Category: Publications

Johor-Singapore Special Economic Zone (JS-SEZ)

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Post date April 16, 2025
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Johor-Singapore Special Economic Zone (JS-SEZ)

On 8 January 2025, Malaysia Government announced tax package incentive for The Johor-Singapore Special Economic Zone (JS-SEZ). JS-SEZ offers a special corporate tax rate 5% for up to 15 years for new investment in qualifying activities such as aerospace manufacturing, medical devices, global services hubs and artificial intelligence and also special personal income tax rate 15% for 10 years for knowledge worker.

Introduction

Johor-Singapore Special Economic Zone (JS-SEZ) is the first special economic zone spanning Southeast Asia’s borders located in the southern Malaysian state of Johor.

Effective from January 1, 2025, companies undertaking new investment in high-growth sectors within the JS-SEZ eligible to apply for special corporate tax rate of 5% for up to 12, 15% tax rate up to 10 years for knowledge workers employed in the JS-SEZ, stamp duty exemption etc.

Location

Source: www.irda.com.my

Why Invest in JS-SEZ

Competitive Cost Advantage

Strong Government Support

Designated Flahships Areas

Strategic Location & Strong Connectivity

Attractive Policies & Incentives

Competitive Tax Incentive

A. Special Tax Corporate Tax Rate:

Special tax rate of 5% for up to 15 years for companies undertaking new investment as below:

No.

B. Special Tax Rate for Knowledge Workers:

A special tax rate of 15% for a period of 10 years is provided for eligible knowledge workers in all Flagships.

Eligibility Criteria / Conditions:

Malaysian/Non-Malaysian citizen;
Not generating employment income in Malaysia 24-months prior;
Salary abroad/in Malaysia >RM20,000 per month.
Subject to academic qualifications / years of professional work experience
Subject to MyCOL profession and JS-SEZ qualifying sectors

Source: MIDA guideline

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Family Office Incentive Scheme in Forest City Free Trade Zone (FCFTZ)

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Post date January 15, 2025
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Family Office Incentive Scheme in Forest City Free Trade Zone (FCFTZ)

First location in Malaysia which provide 0% concessionary tax rate for family offices. This incentive is valid for an initial period of 10 years and an additional 10 years with further conditions.

Forest City Special Financial Zone (FCSFZ)

Following amendment bills were tabled and passed by House of Parliament in July 2024 and gazetted in Sept 2024, FCSFZ is first onshore duty-free zone and special financial zone in Forest City, Johor, Malaysia.

Pulau Satu, Forest City is the first location in Malaysia to offer a zero (0%) percent tax rate for Family Office established under the Single Family Office Scheme.

Single Family Office (SFO) & Single Family Office Vehicle (SFOV)

What is Single Family Office (SFO)?

SFO is a corporate vehicle;
Wholly owned or controlled by members of a single wealthy family;
Created to exclusively manage the assets, investments and long-term interests of that family;
SFO may also represent multiple generations and branches of the family.

What is Single Family Office Vehicle (SFOV) ?

SFOV is a corporate vehicle;
Wholly owned or controlled by members of a single wealthy family;
Established solely for the purposes of holding the assets, investments and long-term interest of members of the single family.

SFO vs SFOV

Key Conditions on SFOVs Tax Incentives

SFOV must be incorporated in Malaysia, preregistered with the Securities Commission (SC), and operating in Pulau Satu, FCSFZ to be eligible for zero (0%) Concessionary Tax Rate for first initial 10 years + additional 10 years. The below conditions are also required to be fulfilled during the incentive periods.

Conditions

First 10 Years

Additional 10 Years

1. Minimum AUM

RM30Mil (*USD7Mil)

RM50Mil (*USD11.5Mil)

2. Minimum Domestic Investment in Promoted Activities

At least 10% of AUM or RM10Mil (*USD2.3Mil), whichever is lower

At least 10% of AUM or RM10Mil (*USD2.3Mil), whichever is higher

3. Minimum local operating expenditure per annum

RM500,000 (*USD115,000)

RM650,000 (*USD150,000)

4. Minimum full time employees

Two (2) and each with a minimum monthly salary of RM10,000 and of whom at least one (1) is an investment professional.

Four (4)

*1 USD = 4.32740 MYR

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Green Investment Tax Allowance (GITA) For Own Comsumption

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Post date October 16, 2024
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MALAYSIA GREEN INVESTMENT TAX ALLOWANCE (GITA) FOR OWN COMSUMPTION

Companies undertake in green technology project for own consumption may enjoy up to 100% Green Investment Tax Allowance (“GITA”) to be offset against 70% of statutory income. Promoted activities such as green building, renewable energy system, energy efficiency, battery energy storage system, electric vehicles etc.

In 2024 Budget, the green technology tax incentives have been revised to the following categories:

Green Investment Tax Allowance (GITA) Project for Business Purposes;
Green Investment Tax Allowance (GITA) Asset for Own Consumption; and
Green Income Tax Exemption (GITE) Solar Leasing

The Malaysian Green Technology and Climate Change Corporation (MGTC) has issued a new guideline for GITA for own consumption project as below:

(i) Investment Tax Allowance :

Tier 1

Tier 2

Qualifying Activities

Qualifying asset as approved by Minister of Finance, Battery Energy Storage System (BESS) and Green Building.

Qualifying asset as approved by Minister of Finance (Appendix 11), Renewable Energy System and Energy Efficiency (Appendix 2).

Percentage of GITA

100%

60%

Percentage (%) of Statutory Income to be Set-Off

70%

Qualifying CAPEX

The qualifying capital expenditure must be an approved asset by MOF that have been verified by MGTC and is listed under the MyHIJAU Directory;
For Green Building, the qualifying CAPEX must be verified by the locally Green Building Rating Tools/ Certification Body approved by Government;
The asset must be new and owned by the Company;
The asset must be used in the business carried out by the company in Malaysia for own consumption and not for income generation.

Qualifying Asset

Electric vehicles (for commercial / industrial used only);
EV Infrastructure;
Green Building;
Energy Storage

Energy Efficiency;
Renewable Energy System;
Waste Composter or waste recycling;
Wastewater recycling or rainwater harvesting

Incentive Period

Qualifying Capital Expenditure incurred starting from 1 January 2024 until 31 December 2026.

Application Period

The application made under the GITA Asset Guidelines must be received by the Malaysian Green Technology and Climate Change Corporation [“MGTC”] from 1st January 2024 until 31st December 2026.

(ii) Eligibility Criteria:

a) New or existing Company:

A newly established company that incurred qualifying capital expenditure under GITA Asset; OR
Existing Company operating in Malaysia but has not incurred qualifying capital under GITA Asset and has not been approved for Green Technology Incentive.

b) Companies within the same group incurring the qualifying capital expenditure:

The project carried out in building/location separately from activities carried out by holding company or related companies;
The plant, machinery and equipment used shall be separately used and shall not be transferred from holding company or related companies;
Not shares the same employees as per holding company or related companies except for the management staff and directors of the Company;
This project must not result in a reduction in the investment of holding company or related companies.

c) To comply all the following criteria:

Minimize the degradation of the environment or reduce greenhouse emission;
Promotes health and improvement of environment; and
Conserves the use of energy, water and/or other forms of natural resources or promote the use of renewable energy or able to recycle waste material resources.

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Malaysia Cold Chain Facilities

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Post date March 18, 2024
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Malaysia Cold Chain Facilities

Investment in cold chain facilities or providing services for perishable agricultural produce such as fruits, vegetables, flowers, ferns, meat and aquatic products eligible for tax exemption up to 70% of statutory income or Investment Tax Allowance of 60% up to 5 years.

Companies providing cold chain facilities and services for perishable agricultural products i.e. fruits, vegetables, flowers, ferns,
meat and aquatic products are eligible for:

Type of Company

Incentive

New Company

Pioneer Status with tax exemption of 70% of statutory income for a period of
5 years;
Unabsorbed pioneer losses after the end of pioneer period are allowed to be
carried forward for 7 consecutive year of assessments;

OR
Investment Tax Allowance (ITA) of 60% on the qualifying capital expenditure
incurred for 5 years;
Unutilised allowances can be carried forward until fully absorbed.

Existing Company
(Company intend to reinvest in cold chain facilities for perishable agricultural produce)

Pioneer Status with tax exemption of 70% of increased statutory income for
a period of 5 years;
Unabsorbed pioneer losses after the end of pioneer period are allowed to be
carried forward for 7 consecutive year of assessments;
OR
Investment Tax Allowance (ITA) of 60% on the additional qualifying capital
expenditure for 5 years;
Unutilised allowances can be carried forward until fully absorbed.

Eligible Company

Eligible Activities

Must be Independent Service Provider (i.e the company conducts all of the cold chain activities on its own);
At least 60% of the company’s revenue must be derived from the provision of cold room facilities, refrigerated transportation and other related services for local agriculture produce.

Provision of cold room facilities or refrigerated transportation for local agricultural produce with or without other post-harvest activities including cleaning, washing, grading, freezing/chilling and packing;
Provision of cold room facilities or refrigerated transportation for local processed food products.

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Malaysia Global Services Hub Tax Incentive

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Post date February 8, 2024
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MALAYSIA GLOBAL SERVICES HUB TAX INCENTIVE

With Global Services Hub tax incentive, the companies will benefit from corporate income tax rates of 5% or 10% based on outcome for a period of up to ten (10) years. This incentive aims to establish Malaysia as a competitive hub in the global service sector in the region.

Global Services Hub tax incentive is an outcom-based incentives which uses a tiered rate in the provision of incentives on service income, or service and trading income achieved.

1. Overview Of The Incentive

An approved Global Services Hub company is eligible to enjoy the following concessionary corporate income tax rates:

2. Qualifying Services and Additional Services

Regional P&L / Business Management Unit;
Strategic Business Planning;
Corporate Development;

AND

Any 2 qualifying activities under the services category as follows:
Strategic services;
Business services;
Shared services;
Other services.

3. Outcome-based conditions

Annual operating expenditure;
High value full time employees;
C-suite with minimum salary of RM35,000;
Locally ancillary services;
Collaboration with higher education institution/TVET;
Training for Malaysian students/citizen;
Environmental. Social and Governance (ESG) elements; or
Other conditions as determined by the Minister of Finance.

Application received by Malaysian Investment Development Authority (MIDA) from 14 October 2023 to 31 December 2027.

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Why Dubai

The UAE’s 0% corporate tax policy transcends numbers; it’s an invitation to transform your business aspirations into reality. With a robust infrastructure, a strategic location, and a welcoming environment, the UAE beckons entrepreneurs and visionaries to harness its potential.

One of the LOWEST TAX RATES in the world, embracing 0% Corporate Tax in the UAE

The United Arab Emirates (UAE) stands as a global beacon of business innovation and prosperity. In the heart of this thriving economic landscape, the UAE offers an array of incentives and advantages to both local and international companies. At the core of this allure is the UAE’s corporate tax policy, a game-changer that propels businesses towards uncharted heights.

Tax Exemptions for Companies in Dubai vs Malaysia

Tax

Rate

Conditions

Value-Added Tax (VAT)

While the UAE champions business freedom, it maintains a balanced approach with a 5% VAT rate, obliging businesses with revenue exceeding AED 375,000 Yet, the UAE’s commitment to global trade is evident as exports of goods remain untaxed, fostering an environment ripe for international commerce.

Businesses with revenue > AED 375,000 (USD 102,000)

Export of goods

Value-Added Tax (VAT)

In the UAE, the benefits extend beyond corporate tax. Dividends, capital gains, intragroup transactions, and reorganizations all enjoy a tax rate of 0%, fostering an ecosystem where business can flourish without restraint.

Dividend and Capital gain, as well as intragroup transaction and reorganisations.

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Featured Ideas & Insights Publications Transfer Pricing

Improving Transfer Pricing Compliance

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Post date August 11, 2023
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Improving Transfer Pricing Compliance

The Transfer Pricing Rules 2023 supersedes the rules that were released in 2012. Significant changes were made with the intention to boost compliance and provide taxpayers with more clarity with regards to Transfer Pricing compliance.

Transfer Pricing Guidelines (“TPG”）

The 2012 Transfer Pricing Guideline was intended to provide detailed guidance to taxpayers on how to comply with the requirements of the law under Section140A of Income Tax Act 1967 and the TP Rules 2012. The 2012 TPG is applicable to:

Controlled transactions between associated persons, where at least one party is assessable or chargeable to tax in Malaysia; and
Applies to both cross-border transactions and domestic related party transactions.

The guidelines reinforces that companies involved in related party transactions in Malaysia should prepare a Transfer Pricing Documentation (“TPD”) for the year of assessment but not required to be submitted unless requested by tax authorities.

Companies who fall below this threshold may opt to prepare a minimal Transfer Pricing Documentation template (from FY 2022 onwards) instead of a full scope Transfer Pricing Documentation. Prior to FY 2022, Companies who fall below the threshold were required to prepare a limited scope Transfer Pricing Documentation.

The IRB released a TPD Flowchart to assists taxpayers in determining the circumstances where full or minimal TPD is required. Companies can be exempted from preparing if any adjustments made does not alter the total tax payable (i.e. both companies do not enjoy incentive, suffer losses or taxed at different rates)

Transfer Pricing Documentation (“TPD”) Flowchart

Transfer Pricing Rules 2023

The Income Tax (TP) Rules 2023 supersedes the rules that was released in 2012 and is effective from the year of assessment 2023. Significant changes were made with the intention to boost compliance and provide taxpayers with more clarity with regards to TP compliance. Some of the important changes that affect the way TPDs will be prepared moving forward:

Contemporaneous TP documentation requirements

A person who enters into a controlled transaction shall prepare a contemporaneous transfer pricing documentation which is brought into existence prior to the due date for furnishing a return in the basis period for a year of assessment in which a controlled transaction is entered into.

As per Transfer Pricing Rules 2023, the contemporaneous transfer pricing documentation shall contain:

The date of completion in the TPD
Additional information on the MNE Group that is relevant to the taxpayer’s business in Malaysia. Alternatively, the taxpayer can attach the Master file prepared by the Group or ultimate holding company with the Local TPD.
A detailed list of information and/or documentation to be included or attached in the Local TPD
Taxpayers must indicate in the TPD if any of the information or documents required are not applicable to the taxpayers.
Failure to do so will result in an incomplete TPD.
For the purposes of this rule MNE means a collection of enterprises related through ownership or control which is required to prepare consolidated financial statements

Method to determine arm’s length price

The person shall ensure that the best method selected and that it can be supported by explanation and reasons to justify the selection. However, the Director General may review the selected method and disregard the taxpayer’s selected method and replace with a different method if they are the opinion that it is not the most appropriate method.

Comparability of transactions

An uncontrolled transaction shall be used as a comparable in determining an arm’s length price of a controlled transaction. A person shall accurately delineate the controlled transaction by identifying the commercial or financial relations between associated person based on the economically relevant characteristics.

Intra-group Services

A person shall demonstrate that the intra-group services have been rendered and the provision of such services has conferred an economic benefit or commercial value to his business and the charge for the intra-group services is justified. Intra-group means services rendered between associated persons. Intra-group services shall be disregarded if it involves:

Shareholder or custodial activities
Duplicative services
Services that provide incidental benefits or passive association benefits
On-call services

Cost contribution arrangement

A person shall determine the arm’s allocation of cost for such arrangement is in accordance with the allocation that would been undertaken by an independent person in a similar arrangement.

Intangible property

Intangible property” refers to an asset which is neither a physical asset nor a financial asset but such asset is capable of being owned or controlled for use in commercial purposes, whose use or transfer would be compensated had it occurred in a transaction between independent persons in comparable circumstances which includes patent, invention, formula, process, design, model, plan, trade secret, know-how or marketing intangible.

Any party that contributes to the functions above should be entitled to an arm’s length consideration, regardless of legal ownership

Full Scope TPD

A full scope report may consist of the following:

a) Group worldwide organizational structure

b) Description of MNE Group businesses
c) MNE’s intangible assets
d) MNE’s intercompany financial activities
e) MNE’s financial and tax position
f) Local organizational structure and company background
g) Nature of business/industry and market conditions
h) Controlled transactions and Pricing policies including formula adopted and sample documents to justify
i) Assumption, strategies and information regarding factors that influenced the price setting policies
j) Functions, assets and risk analysis including risk analysis framework
k) Comparability analysis
l) Selection and application of the transfer pricing method including basis to justify the selection
m) Financial information
n) Other relevant/supporting documents

Simplified TPD

Prior to FY 2022, Companies that fall outside the scope of the threshold amounting RM25 million for revenue and RM15 million of RPTs. A simplified TP documentation consists of items (f), (h) and (i) as listed above. Taxpayer is allowed to apply any method other than the five methods described in the TPG provided it results in arm’s length outcomes.

f) Organizational Structure
(i) the taxpayer’s worldwide organizational and ownership structure covering all associated persons whose transactions directly or indirectly affect the pricing of the documented transactions; and
(ii) a description of the management structure of the local entity, a local organization chart, and a description of the individuals to whom local management reports and the country(ies) in which such individuals maintain their principal offices.

(h) Controlled Transactions
(i) description of details of the property or services to which transaction relates; any intangible rights or property attached thereto, the participants, the scope, timing, frequency, type and value of the controlled transactions (including all relevant related party dealings in relevant geographic markets);
(ii) names and addresses of all associated persons, with details of the relationship with each such associated person;
(iii) the nature, terms (including prices) and conditions of transactions (where applicable) entered into with each associated person and the quantum and value of each transaction;
(iv) an overview description of the business, as well as a functional analysis of all associated persons with whom the taxpayer has transacted;
(v) all commercial agreements setting forth the terms and conditions of transactions with associated persons as well as with third parties; and
(vi) a record of any forecasts, budgets or any other financial estimates prepared by the person for the business as a whole and for each division or product separately.

(i) Pricing Policies
Details of pricing policy for each type of controlled transaction shall include:

(i) the formula adopted, including anticipated profit margin/mark-up and cost component;
(ii) how the formula is applied;
(iii) who determine the pricing policy & how often is the policy being revised;
(iv) sample of documents to support the pricing policy; and
(v) comparability study to ensure the arm’s length price.

Minimum TPD Template (PIN 1/2023)

The template was originally released in 2022 to simplify compliance for SMEs and reduce administrative burden of compliance. Companies that fall below the threshold can choose to fill in the details requested in the minimum TPD template.

The template is a form that consists of 4 parts as follows:

Income Tax (Country-by-Country Reporting) Rules 2016 (“CbyCR Rules”)

The tax authorities issued the CbyCR Rules followed by the Labuan CbyCR Regulation, effective from 1 January 2017 and is applicable to MNE Groups with total consolidated group revenue of at least RM 3 billion. The rules state that the ultimate parent (reporting entity) would have to complete the CbyC Report and submit it to the tax authorities on or before 12 months from the last day of the reporting FY (i.e. 31 December 2023 if the tax payer’s year end is 31 December 2022).

Additionally, there is also a requirement for the Malaysian Companies to notify the tax authorities under Subrule 6(1) and 6(2) of the PU (A) 357/2016, by disclosing the information in the tax returns or by submitting the manual notification form.

Malaysian parent entities and subsidiaries submitting the Form C , TR , TA , TC or TN can furnish the notification by way of tax returns while companies filing Form LE & TF are required to furnish the notification using a manual notification form:

Reporting entity
[Annex B1]

The reporting entity shall notify the Director General in writing if it is the ultimate holding entity on or before the last day of the FY. Details of all Malaysian and foreign non-reporting constituent entities must be included

Non-reporting entity
[Annex C1 & C2]

The Malaysian subsidiary must notify the Director General in writing of the identity and tax
residence of the reporting entity on or before the last day of the FY.

Tax Return Form

Throughout the year from FY 2014 to FY 2022, the income tax return form has been amended to include additional disclosures as follows:

a) Transfer Pricing Documentation and its related information
Tax payer is to disclose its characterization, other related information and all type of transactions they are involved in with a related party and the amount.

b) Disclosure of whether the taxpayer is subject to interest restriction under Section 140C.

Tax authorities introduced Restriction on deductibility of interest under Section 140C of the Income Tax Act 1967, effective 1 July 2019 onwards aimed at restricting the deduction of interest expense in relation to cross border transaction.

The Rules are applicable to:

companies who have been granted any financial assistance in a controlled transaction;
the total amount of any interest expense for all such financial assistance exceeds RM500,000 in the basis period.

The maximum amount of interest that is deductible is 20% of the Tax EBITDA. The balance is allowed to be carried
forward.

c) Disclosure on CbyCR
Tax payer is to disclose if CbyCR is relevant for the Group and fill in the relevant information of the reporting entity.

TP Penalties and Power to Disregard Structures

Failure to furnish contemporaneous TP documentation
With the introduction of Section 113B of the ITA, any person who fails to furnishing a contemporaneous TPD shall be liable to the following:

a) Fine of not less than RM20,000 and not more than RM100,000; or

b) Imprisonment for a term not exceeding six (6) months; or
c) Both.

Taxpayers can appeal on the decision with the Special Commissioners of Income Tax but the burden of proof is on the
taxpayers.

5% surcharge on TP adjustments
Under Section 140A (3C), the Director General may impose a surcharge of not more than 5% of the total transfer pricing adjustments regardless if there is any additional taxes payable by the taxpayers. Any surcharge imposed shall be treated as collection tax.

Power to disregard structure in controlled transactions
Under S140A (3A) and (3B), the Director General will be empowered to disregard any related party transaction structure adopted by the company if he is of the opinion that:

a) The economic substance of that transaction differs from its form; or
b) The commercial reality of that transaction differs from the arrangement which would have been adopted by an
independent party.
In these circumstances, the Director General will be allowed to make adjustments to the structure to reflect the structure
that would have been adopted in a third party arrangement.

Failure to comply (after adjustments have been issued)
Penalties will be imposed under subsection 113(2) and the TP Audit Framework 2019. The rates can range from 30% to 100% depending on whether the TP documentation is prepared contemporaneously

Illustration on Penalties

Key Take-aways

Tax authorities have provided a cost efficient template for SME companies to encourage compliance
In addition to the template, taxpayers also need to include documentation or analysis to justify that the RPT is carried out
at market price (i.e. comparability study)
While there are exemptions to preparing TPD, it is not always possible determine whether adjustments will result in
additional tax until the audit is carried out
Keep in mind that the penalties have not been amended or adjusted for such exemptions. The risk of IRB imposing the
5% surcharge on adjustments on top of remaining penalties are still present.
Burden of proof is on taxpayers to maintain the relevant records, documentation and calculation to justify the arm’s length
nature of the inter-company transactions
Taxpayers need to reassess the completeness and robustness of the TPD prepared previously and make amendments
where necessary
Even if taxpayer’s results fall within the new definition of the arm’s length range, taxpayers cannot take it for granted that
no adjustments will be made in the event of an audit.
Taxpayers must not take lightly the importance of justifying the selected TP method as the best possible method

How We Can Help

Our dedicated team of professionals has experience in various disciplines to respond effectively and efficiently to our clients’ individual requirements. This professional capability allows us to advise and plan strategies critical to our clients’ needs and success within the challenges of the present business environment.

Our service includes a total approach to our clients’ problems and needs. Using a team approach, our services are tailored to meet our clients’ individual requirements. We stress on a high degree of competence, professionalism and commitment among our team members.

We offer the following services with a clear focus on the business issues and regulatory requirements of the client’s industry:

Audit and Assurance
Tax & Transfer Pricing Advisory and Compliance
Business Advisory
China Desk
Financial and Transaction Advisory

Risk, Governance and Sustainability Advisory
Valuation Advisory
Migration Advisory
Offshore Advisory

Should you have any questions or require any assistance on the above, please do not hesitate to drop us an email or call us.

For more information, please view from PDF below

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Featured Ideas & Insights Publications Tax

Malaysia Digital Tax Incentive

Post author By admin
Post date July 19, 2023
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Malaysia Digital (MD) Status Incentive (formerly known as MSC Malaysia Status)

MSC Malaysia Status Service Incentive is now rebranded to Malaysia Digital (“MD”). Companies awarded with MD status shall be entitled to a set of incentives, rights and privileges from the Government of Malaysia. MD status companies have flexibility to choose benefits (either with or without tax incentives).

MALAYSIA DIGITAL (“MD”) STATUS SERVICE INCENTIVE (formerly known as MSC Malaysia Status)

On 4th July 2022, The Government of Malaysia through the Malaysia Digital Economy Corporation (“MDEC”) launched Malaysia Digital (“MD”) as the new national strategic initiative to accelerate and further develop digital economy replaces the Multimedia Super Corridor (“MSC”) Malaysia.

1. ELIGIBILITY CRITERIA

To be eligible to apply for the MD Status Company, companies are required to meet the following criteria:-

a) The company incorporated under the Companies Act 2016 and resident in Malaysia; AND
b) Proposing to carry out one or more of the MD activities (please refer Appendix A).
c) Other general conditions:-

To comply with all applicable permit/licensing requirements and to ensure that the required permit/license has been obtained from the relevant authority for the implementation of MD Approved Activities.

With effective from 25th March 2022, MD Status Company are not subjected to minimum office space requirements and are allowed to operate and undertake MD Approved Activities in any location within Malaysia.

2. BENEFITS OF MD STATUS COMPANIES

i. MD BILL OF GUARANTEES (BoGs)

A set of incentives, rights and privileges available for MD status companies;
MD status companies eligible to access or apply for, amongst others:-

Tax incentives (income tax exemption or investment tax allowance);
Foreign knowledge worker quota and passes;
Multimedia / ICT equipment import duty and sales tax exemptions;
Freedom of ownership by exempting local ownership requirements;
Flexibility to source capital and funds globally

ii. OTHER BENEFITS

MD Status companies are also eligible to access facilitation of other benefits as below, subject to certain criteria and conditions:-

Access to the local and international market and ecosystem;
Business matching and partnership;
Grant and funding facilitation; and/or
Participation in MD catalytic programs.

3. COMPANIES WITH MD STATUS COMPANY WILL HAVE TO COMPLY WITH THE FOLLOWING CONDITIONS WITHIN 12 MONTHS FROM THE DATE OF AWARD OF SUCH STATUS:

Activity

Commencement of operation and undertaking of the Malaysia Digital Approved Activities in Malaysia.

Knowledge Workers

Minimum of 2 full-time employees (comprising knowledge workers) with minimum average monthly base salary of RM5,000 employed for the MD Approved Activities.

Operating Expenditure

Minimum annual operating expenditure of RM50,000 incurred for the MD Approved Activities.

Paid-up Capital

Minimum of RM1,000.00.

As per MDEC’s announcement, the guidelines for the above tax incentives will be released by soon. Please be guide accordingly.

THE MALAYSIA DIGITAL ACTIVITIES Research, development and commercialization of solution and/or provision of services in relation to any of the following technologies or areas:

Big data analytics (BDA);
Artificial intelligence (AI);
Financial technology (FinTech);
Internet of things (IOT);
Cybersecurity (technology/software/design and support);
Data centre and cloud (technology/software/design and support);
Blockchain;
Creative media technology;
Sharing economy platform;
User interface and user experience (UI/UX);
Integrated circuit (IC) design and embedded software;
3D printing (technology/software/design and support);
Robotics (technology/software/design)
Autonomous (technology/software/design and support);
Systems/network architecture design and support;
Global business services or knowledge process outsourcing;
Virtual, augmented and/or extended reality – new/additional activity ;
Drone technology – new/additional activity ;
Advance telecommunication technology – new/additional activity ; OR
Other emerging technologies deemed significant for the digital ecosystem subject to approved by the Approval Committee – new/additional activity.

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Advisory Featured Ideas & Insights Publications

Why Listing on 1Exchange (1X)?

Post author By admin
Post date July 10, 2023
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Why Listing on 1Exchange (1X)?

1X’s strategic shareholder is SGX. 1X is widely regarded as 3rd Board and 1st MAS-regulated and cost-effective Private Securities Exchange in Singapore to design for private companies to enable them to trade on private share and provide ESOS and liquidity for their investors and employees, respectively.

Why Listing on 1Exchange (1X)?

Yes, you may be eligible! if your company has revenue of at least SGD 2 million with at least 2 years operating history, and the listing process only takes about 2-3 months.

您公司有考虑在 1Exchange (1X) 上市？

如果您的公司符合以下条件：

营业额：至少新加坡2百万新币。
经营历史：至少2年，需提供审计过的财务报表。
最低可流通股份：至少占股份的10%，且价值至少新加坡2百万新币。

时间范围：2至3个月。

谁是1 Exchange (1X)?

新加坡交易所（SGX）是1Exchange（1X）的战略股东和合作伙伴之一，1X是新加坡首家受金融管理局监管的私人证券交易所，被广泛视为全球金融中心的第三板块。

1X是一个“轻触式”和成本效益高的私人上市场所，专门为家族企业、成长中的公司和准备上市公司而设计。

此交易所提供市场导向的解决方案，例如直接私人上市和员工股票期权交易。通过1X上市，创始人、所有者和在成长阶段的公司依然可以在保留灵活性和控制权的同时，实现部分退出和可交易性的私人股份。

在1X上的私人投资者可以自由、安全地买入和卖出股份，随时随地可以达到实现流动性。

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Tags Publications, Publications - Advisory

Featured Ideas & Insights Publications Tax

Why Singapore?

WHY SINGAPORE

Singapore is a strategic base to implement your growth strategies and to manage and integrate your operations for the region and beyond. Being one of the lowest income tax rate countries, Singapore has further announced a full and partial tax exemption for the newly incorporated company for the first 3 years consecutively.

1) One of the LOWEST TAX RATES in the world

With effect from 2010, Singapore corporate income tax rate has further reduced from 18% to 17%, being one of the lowest tax rates in the world. Singapore Government has declared a new start-up tax exemption and partial tax exemption for newly incorporated and existing companies:

Tax Exemptions for Newly Start-up Companies in Singapore vs Malaysia

4.25% tax on first S$100K chargeable income

For a newly incorporated company (1), the corporate income tax rate is 4.25% on the first S$100k (≈RM300k) of chargeable income for the first 3 years of assessment consecutively.

8.50% tax on chargeable income of above S$100K up to S$200K

The newly incorporated companies are continued to enjoy for the partial tax exemption which effectively translates to about 8.5% tax rate on chargeable income of above S$100,000 up to S$200,000 per annum. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.

Tax Exemptions for Existing Companies in Singapore vs Malaysia

The 4th years of assessment and onwards, the companies pay only 4.25% tax on their first S$10,000 of chargeable Income and 8.50% for the next S$190,000. The chargeable income above S$200,000 will be charged at the normal headline corporate tax rate of 17%.

1. (a) It is incorporated in Singapore and a tax resident of Singapore for that Year of Assessment. (b) It has no more than 20 shareholders throughout the basis period relating to that Year of Assessment and all its shareholders are individuals throughout the basis period relating to that Year of Assessment; or there is at least one individual shareholder with a minimum of 10% shareholding. c) Its principal activity is not related to (i) investment holding, or (ii) property developer for sales, investment, and both.

2) Engage in TRIANGULAR or TETRAGONAL trade

The companies engaged in international transactions among two or more countries, for instance, the companies purchase goods from e.g. China, and then sell them to e.g. America or trade domestically, Malaysia. This is when the companies need a lower tax trading company (2) to act as the intermediary to issue invoice and packing list in order to strengthen their competitive power in the international or local market.

2. To consider a company as resident in Singapore, the control and management of the business must be exercised in Singapore. Though the term “control and management” is not clearly defined by authorities, a generally accepted consensus is that it refers to the policy level decision making at the level of Board of Directors.

3) Government Incentives

Overview of government incentives

Depending on your company’s business plans, you may consider various tax incentives and grants as follows:

Internationalisation

Incentives available

Benefits

International Headquarters (IHQ) Award

Concessionary corporate tax rates of 5% or 10% for companies that commit to anchor substantive HQ activities in Singapore to manage, coordinate and control regional business operations. The award is accompanied with the award of Development and Expansion Incentive governed by Singapore Economic Development Board (EDB).

Mergers & Acquisitions (M&A) Scheme

The acquiring company is entitled to the following benefits:

25% of M&A allowance (capped at S$10 million) of the total acquisition value capped at S$40 million per YA.
Double Tax Deduction (DTD) on the transaction cost capped at S$100,000 incurred during the share acquisition process.

Double Tax Deduction (DTD) for Internationalisation Scheme

Enjoy up to 200% tax deduction on qualifying expenditure incurred on market expansion and investment development activities. The qualifying expenditures include:

Qualifying salary expenses incurred for employees posted overseas in an overseas entity.
Overseas business development trips and missions.
Overseas investment study trips and missions.
Overseas trade fairs.
Local trade fairs approved by Enterprise Singapore or STB.

Market Readiness Assistance (MRA) grant

Funding support of 50% of eligible costs, capped at S$100,000 per company per new market by Enterprise Singapore. The eligible costs for marketing activities including overseas market set-up, business development and market promotion.

Trading

Incentives available

Benefits

Global Trader Programme

A concessionary corporate tax rate of 5% or 10% for a renewable 3 or 5-year period on qualifying trading income granted by Enterprise Singapore, which includes income from physical trading, brokering of physical trades, derivative trading income, and income from structured commodity financing activities, treasury activities and advisory services in relation to mergers and acquisitions.

Manufacturing and services

Incentives Available

Benefits

Pioneer Incentive

Tax exemption on income from qualifying activities for a period of not exceeding 15 years, administered by Economic and Development Board (EDB).

Development & Expansion Incentive (DEI)

Reduced tax rate of 5% or 10% on incremental income from qualifying activities, limited to 5 years. The incentive is governed by Economic and Development Board (EDB).

Investment Allowance (IA)

Allowance of up to 100% (on top of normal capital allowance) on approved fixed capital expenditure. This incentive is administered by Economic and Development Board (EDB).

Integrated Investment Allowance (IIA)

Additional allowance on fixed capital expenditure incurred on qualifying productive equipment placed with an overseas company for an approved project. This scheme is administered by Economic and Development Board (EDB).

Land Intensification Allowance (LIA)

Initial allowance of 25% and annual allowance of 5% on qualifying capital expenditure incurred for the construction or renovation/extension of a qualifying building or structure. Annual allowances of 5% are granted until total allowance amounts to 100% of qualifying capital expenditure. Approvals for the incentive will be granted by the Economic Development Board (EDB).

Automation Support Package (under Enterprise Singapore)

Enterprise Development Grant (EDG)
Investment Allowance (IA)
Enhanced SME Equipment Loan

Grant support up to 70% of qualifying project costs such as equipment, training and consultancy.

Qualifying projects may be eligible for an IA of 100% on the amount of approved capital expenditure, net of grants. The approved capital expenditure is capped at S$10 million per project.

Under Enterprise Financing Scheme (EFS), qualifying SMEs may receive up to 70% government’s risk-share with participating financial institutions for qualifying projects. SMEs can apply for fixed asset loans of up to S$30 million. ことができる。

Financial and Treasury

Incentives available

Benefits

Finance & Treasury Centre (FTC) Incentive

Enjoy concessionary corporate tax rate of 8% for five years on income derived from qualifying services/ activities as well as withholding tax exemption on interest payments on loans from banks and approved network companies for FTC activities. This incentive is administered by Economic and Development Board (EDB).

Financial Sector Incentive (FSI)

Concessionary tax rate of 10% or 13.5% for licensed financial institutions, from large universal banks, fund managers to capital market players. This incentive is governed by Monetary Authority of Singapore (MAS).

Research and Development (R&D) and intellectual property (IP) management

Incentives available

Benefits

Research Incentive Scheme for Companies (RISC)

Co-funding to encourage and assist businesses companies in Singapore to conduct or expand their research and development (R&D) activities in science and technology. This scheme is administered by Economic and Development Board (EDB).

Supportable project costs include expenditure in the following:

Manpower cost (up to 50% support)
Equipment, materials, consumables and software (up to 30% support)
Singapore-based professional services (up to 30% support)
IPRs, e.g. licensing, royalties, technology acquisition (up to 30% support)

Intellectual Property Development Incentive (IDI)

Reduced tax rate of 5% or 10% on a percentage of qualifying IP income for an initial period of not exceeding 10 years, and may be further extended for a period or periods not exceeding ten years each. This incentive is administered by Economic and Development Board (EDB).

Approved Foreign Loan Incentive (AFL)

Reduced or nil withholding tax rate on interest payments on loans with minimum amount of S$20 million taken to purchase productive equipment. This incentive is administered by Economic and Development Board (EDB).

Approved royalties incentive (ARI)

Reduced or nil withholding tax rate on approved royalties, fees or contributions to research and development costs made to a non-tax resident.. This incentive is administered by Economic and Development Board (EDB).

Writing-down allowances for IP acquisition (S19B)

Automatic 5/10/15-year writing-down allowances on capital expenditure incurred for IPR acquisitions with legal and economic ownership. EDB’s approval is required if only economic ownership of IP rights is acquired.

Maritime, shipping and logistics

Incentives Available

Benefits

Maritime Sector Incentive (MSI) – Singapore Registry of Ships (MSI-SRS) and Approved International Shipping (MSI-AIS)

Tax exemption on qualifying shipping income from operating Singapore and foreign- flagged ships, provision of specified ship management services, and income from foreign exchange and risk management activities which are carried out in connection with or incidental to the operations of ships for either a 10-year renewable period; or a 5-year non-renewable period, with the option of graduating to the 10-year renewable award at the end of the 5-year period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

MSI – Shipping Related Support Services (MSI- SSS) Award

Concessionary tax rate of 10% on the incremental income derived from carrying out approved shipping-related support services for a 5-year renewable period. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

Ship broking;
Forward freight agreement (FFA) trading;
Ship management;
Ship agency;
Freight forwarding and logistics services; and
Corporate services rendered to qualifying approved related parties who are carrying on business of shipping – related activities.

MSI – Maritime Leasing (MSI-ML) Award

Concessionary tax rate of 10% for up to 5 years on qualifying leasing or management income. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

Maritime Innovation & Technology (MINT) Fund

To promotes and encourages upstream research, product and solution development relevant to the maritime industry in Singapore. This incentive is administered by Maritime and Port Authority of Singapore (MPA).

Grant of up to 70% of the total qualifying project costs (inclusive of input GST), comprising of manpower and equipment either engaged or acquired for the purposes of the project, and other operating expenditure incurred for the purposes of the project.

4) TAX EXEMPTION on Dividend declared from Singapore

Dividend declared out of the profit derived from Singapore Company and received in Malaysia is exempted from tax (3).

5) TAX TREATIES

Singapore has entered into Double Taxation Agreement (“DTA”) with 88 countries. Please refer to APPENDIX I.

6) AUDIT EXEMPTION of a Singapore Company

A company incorporated on or after 1 July 2015, if a private company that fulfils at least two of the following three quantitative criteria in each of the immediate past two financial years is exempted from audit (4) : (a) Total annual revenue of not more than SGD 10 million; (b) Total assets of not more than SGD 10 million; (c) Number of employee of not more than 50.

3. Section 127 (1) – Exemptions from tax. Any income specified in Part 1 of Schedule 6 shall be exempt from tax. Part 1 Schedule 6, para 28 (1), Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia Part 1 schedule 6, para 28(1), exempt income of any person derive from sources outside Malaysia and received in Malaysia (See also exception).

4. Existing safeguards will however be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.

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Tags Publications, Publications - Tax

Johor-Singapore Special Economic Zone (JS-SEZ)

Introduction

Location

Why Invest in JS-SEZ

Competitive Tax Incentive

A. Special Tax Corporate Tax Rate:

B. Special Tax Rate for Knowledge Workers:

Family Office Incentive Scheme in Forest City Free Trade Zone (FCFTZ)

Forest City Special Financial Zone (FCSFZ)

Single Family Office (SFO) & Single Family Office Vehicle (SFOV)

What is Single Family Office (SFO)?

What is Single Family Office (SFO)?

What is Single Family Office Vehicle (SFOV) ?

SFO vs SFOV

Key Conditions on SFOVs Tax Incentives

MALAYSIA GREEN INVESTMENT TAX ALLOWANCE (GITA) FOR OWN COMSUMPTION

(i) Investment Tax Allowance :

(ii) Eligibility Criteria:

Malaysia Cold Chain Facilities

MALAYSIA GLOBAL SERVICES HUB TAX INCENTIVE

1. Overview Of The Incentive

2. Qualifying Services and Additional Services

3. Outcome-based conditions

Why Dubai

One of the LOWEST TAX RATES in the world, embracing 0% Corporate Tax in the UAE

Tax Exemptions for Companies in Dubai vs Malaysia

Improving Transfer Pricing Compliance

Transfer Pricing Guidelines (“TPG”）

Transfer Pricing Documentation (“TPD”) Flowchart

Transfer Pricing Rules 2023

Contemporaneous TP documentation requirements

Method to determine arm’s length price

Comparability of transactions

Intra-group Services

Cost contribution arrangement

Intangible property

Full Scope TPD

Simplified TPD

Minimum TPD Template (PIN 1/2023)

Income Tax (Country-by-Country Reporting) Rules 2016 (“CbyCR Rules”)

Tax Return Form

TP Penalties and Power to Disregard Structures

Illustration on Penalties

Key Take-aways

How We Can Help

Malaysia Digital (MD) Status Incentive (formerly known as MSC Malaysia Status)

MALAYSIA DIGITAL (“MD”) STATUS SERVICE INCENTIVE (formerly known as MSC Malaysia Status)

1. ELIGIBILITY CRITERIA

2. BENEFITS OF MD STATUS COMPANIES

i. MD BILL OF GUARANTEES (BoGs)

ii. OTHER BENEFITS

3. COMPANIES WITH MD STATUS COMPANY WILL HAVE TO COMPLY WITH THE FOLLOWING CONDITIONS WITHIN 12 MONTHS FROM THE DATE OF AWARD OF SUCH STATUS:

Activity

Knowledge Workers

Operating Expenditure

Paid-up Capital

THE MALAYSIA DIGITAL ACTIVITIES Research, development and commercialization of solution and/or provision of services in relation to any of the following technologies or areas:

Why Listing on 1Exchange (1X)?

Why Listing on 1Exchange (1X)?

您公司有考虑在 1Exchange (1X) 上市？

谁是1 Exchange (1X)?

WHY SINGAPORE

1) One of the LOWEST TAX RATES in the world

4.25% tax on first S$100K chargeable income

8.50% tax on chargeable income of above S$100K up to S$200K

2) Engage in TRIANGULAR or TETRAGONAL trade

3) Government Incentives

Overview of government incentives

4) TAX EXEMPTION on Dividend declared from Singapore

5) TAX TREATIES

6) AUDIT EXEMPTION of a Singapore Company

OUR GLOBAL PRESENCE

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100+

630+

42000+