ACT
327
PROMOTION OF INVESTMENTS ACT 1986
PROMOTION OF INVESTMENTS ACT 1986
SCHEDULE [Subsection 41 (3) ]
INCOME
TAX (PROMOTION OF EXPORTS) RULES 1986
1. Citation and commencement.
(1) These Rules may be cited as the Income Tax (Promotion of Exports) Rules 1986.
(2) These Rules shall have effect with respect to approved outgoings and expenses incurred on or after the 1 January 1986.
2. Interpretation.
In these Rules, unless the context otherwise requires–
"approved outgoings and expenses" means outgoings and expenses allowable as a deduction under rule 4.
3. Company resident in Malaysia eligible for deduction.
Every company resident in Malaysia for the basis year for a year of assessment shall be eligible for the deductions under these Rules for that year.
4. Deduction of certain outgoings and expenses.
(1) Subject to these Rules, for the purpose of ascertaining under the principal 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 seeking opportunities, or in creating or increasing a demand, for the export of goods or agricultural produce manufactured, produced, assembled, processed, packed, graded or sorted in Malaysia.
(b) were incurred primarily and principally for the purpose of seeking opportunities, or in creating or increasing a demand, for the export of goods or agricultural produce manufactured, produced, assembled, processed, packed, graded or sorted in Malaysia.
(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 samples without charge to prospective customers outside Malaysia, including the cost of delivery of the samples;
(c) expenses directly attributable to carrying out export market research or the obtaining of export marketing information;
(d) expenses directly attributable to the preparation of tenders for the supply of goods or agricultural produce (not being goods or agricultural produce of the same kind and specifications as those regularly manufactured, produced or supplied by the company) to prospective customers outside Malaysia;
(e) expenses by way of fares in respect of travel to a country outside Malaysia by a representative of the company, being travel necessarily undertaken for the purpose of negotiating or concluding contracts for sales of goods or agricultural produce on behalf of the company or for the purpose of participating in trade fairs or trade or industrial exhibitions approved by the Minister, and actual expenses, subject to a maximum of three hundred ringgit per day, for accommodation and a maximum of one hundred and fifty 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;
(b) expenses directly attributable to the provision of samples without charge to prospective customers outside Malaysia, including the cost of delivery of the samples;
(c) expenses directly attributable to carrying out export market research or the obtaining of export marketing information;
(d) expenses directly attributable to the preparation of tenders for the supply of goods or agricultural produce (not being goods or agricultural produce of the same kind and specifications as those regularly manufactured, produced or supplied by the company) to prospective customers outside Malaysia;
(e) expenses by way of fares in respect of travel to a country outside Malaysia by a representative of the company, being travel necessarily undertaken for the purpose of negotiating or concluding contracts for sales of goods or agricultural produce on behalf of the company or for the purpose of participating in trade fairs or trade or industrial exhibitions approved by the Minister, and actual expenses, subject to a maximum of three hundred ringgit per day, for accommodation and a maximum of one hundred and fifty 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;
(f) expenses for giving technical information to persons outside Malaysia relating generally to goods or agricultural produce of the company offered for sale, excluding expenses for giving technical information to purchasers after purchase;
(g) expenses directly attributable to the provision of exhibits for trade fairs or trade or industrial exhibitions which are held outside Malaysia and approved by the Minister;
(h) expenses for services rendered for public relations work connected with export;
(i) expenses directly incurred for participating in trade fairs or trade or industrial exhibitions approved by the Minister other than the expenses specified in subparagraphs (e) and (g);
(j) expenses for the cost of maintaining sales offices overseas for the promotion of exports from Malaysia;
(k) professional fees incurred in packaging design on condition that the goods are of export quality and the company employs local
professional services.
(3) Deductions allowed under this rule shall be in addition to any deductions allowable under section 33 of the principal Act.
(4) No deduction shall be allowed under this rule in respect of any outgoings, expenses or other payments of the kind mentioned subsection 39 (1) of the principal Act.
(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.
(6) For the purpose of paragraph (1) of this rule, where two basis periods overlap, the period common to both shall be deemed to fall in the first basis period only.
5. Pioneer company.
Notwithstanding section 21 where a company which has incurred outgoings and expenses allowed under rule 4 is a pioneer company, then–
(a) for the purpose of
computing its income for any accounting period in respect of its pioneer
business under that section, no deductions shall be made under these Rules;
(b) all deductions under these Rules which but for paragraph (a) of this rule would have fallen to be made for the purpose of computing its income from its pioneer business under that section shall be accumulated, and the aggregate amount thereof shall be allowed as a deduction under these Rules for the purpose of ascertaining its income from its post-pioneer business for the first basis period appropriate to the post-pioneer business for a year of assessment.
(b) all deductions under these Rules which but for paragraph (a) of this rule would have fallen to be made for the purpose of computing its income from its pioneer business under that section shall be accumulated, and the aggregate amount thereof shall be allowed as a deduction under these Rules for the purpose of ascertaining its income from its post-pioneer business for the first basis period appropriate to the post-pioneer business for a year of assessment.
6. Non-application of Rules.
These Rules shall not apply to any of the outgoings and expenses referred to in rule 4 which are incurred in relation to the export of any of the products excluded for the purposes of Chapters 4 and 5.
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