INCOME TAX (EXEMPTION) (NO. 2) ORDER 2001

INCOME TAX (EXEMPTION) (NO. 2) ORDER 2001

 

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. 2) Order 2001.

(2)     This Order shall be deemed to have come into operation on 1 January 1998 for items 1 to 11 as listed in the Schedule.

(3)     This Order shall have effect from the year of assessment 2001 for items 12 and 13 as listed in the Schedule.

Interpretation

2.  For the purpose of this Order—

"foreign client" means a company, a partnership, an organisation or a co-operative society which is incorporated or registered outside Malaysia or an individual who is a non-Malaysian citizen and does not hold a Malaysian work permit or an individual who is a non-resident Malaysian citizen living abroad;

"qualifying services" means services specified in the Schedule which are provided to foreign clients, from Malaysia, and in relation to the provisions of private healthcare and private education, the services to be provided to foreign clients are to be provided either in Malaysia, or provided from Malaysia;

"value of increased exports" means the difference of the value of the qualifying services exported in the basis period and that of the immediately preceding basis period.

Exemption

3.  The Minister exempts a person resident in Malaysia from the payment of income tax in respect of income derived from the export of qualifying services specified in the Schedule in the basis period for a year of assessment, in an amount and manner prescribed in paragraph 4.

Amount of income to be exempted

4. (1)     The amount of income referred to in paragraph 3 shall be equal to 10 per cent of the value of increased exports.

(2)     Where an amount of income equivalent to 10 per cent of the value of increased exports has been determined for a year of assessment, so much of the statutory income of the business of that person for that year of assessment as is equal to that value of increased exports (or to the The aggregate amount of any such value of increased exports as the case may be) but not exceeding 70 per cent of the statutory income shall be exempted from tax.

Insufficiency of income

5.  Where, by reason of the restriction of 70 per cent of the statutory income or of an insufficiency or absence of statutory income from a business of the person for the basis period for a year of assessment, effect cannot be given or cannot be given in full to the amount of the determined value of increased exports to which the person is entitled under paragraph 4 for that year of assessment, then so much of that amount or the aggregate amount as cannot be given for that year shall be given to the person for the first subsequent year of assessment for the basis period for which there is statutory income from that business, and for subsequent years of assessment until the person has received the whole of the amount or the aggregate amount to which the person is so entitled.

Non-application

6.  This Order shall not apply to a person—

(a)     for the period during which the person has been granted any incentives (except for deductions for promotion of exports) under the Promotion of Investments Act 1986 [Act 327];

(b)     for the period during which the person has been granted investment allowance under Schedule 7B of the Act; and

(c)     for the period during which the person has been granted an exemption under paragraph 127(3) (b) in respect of an approved service project.

Application of paragraphs 5 and 6 of Schedule 7A

7.  Paragraphs 5 and 6 of Schedule 7A to the Act shall apply mutatis mutandis to the amount of income exempt under paragraph 4.

 

SCHEDULE

Qualifying services

 

1.      Legal

2.      Accounting.

3.      Architecture.

4.      Marketing.

5.      Business consultancy.

6.      Office services.

7.      Construction management.

8.      Building management.

9.      Plantation management.

10.    Private healthcare.

11.    Private education.

12.    Publishing services.

13.    Information technology and communication services (ICT). 

 

Made 8 May 2001.

[Perb. CR (8. 20) 116/1-138 (2001) Vol. 3 (sk1) ; LHDN. 01/35/42/51/231-19; PN(PU2) 80/XXIX]

 

On behalf and in the name of the Minister of Finance,

CHAN KONG CHOY

Deputy Minister of Finance

[To be laid before the Dewan Rakyat pursuant to paragraph 127(4) of the Income Tax Act 1967]