Amendments to the Income Tax Act 1967

by MH Law | May 22, 2024 | Legal Updates

Overview

The Income Tax (Amendment) Act 2024 introduces significant changes to the principal Income Tax Act of 1967, reflecting Malaysia's evolving tax policies. Below is a summary of the key amendments:

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Key Amendments

Definition of "Capital Asset" expanded to include

Movable and immovable property outside Malaysia.
Movable property in Malaysia, specifically shares in Malaysian companies not listed on the stock exchange, owned by companies, LLPs, trusts, or co-operatives.

Amendments to Section 15c

"Person" redefined to specifically include companies, LLPs, trust bodies, and co-operatives.
Updated the reference for "defined value" to subsection (4) instead of subsection (2).

Changes to Disposal Provisions (Section 65c)

Removed the definition of "shares" in this section.

Adjustment to Record-Keeping Requirements (Section 82)

"Printed" records no longer explicitly required, simplifying compliance with digital record-keeping norms.

Electronic Commerce (Section 82c)

Introduced self-billed electronic invoices, allowing businesses to generate invoices for goods/services sold electronically, subject to the Director General's conditions.

Revised Estimate Timeline (Section 107c)

Enhanced clarity on the timeline for filing revised tax estimates, allowing for submissions in the 11th, 9th, or 6th month of the basis period, in descending order of priority.

Updated Tax Rates for Disposal of Assets (Schedule 1, Part XXI)

New tax rates for disposal of movable property or shares:
- Acquired before 1 January 2024: 10% on chargeable income or 2% on gross disposal price.
- Acquired on or after 1 January 2024: Flat 10% on chargeable income.

Removal of Exemptions (Schedule 6)

Paragraph 38 of Schedule 6, which may have provided specific exemptions, has been deleted.

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Implications

Strengthened Tax Framework for Capital Assets
The broadened definition ensures wider tax coverage, particularly targeting offshore assets and unlisted shares in local companies.
Modernization of Tax Administration
The push towards digital invoicing aligns with global trends, promoting efficiency and reducing compliance burdens.
Revised Taxation on Asset Disposal
The tiered approach to asset disposal tax reflects efforts to balance equity and incentivize long-term investment in assets.
Streamlined Compliance for Businesses
With the removal of "printed" record requirements, businesses can fully leverage digital tools for tax documentation.
Revenue Growth and Compliance
These amendments aim to enhance revenue collection while clarifying compliance processes, particularly for cross-border and electronic commerce activities.

This legislative update signals Malaysia's commitment to fostering a robust, modern, and transparent tax system. It reflects strategic adaptation to technological advancements and the globalized economy.