139 with a view toconverging the accounting and tax treatment of financialassets and liabilities, in particular, the timing of incomerecognition and the deductibility of expenses. Theguidelines can be obtained from the MOF’s website:www.treasury.gov.my.www.micpa.com.myAugust 2008 | The Malaysian Accountant |5
Page 1: August 2008 www.micpa.com.my KDNPP
Page 4: PERSPECTIVEIt was a significant nig
Page 9 and 10: FEATURECorporate Governance Analysi
Page 11 and 12: a company’s audit, remuneration a
Page 13 and 14: Muslim jurists are of the opinionth
Page 15 and 16: governance.The Takaful industry is
Page 17 and 18: occasion of the Institute’s 50th
Page 19 and 20: accountancy profession. This is cle
Page 21 and 22: Session three was on “Working Abr
Page 23 and 24: MAY 2008 EXAMINATION RESULTSCPA STU
Page 25 and 26: Career Fairs and ExhibitionsThe Ins
Page 28 and 29: PROFESSIONAL NEWSMASB UpdateMalaysi
Page 30 and 31: currently accounted for in accordan
Page 32 and 33: PROFESSIONAL NEWSIFAC UpdateNew IFA
Page 34 and 35: Arnold Schilder Named to Lead IFAC'
Page 36 and 37: visit its home page at http://www.i
Page 38 and 39: GLOBAL INSIGHTNEWSfrom Down UnderA
Page 40 and 41: GLOBAL INSIGHTWORLDNEWSEUROPEAN COM
Page 42: The unusual rainfall in Taiping has

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