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Recent Amendments to the Income Tax Act 1967

by MH Law | June 12, 2024 | Legal Updates

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Overview


On May 20, 2024, the Income Tax (Amendment) Act 2024, known as the Amendment Act, was released, bringing in various significant changes that will come into force on different dates.

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Capital Gains Tax


The Amendment Act has refined the definition of taxable capital assets and identified the entities subject to Capital Gains Tax (CGT). The term "capital asset" in the Income Tax Act 1967 has been updated to include movable or immovable property both within and outside Malaysia. The revised definition now encompasses shares of Malaysian-incorporated companies not listed on the stock exchange, along with related rights or interests, owned by various entities such as companies, limited liability partnerships, trust bodies, or cooperative societies. As a result, paragraph 38 of Schedule 6 of the Principal Act has been eliminated.


Furthermore, the entities subject to CGT on share disposals under section 15C have been revised to align with those for unlisted Malaysian-incorporated companies. The definition of "defined value" for disposals under section 15C now refers to the market value of real property or the acquisition price of shares in another controlled company. Additionally, the specific definition of "shares" in the Principal Act has been removed, with the updated definition encompassing any rights or interests related to shares and stocks, excluding loan stocks and debentures issued by companies incorporated in Malaysia from CGT.


Changes have also been made to Part XXI of Schedule 1 of the Principal Act to reflect the updated definition of "capital asset." These amendments came into effect on May 21, 2024.

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E-invoicing


The Amendment Act brings changes to e-invoicing requirements. Before, businesses that issued consolidated e-invoices were obligated to give printed receipts to buyers. However, starting January 1, 2024, receipts can be issued in any form, including electronically.


Furthermore, as of January 1, 2024, e-commerce platform providers are required to issue self-billed invoices in compliance with the conditions established by the Director General of Inland Revenue.

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Revision of Estimated Tax Payable


The Amendment Act modifies the process for calculating the tax amount due. The revised definition of “revised estimate” in section 107C(12) of the Principal Act permits taxpayers to adjust their tax estimate three times annually: during the 6th, 9th, and 11th months of the basis period. This adjustment applies starting from the assessment year 2024 and onwards.


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Comments


It is crucial to understand that the Capital Gains Tax (CGT) provisions in the Principal Act became effective on March 1, 2024, as a result of exemption orders. The amendments to the CGT provisions introduced by the Amendment Act came into force on May 21, 2024. As a result, disposals of shares, as defined previously, between March 1 and May 20, 2024, will be governed by the original provisions of the Principal Act. This implies that any gains or profits from disposals of shares by an individual under section 15C or of debentures issued by a Malaysian incorporated body corporate by a non-individual during this period will be subject to CGT.


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