Laws of Malaysia Act 591 Re-printing of the Finance Act (No. 2) 1998 Containing all amendments to 1 January 2006 published by the Commissioner of law revision, under the authority of Law Revision Act 1968 In collaboration with PerCetakan naSional malaySia bhD 2006 laws of Malaysia Act 591 Finance Act (No. 2) 1998 date of Assent............ 4 December 1998 date of publication in the Gazette of ... ... more 31 December 1998 Reprint before Reprinting the first............ 2002 finance (No. 2) 3 laws of Malaysia Act 591 Finance Act (No. 2) 1998 arrangement of sections Chapter i preliminary section 1. short title. Amendment Act Chapter ii amendments to the income tax Act 1967 3. Commencement amendments to the income tax Act 1967 4. Amendment of section 13 5. Amendment of section 34 6. Amendment of section 44 7. Amendment of section 54a 8. Amendment of section 60 9. The replacement of section 130 10. new Schedule 4 c 11. Amendment of Schedule 6 1. Amendment of Schedule 7 13. Amendment of schedule 7a chapter iii amendments to the real property gains tax Act 1976 14. Commencement amendments to the real property gains tax Act 1976 4 laws of Malaysia Act 591 section 15. Amendment of section 53 chapter iV amendments to the Tax Act labuan offshore business activity 1990 16. Commencement of activity Tax Act amendments to the labuan offshore business 1990 17. Amendment of section 18. Deletion of section 10a of the finance (No. 2) 5 laws of Malaysia Act 591 Finance Act (No. 2) 1998 an act to amend the income tax Act 1967, real property gains tax Act 1976 and Tax Act labuan offshore business activity, 1990.
[] enacted by the Parliament of malaysia as follows: Chapter i preliminary short title 1. This Act may be cited as the Finance Act (No.) 1998. amendment of Act 2. the income tax Act 1967 [Act 53], the real property gains tax Act 1976 [Act 169] and Tax Act labuan offshore business activity, 1990 [Act 445] is amended in the manner set out in chapters ii, iii and iV.
Chapter ii amendments to the income tax Act 1967 commencement amendments to the income tax Act 1967 3. (1) except for section 4, 6, 8, 10 and 13, this chapter shall have effect for the year of assessment 1999 and the next year of assessment.
6 laws of Malaysia Act 591 () section 4 shall be deemed to have come into operation on 4 October 1998.
(3) sections 6 and 10 shall have effect for the year of assessment 000 and the next year of assessment.
(3a) of section 8 shall be deemed to have come into operation for the year of assessment 1995 and the next year of assessment.
(4) section 13 shall be deemed to have effect for the year of assessment 1998 and for the next year of assessment.
Amendment of section 13 4. income tax Act 1967, called the principal Act in this chapter, is amended by replacing subparagraph 13 (1) (b) (ii) with the following subparagraph: "(ii) a benefit spouse contributor or amenity consisting of — (A) leave passages for travel within malaysia not exceeding three times in any calendar year; or (B) one leave passage for travel between malaysia and any place on the efforts of malaysia in any calendar year, limited to a but of three thousand dollars:, likely that the benefit spouse contributor or amenity've enjoyed under this subparagraph is confined only to the employee and members of his immediate family; ".
Amendment of section 34 5. Paragraph 34 (6) (h) of the Act is amended by substituting the above authority the word minister.
Amendment of section 44 6. Section 44 of the principal Act is amended — (a) in paragraph (1) (b) by substituting for the word "or" with the word "4B, 4B or 4 c"; (b) in subsection (6) by substituting for the words "or 4B," the word ", 4B or 4 c"; and (c) in subsection (6a) by substituting for the words "or 4B," the word ", 4B or 4 c".
Finance (No. 2) 7 amendment of section 54A 7. Section 54a of the principal Act is amended — (a) by replacing subsection (1) with the following subsection: "(1) Subject to the following subsections, where a person who is resident for the basis year for a year of assessment carries on the business of — (a) transporting passengers or cargo by sea on a malaysian ship; or (b) letting out on charter a malaysian ship owned by him on a voyage or time charter basis, the statutory income for that year of assessment from that business shall be exempt from tax. ";
(b) in subsection (3) by substituting for the words "the business of transporting passengers or cargo on board a malaysian ship" with the words "a business in respect of which his income is exempt under subsection (1)"; and (c) in subsection (6) — (i) by substituting a semicolon which appears at the end of the definition of "person" with the full stop; and (ii) by deleting the definition of "transporting passengers or cargo".
Amendment of section 60 8. Section 60 of the principal Act is amended — (a) by replacing subparagraph (3a) (a) (iii) with the following subparagraph: "(iii) the amount of the actuarial surplus from the life fund that is transferred to the shareholders ' fund; and "; and 8 laws of Malaysia Act 591 (b) by replacing subparagraph (4a) (a) (iii) with the following subparagraph: "(iii) the amount of the actuarial surplus from the life fund that is transferred to the remaining fund; and ".
The replacement of section 130 9. the principal Act is amended by replacing section 130 with the following section: "non-resident citizen 130 relief. (1) there shall be allowed a relief to an individual who is a citizen but not resident for the basis year for a year of assessment by reason of his employment which is exercised on the efforts of malaysia in the public services or the service of a statutory authority.
() the relief shall be such relief as will reduce the amount of tax chargeable on him in respect of his chargeable income for that year of assessment to an amount which bears the same proportion to the amount of tax which would be so chargeable if he were resident for that year and the tax base were charged on his aggregate income as the amount of his total income bears to the amount of his aggregate income.
(3) an individual claiming relief under this section shall make his claim in the form comes and shall furnish such further since as the Director general may require.
(4) in this section, aggregate income, in relation to an individual claiming relief under this section for a year of assessment, means his total income accruing in, derived from or malaysia or elsewhere, computed in accordance with the provisions of this act: Likely that where subsection 45 () applies in arriving at the aggregate income the reference to total income shall include the total income of the wife of the individual ".
Finance (No. 2) 9 new Schedule 4 c 10. the principal Act is amended by inserting after table 4B table the following: "Schedule 4 c [Section 44] deduction for approved Food Production Projects 1. Subject to this Schedule, a company resident in malaysia in the basis year for a year of assessment (referred to in this Schedule as a "surrendering company") may surrender its adjusted loss, in full or in part, in the basis period for that year of assessment in respect of an approved food production project to one or more related companies resident in malaysia in the basis year for that year of assessment (referred to in this Schedule as a "NAMA penuntut company ").
. in relation to an approved food production project — (a) the application for approval for the project shall be made not later than 31 December 1999;
(b) the project shall commence within one year from the date of approval; and (c) at least eighty per cent of the sales, if any, of the produce are made within malaysia.
3. For the purposes of this Schedule, a surrendering company is related to a NAMA penuntut company if at the end of the basis period for a year of assessment at least — (a) seventy per cent of the issued share capital of the surrendering company are directly owned by the NAMA penuntut company;
(b) seventy per cent of the issued share capital of the NAMA penuntut company are directly owned by the surrendering company; or (c) seventy per cent each of the issued share capital of the surrendering company and NAMA penuntut company are directly owned by another company.
4. the amount of adjusted loss surrendered shall be allowed as a deduction against the aggregate income of the NAMA penuntut company listed on to subsection 44 (1).
10 laws of Malaysia Act 591 5. any amount of adjusted loss from the approved food production project that is not surrendered in any year of assessment shall not be available to any NAMA penuntut company for any year of assessment I.
6. where the basis period of the surrendering company does not coincide with the basis period of the NAMA penuntut company, the adjusted loss from the approved food production project shall be deemed to have accrued evenly over the base period of the surrendering company and the amount of adjusted loss surrendered shall not vehicles such amount that is apportioned to the period that coincides with the basis period of the NAMA penuntut company.
7. where a company has commenced an approved food production project, that company shall maintain a separate account for the income derived from that project: Likely that where expenses have been incurred by that company which are not directly attributable to that project, the Director general may allocate such amount as u.s. expenses might have been reasonably and properly incurred in the normal course of its business in respect of such project.

8. any claim for a deduction under this Schedule shall be made in a written statement and shall be accompanied by a notice of consent given by the surrendering company containing such since the US to show the amount of adjusted loss being surrendered.
9. notwithstanding the foregoing provisions of this Schedule, where it she has been to the Director general that the deduction as mentioned in paragraph 4 ought not to have been so given, the Director general may raise such assessment or additional assessment upon that NAMA penuntut company as may be necessary in order to make good any loss of tax.
10. the provisions of this Schedule shall not apply to a surrendering company which has been allowed a deduction under Schedule 4a or given an allowance under Schedule 7a, or granted any incentive under the Promotion of investments act 1986 [Act 327] in respect of the same activity.
11. in this Schedule, "approved food production project" means an agricultural project which is approved by the minister of agriculture for the cultivation of maize for animal feed, cattle farming or any other activities as may be comes by the minister of Finance. ".
Amendment of Schedule 6 11. table 6 of the principal Act is amended — (a) in paragraph 1a and 1B by substituting for the words "King Queen or tengku ampuan" the word finance (No. 2) 11 "tengku ampuan, Consort, tengku Permaisuri, or Queen";
(b) in paragraph 30 by deleting the words "resident for the basis year for a year of assessment";
(c) by substituting paragraph 34 with the following paragraph: "34. (1) the income of an individual derived from exercising an employment on board a malaysian ship.
() For the purposes of subparagraph (1), malaysian ship has the same meaning as in section 54a (6). "; and (d) by inserting after paragraph 35 the following paragraph: "35A. income of a unit trust in respect of interest derived from malaysia and paid or credited by any bank or financial institution licensed under the banking and Financial institutions act 1989 [Act 372] or the islamic banking act 1983 [Act 276]. ".
Amendment of Schedule 7 12. Schedule 7 to the Act is amended by deleting paragraph 8.
Amendment of schedule 7A 13. table 7a to the principal Act is amended — (a) in subparagraph (1) (a) by inserting a colon after the word "and";
(b) in subparagraph (1) (b) by substituting for the words "; and "with a comma; and (c) by deleting subparagraph (1) (c).
1 laws of Malaysia Act 591 chapter iii amendments to the real property gains tax Act 1976 commencement amendments to the real property gains tax Act 1976 14. This chapter shall come into force when this Act comes into force.
Amendment of section 53 15. real property gains tax Act 1976 is amended by substituting paragraph 53 () (a) with the following paragraph: "(a) about a company, partnership or group of persons having registered office in malaysia — (i) to the registered office;
(ii) to his last known address; or (iii) to any person authorized by him to receive delivery process; ".
Chapter iV amendments to the Tax Act labuan offshore business activity 1990 commencement of activity Tax Act amendments to the labuan offshore business 1990 16. This chapter shall have effect for the year of assessment 1999 and the next year of assessment.
Finance (No. 2) amendment section 2 17. Business activity Tax Act offshore labuan 1990, referred to the principal Act in this chapter, is amended in subsection (1) — (a) by substituting for the proviso to the definition of "offshore business activity" with the following proviso: "provided that — (a) in relation to offshore companies that conduct business offshore bank, such activity may be carried out with the resident and, if allowed under subsection 0 () Offshore Banking Act 1990 [Act 443] , a transaction may be carried out in a currency of malaysia;
(b) in relation to offshore companies that conduct business offshore insurance, such activity may be carried out with the resident and, if allowed under subsection 1 () the offshore Insurance Act 1990 [Act 444], the transactions may be carried out in a currency of malaysia;
(c) in relation to investment holding by an offshore company in a domestic company, the holding may be cited in the Malaysian currency;
(d) in relation to offshore companies which carry out money brokerage business, the activity may be carried out by resident j if permitted under paragraph 7 (3) (a) offshore companies Act 1990 [Act 441];
(e) in relation to offshore companies that conduct business offshore leasing, such activity may be carried out by resident if permitted under paragraph 7 (3) (a) offshore companies Act 1990; or 14 laws of Malaysia Act 591 (f) the Minister may approve the activities, with the resident or the transaction in the Malaysian currency; "; and (b) by inserting after the definition of "Minister" in the following definition: ' "shipping operations" means the transportation of passengers or cargo via sea or based on hire on the basis of carter carter ship or journey times; '.
Deletion of section 10A 18. the principal Act is amended by deleting section 10a.
Finance (No. 2) 15 laws of Malaysia Act 591 Finance Act (No. 2) 1998 List Amendment law short title force amend from 631 Finance Act Act 003 01-01-1999 16 laws of Malaysia Act 591 laws of Malaysia Act 591 Finance Act (No. 2) 1998 List Section amended Section power amend with effect from 3 631 Act 01-01-1999