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Windfall Profit LevyElectricity and oil palm fruit have become prescribed goods for the purposes of the Windfall Profit Levy Act, 1998. Theimpact of this is as follows:ImpactComputation of Windfall Profit Levy (WPL)Electricity:Producers of electricity will be subject to a windfall profit levy (WPL) on a return [Profit (before interest, tax and WPL)on assets (ROA) which exceeds 9% per financial year. – (9% of fixed assets)] x 30%WPL is payable pursuant to the Windfall Profit Levy (Electricity) Order 2008.Oil Palm fruit: i) For Peninsular Malaysia:Plantation companies/oil palm fruit producers who own oil palm holdings which WPL = (Monthly average national price ofin aggregate are not less than 100 acres are subject to a WPL in respect ofcrude palm oil – RM2,000) x 0.03 x monthly totaloil palm fruit produced.production of oil palm fruit in metric tonnesWPL is payable pursuant to the Windfall Profit Levy (Oil Palm Fruit) Order 2008. ii) For Sabah and Sarawak:WPL = (Monthly average national price ofcrude palm oil – RM2,000) x 0.015 x monthly totalproduction of oil palm fruit in metric tonnesOther Gazette OrdersSeveral other Gazette Orders have been recently issuedincluding the following:- Income Tax (Deduction of Tax on the Distribution ofIncome of a Family Fund, Family Re-Takaful Fund orGeneral Fund) Rules 2008- Income Tax (Set-Off for Tax Charged on ActuarialSurplus) Rules 2008Indirect TaxService TaxWith effect from July 1, 2008, the annual sales turnoverthreshold for restaurants (excluding those located inhotels) has increased from RM300,000 to RM3 million,pursuant to the Service Tax (Amendment) Regulations2008. This means that service tax cannot be imposed by arestaurant (other than one located in a hotel) unless itsturnover within a twelve-month period exceeds RM3 million.Extension of Time to AppealTaxpayers who seek to appeal against a decision of theDirector General of Customs may do so by filing aprescribed form, Form A within 30 days from the date ofwritten notification of such decision. In the case where itis inevitable that an appeal needs to be filed out of time,the taxpayer may apply for an extension of time underRegulation 3 of the Customs (Appeal Tribunal) Regulations2007. The Customs Appeal Tribunal has issued guidelineson such applications (for an extension of time to fileappeals). Essentially, the application can be made by wayof a letter to the Director General of Customs or hisrepresentative indicating the reasons for the failure to filethe appeal within the stipulated time frame. The saidapplication must be sent by way of Registered Post or bypersonal service. (Applications sent by personal servicewould need to be acknowledged by the Customs officer).Double Tax AgreementsMalaysia and Qatar signed a double tax agreement (DTA)on July 3, 2008. The details of the DTA will be reportedwhen this information is available.ConclusionThe above summarises the tax developments in Malaysiaover the last few months. It is important that reference bemade to the relevant legislation, guidelines and publicrulings to ensure a clear understanding of the changes. Asindicated at the outset, the 2009 Budget Proposals have notbeen announced at the time of writing this article, andclearly, we can expect several tax proposals. It is hopedthat the proposals will take account of the increased costsof doing business and rising costs of living affectingMalaysians as a whole.Renuka Bhupalan is a Director at TAXAND MALAYSIASdn Bhd which is part of the TAXAND network of independenttax consulting firms in 44 jurisdictions. She can be contactedat rb@taxand.com.my. The views expressed are the personalviews of the writer.The Analysis of the 2009 Budget Proposals will bepublished in the October 2008 issue of The Malaysian Accountant.6 | The Malaysian Accountant | August 2008 www.micpa.com.my
FEATURECorporate Governance Analysisin MalaysiaBY RHB RESEARCHGood corporate governance is always ablessing to investors, which heightens inimportance given the difficulty in aligningthe interest of shareholders withbondholders.As an example, company owners may think abusiness venture that could yield an expected return oninvestment (ROI) of 20% is appealing despite a failure rateof 70%. However, from the standpoint of bond investors,incremental benefits from taking excessive risk will mostlyaccrue to equity owners at the expense of lenders.In this case, strict financing covenants are an optionthat bondholders can use to protect themselves incurtailing moral hazard and reducing chances of businessowners from taking advantage of this asymmetric rewardprofile.In other instances, a complicated ownership structureand “poison pill” for corporate takeovers may help equityowners obtain a firm grip of company ownership. However,such practices may impede corporate takeovers, indulgepoor management and prejudice the interest of creditors.In the local bond market context, we highlight four broadcategories of poor corporate governance: non-complianceof information covenants; related party transactions andimproper payments; misappropriation of funds; andearnings manipulation.We offer some suggestions for investors to search fornascent signs of deteriorating corporate governance andearnings quality, including a company’s timelydissemination of information, growing related partytransactions, to be watchful for purposes and use of bondproceeds and potential signs of earnings manipulation.Broad corporate governanceissues in MalaysiaAt the root of finance principles, excess funds provided byinvestors feed through businesses which require financing,in exchange for gaining a certain expected rate of returnin future at the expense of sacrificing existing spendingpatterns.However, how can the suppliers of funds be assuredtheir funds will be put into productive projects, rather thanwww.micpa.com.myAugust 2008 | The Malaysian Accountant |7
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