INCOME TAX (DEDUCTION FOR ADVERTISING EXPENDITURE ON
MALAYSIAN BRAND NAME GOODS) RULES 2002 [P.U. (A) 62]
IN
exercise of the powers conferred by paragraph 154(1)(b) of the Income
Tax Act 1967 [Act 53], the Minister makes the following rules:
Citation
and commencement
1. (1) These rules may be cited as the Income Tax
(Deduction for Advertising Expenditure on Malaysian Brand Name Goods) Rules
2002.
(2) These Rules shall be
deemed to have effect from the year of assessment 1998 and subsequent years of
assessment in relation to advertising expenditure specified in paragraph 3 (a).
(3) These Rules shall have
effect from the year of assessment 2002 and subsequent years of assessment in
relation to payment of professional fees specified in paragraph 3 (b)
made to a company resident in Malaysia.
Interpretation
2. In these Rules,unless
the context otherwise requires —
“approved
international sporting event” means an international sporting event approved by
the Minister charged with the responsibility for sports;
“export
quality” in relation to exported Malaysian brand name goods, means at least 20
per centum of the total sales of the Malaysian brand name goods in the relevant
year of assessment is exported;
“Malaysian
brand name” means a brand name that is registered as a trade mark in Malaysia
or in any country outside Malaysia under the law relating to trade marks to a
registered proprietor that is a company incorporated in Malaysia where at least
70 per centum of the issued share capital of the company is Malaysian owned;
“approved
international trade exhibition” means an international trade exhibition
approved by the Malaysian External Trade Development Corporation;
“approved
international trade conference” means an international trade conference
approved by the Malaysian External Trade Development Corporation.
Qualifying
advertising expenditure
3. For the purposes of
these Rules, “qualifying advertising expenditure” means expenditure incurred
within Malaysia in respect of —
(a) the cost of
advertising Malaysian brand name goods through —
(i) advertisements on the internet where the
host website is located in Malaysia;
(ii) advertisements in magazines and newspapers
where the magazines and newspapers are printed in Malaysia;
(iii) advertisements on local licensed television
stations;
(iv) advertisements approved by the relevant
local authority on advertisement hoardings located in Malaysia;
(v) advertisements in trade publications where
the trade publications are printed in Malaysia;
(vi) advertisements in any form in the course of
sponsoring an approved international sporting event held in Malaysia; and
(vii) advertisements in any form in the course of
sponsoring an approved international trade conference or an approved
international trade exhibition held in Malaysia;and
(b) professional fees
made to a company resident in Malaysia for advertising or promoting Malaysian
brand name goods on behalf of the company which is the registered proprietor of
the Malaysian brand name.
Allowable
deduction
4. (1) For the purpose of ascertaining the adjusted
income of a company from its business for the basis period for the relevant
year of assessment under the Act, a company that satisfies the conditions
specified in rule 5 shall be allowed, as a deduction, any qualifying
expenditure specified under rule 3 incurred by the company in respect of Malaysian
brand name goods.
(2) The deduction allowed
under these Rules shall be in addition to any deduction allowable under section
33 of the Act.
Qualification
for deduction
5. To qualify for a
deduction under rule 4,the company claiming the deduction shall satisfy the
following conditions:
(1)
Rule 5 renumbered to subrule 1 amended
by PU (A) 171/2007. Effective from
YA 2007
(a) the company is a
company incorporated in Malaysia and at least 70 per centum of the issued share
capital of the company is Malaysian owned;
(b) the company is the registered proprietor
of the Malaysian brand name used in the advertisement;
(b)the
company is the registered proprietor or related to the registered proprietor of
the Malaysian brand name used in the
advertisement” amended
by PU (A) 171/2007. Effective from
YA 2007
(c) the Malaysian brand
name goods are of export quality;
(d) the expenditure incurred in advertising
the Malaysian brand name goods must be incurred within Malaysia;
(e) the expenditure
incurred on professional fees must be incurred within Malaysia;and
(f) the
expenditure incurred in advertising the Malaysian brand name goods or on
professional fees must be of a kind allowable under section 33 of the Act.
(2)
For the purpose of paragraph 5(1)(b), the company is related to the registered
proprietor of the Malaysian brand name used in the advertisement if more than
fifty percent of the paid-up capital in respect of ordinary shares of—
(a)
the company is directly or indirectly (through the medium of other companies
resident and incorporated in Malaysia) owned by the registered proprietor of
the Malaysian brand name used in the advertisement;
(b)
the registered proprietor of the Malaysian brand name used in the advertisement
are directly or indirectly (through the medium of other companies resident and
incorporated in Malaysia) owned by that company;
or
(c)
that company and the registered proprietor of the Malaysian brand name used in
the advertisement are directly or indirectly owned by another company resident
and incorporated in Malaysia;
Provided
that only one of the related company shall be eligible for the deduction under
these Rules in the basis period for each year of assessment.
inserted
by PU (A) 171/2007. Effective from
YA 2007
Revocation
6. The Income Tax
(Deduction for Advertising Expenditure on Malaysian Brand Name Goods) Rules
1999 [P.U.(A) 129/99] published in the Gazette on 5 April 1999 is
revoked.
Made
24 January 2002.
[Perb.0.3865/G(SJ.6);
LHDN. 01/35/(S)/42/51/82-44; PN(PU2)80/XXXI]
By
order,
CHAN KONG CHOY
Deputy Minister of Finance
[To be laid before the
Dewan Rakyat pursuant to subsection 154(2) of the Income Tax Act 1967]
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