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Case Study

Application for Pioneer Status Certificate

What is Pioneer Status?

A company that is granted Pioneer Status (PS) will enjoy a different degree of tax exemption for a number of years, depending on the types of promoted products or activities.

The scopes under the Promotion of Investments Act 1986 include:

  • Manufacturing
  • Agricultural
  • Hotel
  • Tourism
  • Research and Development
  • Technical or vocational training

Tax Appeal to Special Commissioner

What is tax appeal to Special Commissioner?

  • Pursuant to section 99 of the Income Tax Act (ITA) 1967, a person who is aggrieved by an assessment which has been made on him by the Director-General is entitled to appeal against that assessment to the Special Commissioners for Income Tax (“Special Commissioners”).
  • An appeal must be made no later than 30 days after the notice of assessment (NOA) has been served on the taxpayer by submitting Form Q to the Director-General. The 30-days period starts to run the following day. However, payment of tax must be made before you can appeal against an assessment under section99 of the ITA 1967

Reinvestment Allowance

What is Reinvestment Allowance (RA)?

  • RA is commonly known as the second incentive for the company mainly in manufacturing and agriculture whois resident company in Malaysia and has operated over 36 months. In the same basis period, they incurred qualifying capital expenditure in undertaking Expansion, Modernisation, Automation and diversification will enjoy the tax incentive.
  • An eligible company is allowed to claim RA of on 60% of the capital expenditure incurred during the year of assessment. Besides, RA can be deducted against the statutory income with restriction 70% of statutory income for 15 consecutive years.
  • The Company still may be allowed to claim RA with 100% once achieved the level of productivity compared with level prescribed by MOF with Process Efficiency method.

Due diligence for company acquisition

Preparation of transfer pricing documentation

Field Audit

What is Due Diligence?

What is transfer pricing documentation?

What is Field Audit?

  • Due diligence helps purchaser understand the nature of a deal, the risks involved, and whether the deal lifts with their portfolio. Undergoing due diligence is like doing “homework” on a potential deal and is essential to informed decisions.
  • Transfer pricing documents show that the related party transactions are conducted at arm’s length.
  • Have you carried out business activities between related parties?
  • Are the transactions dealing with related parties at arm’s length?
  • Do the control transactions comply with Income Tax (Transfer Pricing) Rules 2012?
  • Contemporaneous Transfer Pricing Documentation is needed if either of the following thresholds is met:
    • Annual business with gross income exceeding RM25 million, and the total amount of related party transactions exceeding RM15 million; or
    • Provision of financial assistance exceeds RM50 million.
  • Abbreviated Transfer Pricing Documentation is needed if the threshold as above is not met.
  • A field audit is a comprehensive tax audit conducted by IRB where an officer may either visit taxpayers’ premises or collect the books of record to an officer for further review.
  • IRB officer will focus on an examination of the book of records at taxpayers’ premises with/ without advance notice in accordance with Tax audit framework (Amendment 1/2017).
  • Before the field audit, the client will receive a letter (CP800) for the notification of a desk audit. However, this is not the end as IRB may raise a field audit if they do not satisfy with the document or they argue for the reasonableness of the book of records.