Income Tax (Exemption) (No. 7) Order 2009

Income Tax (Exemption) (No. 7) Order 2009

In exercise of the powers conferred by paragraph 127(3)(b) of the Income Tax Act 1967 [Act 53], the Minister makes the following order:

Citation and commencement

1. (1) This order may be cited as the Income Tax (Exemption) (No. 7) Order 2009.

(2) This Order is deemed to have come into operation on 24 October 2009 and shall have effect subject to paragraph 3.

Interpretation

2. In this Order—

“company” means—

(a) a bank licensed under the Banking and Financial Institutions Act 1989 [Act 372]; or

(b) a bank licensed under the Islamic Banking Act 1983 [Act 276]; “investee company” means a company where at least twenty percent of its issued share capital is directly owned by a company referred to in subparagraph 3(1).

Exemption

3. (1) The Minister exempts for five consecutive years of assessment (hereinafter referred to as “exempt period”) a company resident in Malaysia from the payment of income tax in respect of statutory income in relation to sources of income derived from its branch or investee company—

(a) which carries or will carry on banking, Islamic banking or any part of banking or Islamic banking; and

(b) which is located outside Malaysia.

(2) To qualify for an exemption under this Order—

(a) an application for such exemption shall be made by the company;

(b) the application under subsubparagraph (a) is received by the Central Bank on or after 24 October 2009 but not later than 31 December 2015; and

(c) the branch or investee company referred to in subparagraph 3(1) shall commence the banking, Islamic banking or any part of the banking or Islamic banking business within two years from the date of approval issued by the Central Bank.

(3) The commencement of the exempt period referred to in subparagraph 3(1) shall be determined by the company but shall not be later than the third year of assessment the branch or investee company commences the banking, Islamic banking or any part of the banking or Islamic banking business.

(4) Nothing in subparagraph 3(1) shall absolve or be deemed to have absolved the company from complying with any requirement to submit any return or statement of accounts or to furnish any other information under the provisions of the Act.

Application of paragraphs 5 and 6 Schedule 7A

4. Paragraphs 5 and 6 of Schedule 7A to the Act shall apply, mutatis mutandis, to the amount of income exempted under subparagraph 3(1).

Separate account

5. The branch or investee company shall maintain a separate account for the income exempted from tax under subparagraph 3(1).

Exemption

6. (1) Where a company has been granted an exemption under the Income Tax (Exemption) (No. 16) Order 2007 [P.U. (A) 278/2007], such exemption shall continue to remain in full force and effect and that Order shall be deemed to continue to apply for the remaining years of assessment of the exempt period of that company.

(2) In relation to a company which has been granted approval by the Central Bank on or before 23 October 2009 to carry on banking, Islamic banking or any part of banking or Islamic banking business under the provisions of the Order referred to in subparagraph 6(1) but has not commenced the business, the exempt period of the company shall commence in accordance with the provisions of this Order.

Made 23 November 2009

[Perb. CR(8.09)294/6/4-9(SJ. 9)(2010); LHDN. 01/35/(S)/42/51/231-17.11;
PN(PU2)80/LVIII]

Dato’ Seri Haji Ahmad Husni bin Mohamad Hanadzlah
Second Minister of Finance

[To be laid before the Dewan Rakyat pursuant to subsection 154(2) of the
Income Tax Act 1967]