INCOME TAX (DEDUCTIONS FOR OVERSEAS EXPENSES FOR PROMOTION OF TOURISM)

INCOME TAX (DEDUCTIONS FOR OVERSEAS

EXPENSES FOR PROMOTION OF TOURISM)

RULES 1991

 

PU (A) 412

 

 

IN exercise of the powers conferred by section 154(1)(b) of the Income Tax Act 1967, the Minister makes the following rules :

 

RULE 1           CITATION AND COMMENCEMENT

 

1.      These Rules may be cited as the Income Tax (Deductions for Overseas Expenses for Promotion of Tourism) Rules 1991 and shall have effect for the year of assessment 1991 and subsequent year of assessment.

 

RULE 2           INTERPRETATION

 

2.      For purposes of these Rules –

 

”hotel business” means the carrying on of a business in a hotel including a motel, chalet or hostel, where such business provides sleeping accommodation and may include providing of food, drinks and other services or facilities and the granting of concessions of any part of such hotel for purposes connected with and incidental to the promotion of tourism;

 

“tour operating business” has the meaning assigned to it under the Tourist Development Corporation (Tour Operating Business and Travel Agency Business) Regulations 1985.

 

RULE 3           COMPANY RESIDENT IN MALAYSIA ELIGIBLE FOR DEDUCTION

 

3.      Every company resident in Malaysia for the basis year of a year of assessment and is carrying on –

 

(a)     a hotel business in a hotel registered with the Tourist Development Corporation of Malaysia; or

 

(b)     a tour operating business registered with the Tourist Development Corporation of Malaysia.

 

Shall be eligible for the deductions under these Rules for that year of assessment.

 

RULE 4           DEDUCTIONS

 

4(1)   Subject to these Rules, for the purpose of ascertaining under the Act the adjusted income of a company from its business for the basis period for a year of assessment, there shall be allowed as a deduction any outgoings and expenses of the kind described in paragraph (2) which –

 

(a)     were incurred by that company during that basis period with respect to that business; and

(b)     were incurred primarily and principally for the purpose of promoting tourism to Malaysia.

 

4(2)   The outgoings and expenses referred to in paragraph (1) are -

(a)     expenses incurred in respect of publicity and advertisements in any media outside Malaysia;

(b)     expenses directly attributable to the provision of brochures, magazines and guidebooks without charge of prospective tourists outside Malaysia including the cost of delivery of the brochures, magazines and guidebooks;

(c)     expenses directly attributable to carry out, with the prior approval of the Minister of Culture, Arts and Tourism, market research outside Malaysia;

(d)     expenses by way of fares in respect of travel to a country outside Malaysia by a representative of the company, being a travel necessarily undertaken for the purpose of negotiating or concluding contracts for overseas advertisements or for the purpose of participating in trade fairs, conferences or forums approved by the Minister of Culture, Arts and Tourism, and actual expenses subject to a maximum of two hundred ringgit per day for accommodation and a maximum of one hundred ringgit per day for sustenance for the whole of the period commencing with the representative's departure from Malaysia and ending with his return to Malaysia;

(e)     expenses directly attributable to the holding of overseas trade fairs, conferences or forums approved by the Minister of Culture, Arts and Tourism; and

(f)     expenses for the cost of maintaining sales office overseas for the purpose of promoting tourism to Malaysia.

 

4(3)   The deduction allowed under this rule shall be in addition to any deduction allowable under section 33 of the Act.

 

4(4)   No deduction shall be allowed under this rule in respect of any outgoings, expenses or other payments which are -

(a)     of the kind mentioned in section 39(1) of the Act; or

(b)     incurred by a company having a place of business and subject to tax in the country where such outgoings or expenses were incurred.

 

4(5)   Where the amount of any outgoings and expenses, the whole of which would have been allowable as a deduction under these Rules but for this paragraph, exceeds the amount which in the opinion of the Director General would reasonably be expected to be incurred in the ordinary course of the business with respect to which those outgoings and expenses were incurred, the Director General may to the extent of that excess disallow that amount as a deduction under these Rules.

 

4(6)      For the purpose of paragraph (1), where two basis periods overlap, the period common to both shall be deemed to fall in the first basis period only.