Finance Act 2002

Original Language Title: Finance Act 2002

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WM laws of MALAYSIA Act REPRINTING 619 of the FINANCE ACT, 2002 Contains 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 6192 FINANCE ACT 2002 date of Assent.................. 29 January 2002 date of publication in the Gazette............ February 7, 2002 REPRINT BEFORE Reprinting The first ... ... more 2004 Financial 3 laws of MALAYSIA Act 619 of the FINANCE ACT 2002 ARRANGEMENT of SECTIONS CHAPTER I preliminary section 1. Short title 2. Amendment Act CHAPTER II AMENDMENTS to the INCOME TAX ACT 1967 3. Commencement amendments to the income tax Act 1967 4. Amendment of section 34 5. Amendment of section 39 6. Amendment of section 75 7. Amendment of Schedule 1 8. Amendment of Schedule 3 9. Special provisions in respect of paragraph 16 of Schedule 3 10. Amendment of schedule 7A CHAPTER III AMENDMENTS to the PETROLEUM (income tax) 1967 11. Commencement of the Act the amendments to the Petroleum (income tax) 1967 12. Amendment of section 16 13. Amendment of section 18 14. Amendment Of Second Schedule 15. Special provisions relating to paragraph 13 of the second schedule laws of Malaysia ACT 6194 CHAPTER IV AMENDMENTS to the stamp Act 1949 Section 16. Commencement amendment to the stamp Act 1949 17. Amendment of section 9 18. New section 38A 19. Amendment of section 39 20. Amendment of section 47A 21. Amendment of first schedule 5 Financial laws of MALAYSIA Act 619 of the FINANCE ACT 2002 an act to amend the income tax Act 1967, the Petroleum (income tax) in 1967 and the stamp Act 1949.
[] enacted by the Parliament of Malaysia as follows: CHAPTER I preliminary short title 1. This Act may be cited as the Finance Act 2002.
Amendment Of Act 2. The income tax Act 1967 [Act 53], the Petroleum (income tax) 1967 [Act 543] and stamp Act 1949 [Act 378] 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) sections 4, 5, 7, paragraph 8 (a), 8 (b), 8 (d), 8 (e), 8 (f), 8 (g), 8 (h), 8 (i), 8 (j), 8 (l) and 8 (m), section 9 and paragraph 10 (a), 10 (b) and 10 (c) this chapter shall have effect for the year of assessment 2002 and the next year of assessment.
Laws of Malaysia ACT 6196 (2) of paragraph 8 (c) of this chapter shall be deemed to have come into force on 1 January 2000 and shall take effect for the year of assessment 2000 in relation to the basis period ending in the year 2000 and the next year of assessment.
(3) Paragraph 37F to schedule 3 of the income tax Act 1967, which is referred to as "the principal Act" in this chapter, as inserted by paragraph 8 (k) this chapter shall have effect for the year of assessment 2002 and the next year of assessment.
(4) Paragraphs 37G and 37H of the Schedule 3 of the principal act as inserted by paragraph 8 (k) this chapter shall be deemed to have effect for the year of assessment 2001 and the next year of assessment.
(5) Paragraph 10 (d) shall be deemed to have effect for the year of assessment 1998 and for the next year of assessment.
Amendment of section 34 4. The principal Act is amended in subsection 34 (6) — (a) in paragraph (l), by deleting the word "and" at the end of proviso (b);
(b) by replacing the full stop at the end of paragraph (m) with the words "; and "; and (c) by inserting after paragraph (m) of the following paragraph: "(n) an amount equal to the expenditure incurred by a person in the relevant period imposed on the provision of practical training in Malaysia in relation to his business, to an individual who is — (i) resident in the basis year for a year of assessment; and (ii) not an employee of that person. ".
Amendment of section 39 5. Section 39 of the principal Act is amended in subsection (1) — (a) by deleting paragraph (h); and financial 7 (b) by replacing paragraph (k) with the following paragraph: "(k) any sum paid by way of rentals in respect of a motor vehicle, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers, in for excess of fifty thousand dollars: Likely that if the motor vehicle has not been used by any person for any purpose prior to the rental and the total cost of the motor vehicle does not-new vehicles one hundred and fifty thousand ringgit, any sum paid by way of rental in for excess of one hundred thousand dollars:, likely further that the amount of deduction but in respect of the rentals of such motor vehicle in the year of assessment and I years of assessment shall not in the aggregate fifty thousand dollars new vehicles or one hundred thousand dollars , as the case may be, in respect of that motor vehicle; ".
Amendment of section 75 6. Section 75 of the Act is amended in subsection (1) — (a) by substituting for the word "Responsibility" with the words "Notwithstanding anything to the contrary to this Act or any other written law, the responsibility"; and (b) by inserting after the words "for the purposes of this Act" the words "including the payment of tax".
Amendment of Schedule 1 7. Table 1 of the principal Act is amended — (a) in part I in paragraph 1, by replacing the existing rate with the following rates: "Chargeable Income RM Rate of Income Tax For every ringgit of the first 2,500 0 per cent For every ringgit of the next 2,500 1 per cent law of Malaysia Act 6198 For every ringgit of the next 15,000 3 per cent For every ringgit of the next 15,000 7 per cent For every ringgit of the next 15,000 13 per cent For every ringgit of the next 20,000 19 per cent For every ringgit of the next 30,000 24 per cent For every ringgit of the next 150,000 27 per cent For every ringgit exceeding 250,000 28 per cent ";
(b) in part I in paragraph 1A, by substituting for the words "29" with the words "28"; and (c) in part IV, by replacing the existing rate with the following rates: "Chargeable Income RM Rate of Income Tax For every ringgit of the first 20,000 0 per cent For every ringgit of the next 10,000 3 per cent For every ringgit of the next 10,000 6 per cent For every ringgit of the next 10,000 9 per cent For every ringgit of the next 25,000 12 per cent For every ringgit of the next 25,000 16 per cent For every ringgit of the next 50,000 20 per cent For every ringgit of the next 100,000 23 per cent For every ringgit of the next 250,000 26 per cent For every ringgit exceeding 500,000 28 per cent ".
Amendment of Schedule 3 8. Schedule 3 of the principal Act is amended — (a) in paragraph 3, by replacing the words "4" with the words "3A";
(b) by inserting after paragraph 3 the following paragraph: "3A. (1) Subject to subparagraph (2), where a building is purchased for use as an industrial building from a person who constructed that building and that building "Chargeable Income RM Rate of Income Tax 9 has not been Financial used by any person for any purpose prior to the purchase, then, for the purposes of this Schedule — (a) the purchaser shall be deemed to have constructed that building and deemed to have incurred capital expenditure on the construction of that building;
(b) the purchase price shall be deemed to be the capital expenditure incurred on the construction of that building; and (c) the date of that purchase shall be deemed to be the date of construction of that building.
(2) The capital expenditure incurred by the person who constructed the building and the date of construction of that building by that person to which regard would be limits but for this subparagraph shall be disregarded for the purposes of this Schedule. ";
(c) in paragraph 5 — (i) in subparagraph (1) by substituting for the word "In" with the words "Subject to subparagraph (1A), in";
(ii) in subsubperenggan (1) a — (A) by substituting for the word "following" the word "from"; and (B) by substituting for the words "including the particular" the words "including the conjunction to immediately"; and (iii) by inserting after subparagraph (1) of the following subparagraph: "(1A) Where the purchased building referred to in subparagraph (1) is constructed prior to 1 January 2000 and that building was first used after its purchase as an industrial building — (a) in the year of assessment 2000, all annual allowances referred to in sub-subparagraph (1) (a) shall be allowances which could have been claimed or made for the year of assessment following the year of laws of Malaysia ACT 61910
assessment in which the expenditure on the construction of that building was incurred up to and including the year of assessment 2000 (in conjunction to year basis); or (b) in the year of assessment 2001 or any I year of assessment, all annual allowances referred to in subsubparagraph (1) (a) shall be allowances which could have been claimed or made for the year of assessment following the year of assessment in which the expenditure on the construction of that building was incurred up to and including the year of assessment immediately in conjunction , the year of assessment 2001 or any I year of assessment in which that building was first used after its purchase as an industrial building, and for the avoidance of doubt, the allowance for the year of assessment 2000 shall consist of the allowances for the year of assessment 2000 (in conjunction to year basis) and year of assessment 2000 (current year basis). ";
(d) in paragraph 12, by inserting after the word "construction" the words "or purchase";
(e) in paragraph 14, by substituting for the words "17" with the words "16A";
(f) by deleting paragraph 15 A;
(g) in paragraph 16 — (i) by inserting after the word "construction" the words "or purchase"; and

(ii) by substituting for the words "one-fiftieth" with the words "three-hundredth";
(h) by deleting paragraph 17;
11 (i) in paragraph 18, by substituting for the words "15, 16 or 17" with the words "15 or 16";
(j) in paragraph 37C, by substituting for the words "12, 16 or 17" with the words "12 or 16";
(k) by inserting after paragraph 37E paragraphs the following: "Qualifying expenditure: Building used for hotel 37F. The provisions of this Schedule relating to industrial buildings shall apply, mutatis mutandis, to a building or part thereof used by a person solely for the purpose of an hotel and that hotel is registered with the Ministry of Culture, Arts and Tourism.
Qualifying expenditure: Airport 37G. The provisions of this Schedule relating to industrial buildings shall apply, mutatis mutandis, to an airport and the reference to capital expenditure incurred in relation to that airport shall include the capital expenditure on the construction, reconstruction, extension, improvement or purchase of any building, runway or ancillary structures.
Qualifying expenditure: Motor racing circuit 37. The provisions of this Schedule relating to industrial buildings shall apply, mutatis mutandis, to a motor racing circuit approved by the Minister and the reference to capital expenditure incurred in relation to that motor racing circuit shall include the capital expenditure on the construction, reconstruction, improvement or extension of that motor racing circuit or ancillary structures. ";
(l) in paragraph 42A, 42B and 42C, by deleting the words ", 17"; and (m) in subparagraph 65 (3), by deleting the word "hotel".
Laws of Malaysia ACT 61912 special provisions in relation to paragraph 16 of Schedule 3 9. Notwithstanding the provisions of paragraph 16 of Schedule 3 of the principal Act, where an annual allowance has been made to a person in respect of a purchase of buildings, and the allowance is calculated based on a breakdown that allowed under paragraph 17 of Schedule 3 of the principal Act before force deletion of the paragraph under paragraph 8 (h) of this Act, whichever is higher than three per hundred the annual allowance for a year of assessment for the building shall be calculated on the basis of the breakdown and the allowance shall not exceed the amount of the balance of expenses at the end of the basis period for the year of assessment.
Amendment of schedule 7A 10. Table 7A of the principal Act is amended — (a) in paragraph 1, by replacing the word "Where" with the words "Subject to this Schedule, where";
(b) in paragraph 1A, by substituting for the word "Where" with the words "Subject to this Schedule, where";
(c) by inserting after paragraph 1A the following paragraph: "1B. (1) Subject to subparagraph (2), where a company (in this paragraph referred to as the "acquirer") has incurred capital expenditure in respect of an asset for the purposes of a qualifying project and that asset is acquired from another company (in this paragraph referred to as "the disposer") and at the time of the acquisition of — (a) the acquirer of the asset is a person over whom the disposer of the asset has control;
(b) the disposer of the asset is a person over whom the acquirer of the asset has control;
(c) some other person has control over the acquirer and disposer of the asset; or (d) the acquisition is effected in consequence of a scheme of reconstruction or accept the use of companies, finance 13 the acquirer shall be deemed to have incurred that capital expenditure on the asset on the first day of the disposer's final-period, of an amount equal to the amount of residual expenditure ascertained under subparagraph (3).
(2) Where the disposer incurred capital expenditure in relation to the asset referred to in subparagraph (1) on or after the first day of the disposer's final-period, the acquirer shall be deemed to have incurred capital expenditure on the asset on the day that disposer incurred capital expenditure, of an amount equal to the amount of capital expenditure incurred by that disposer.
(3) For the purposes of subparagraph (1), residual expenditure in relation to an asset shall be the capital expenditure incurred by the disposer reduced by the amount of allowances on that asset under Schedule 3 that has been made or would have been made to the disposer in the basis period or periods before the first day of the disposer's final-period.
(4) In this paragraph — "asset" means a factory, plant or machinery referred to in paragraph 1, or plant, machinery or building referred to in the definition of "capital expenditure" under paragraph 9;
"control", in relation to a company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person;
"the disposer's final-period", in relation to the disposal and acquisition of the asset, means the base period (appropriate to the disposer's business for the purposes of which expenditure has been incurred in relation to the asset) for the year of assessment which coincides with laws of Malaysia Act 61914 with the first year of assessment for which an allowance under Schedule 3 may be made to the acquirer in relation to the asset if it is used for the purposes of a business carried on by the acquirer or as an industrial building. "; and (d) in paragraph 2, by replacing the word "five" with the words "fifteen".
CHAPTER III AMENDMENTS to the PETROLEUM (income tax) Act 1967 commencement amendments to the Petroleum (income tax) 1967 11. Section 12, 13, 14 and 15 shall be in effect for the year of assessment 2002 and the next year of assessment.
Amendment of section 16 12. Petroleum Act (income tax) in 1967, which is referred to as "the principal Act" in this chapter, in section 16 is amended by inserting after subsection (7G) of the following subsection: "(7H) There shall be deducted from the above gross income an amount equal to the expenditure incurred by the above chargeable person in the relevant period imposed on the provision of practical training in Malaysia, in relation to his business , to an individual who is — (a) resident in the basis year for a year of assessment; and (b) not an employee of that person. ".
Amendment of section 18 13. Section 18 of the principal Act is amended — (a) by deleting paragraph (1) (l); and finance 15 (b) by replacing paragraph (1) (m) with the following paragraph: "(m) any sum paid by way of rentals in respect of a motor vehicle, other than a motor vehicle licensed by the appropriate authority for commercial transportation of goods or passengers, in for excess of fifty thousand dollars: Likely that if the motor vehicle has not been used by any person for any purpose prior to the rental and the total cost of the motor vehicle does not new vehicles one hundred and fifty thousand ringgit, any sum paid by way of rental in for excess of one hundred thousand dollars:, likely further that the amount of deduction but in respect of the rentals of such motor vehicle in the year of assessment and I years of assessment shall not in the aggregate fifty thousand dollars new vehicles or one hundred thousand dollars , as the case may be, in respect of that motor vehicle. ".
Amendment Of Second Schedule 14. The second schedule of the principal Act is amended — (a) in paragraph 3, by replacing the words "4" with the words "3A";
(b) by inserting after paragraph 3 the following paragraph: "3A. (1) Subject to subparagraph (2), where a building is purchased for use as an industrial building from a person who constructed that building and that building has not been used by any person prior to the purchase, then, for the purposes of this Schedule — (a) the purchaser shall be deemed to have constructed that building and deemed to have incurred capital expenditure on the construction of that building;
Laws of Malaysia ACT 61916 (b) the purchase price shall be deemed to be the capital expenditure incurred on the construction of that building; and (c) the date of that purchase shall be deemed to be the date of the construction of that building.
(2) The capital expenditure incurred by a chargeable person who constructed the building and the date of construction of that building by that person to which regard would be limits but for this subparagraph shall be disregarded for the purposes of this Schedule. ";
(c) in paragraph 9, by inserting after the word "construction" the words "or purchase";
(d) in paragraph 11, by substituting for the words "to 14" the words "and 13";
(e) in paragraph 13 — (i) by inserting after the word "construction" the words "or purchase"; and (ii) by substituting for the word "two" with the word "three";
(f) by deleting paragraph 14; and (g) in paragraph 15, by deleting the words "or 14".
Special provisions relating to paragraph 13 of the Second Schedule 15. Notwithstanding the provisions of paragraph 13 of the second schedule of the principal Act, where an annual allowance has been made to a person in respect of a taxable purchase of buildings, and the allowance is calculated based on a breakdown that allowed under paragraph 14 of the second schedule of the principal Act before force deletion of the paragraph under paragraph 14 (f) of this Act, whichever is higher than three percent the annual allowance for a year of assessment for the building shall be calculated on the basis of the breakdown and the allowance shall not exceed the amount of the balance of expenses at the end of the basis period for the year of assessment.
Financial 17 CHAPTER IV AMENDMENTS to the stamp Act 1949

Commencement amendment to the stamp Act 1949 16. Section 17, 18, 19, 20 and 21 shall become effective from 1 January 2002.
Amendment of section 9 17. Stamp Act 1949, which is referred to as "the principal Act" in this chapter, is amended in subsection 9 (3), by substituting for the words "Minister of Finance" with the word "Collector".
New section 38A 18. The principal Act is amended by inserting after section 38 the following section: "Notice of objection 38A. (1) Any person who is dissatisfied with an assessment of the Collector under section 36 may, by written notice (in this Act referred to as "notice of objection"), object to the assessment and apply to the Collector to review the assessment.
(2) Every notice of objection shall state the grounds of objection to the collector's assessment and shall be made within thirty days after the date of the assessment or such further period as the Collector may allow in any particular case.
(3) The person ' a notice of objection shall furnish further since and information in relation to the grounds of the objection if required to do so by the Collector in writing.
(4) The Collector shall, on receipt of a notice of objection and such further since and information as he may require under subsection (3), review the assessment.
Laws of Malaysia ACT 61918 (5) After the objection has been determined, the Collector shall notify the person in writing of his decision.
(6) Where, on review, it she has been to the Collector that the amount of duty originally assessed is excessive, he may cancel the original assessment and make such other assessment in substitution of the original assessment and shall serve on the person a notice of assessment substituted.
(7) The making of an objection shall not relieve the person of liability to pay the duty as required by this Act.
(8) Any reference in this Act to an assessment shall be construed as including a reference to a substituted assessment under subsection (6). ".
Amendment of section 39 19. Section 39 of the principal Act is amended — (a) by replacing subsection (1) with the following subsection: "(1) Any person who is dissatisfied with the decision of the Collector under section 38A (5) may, within twenty one days after the person is notified in writing of that decision and upon payment of duty in conformity therewith, appeal against the decision to the High Court by filing a notice of appeal with the High Court and may for that purpose require the Collector to State and sign a case setting forth the question, upon which his opinion was required, and the decision made by him. "; and (b) by inserting after subsection (1) of the following subsection: "(1A) Where a notice of appeal has been filed under subsection (1), the notice shall be of battle on the Collector within the time stipulated for the filing of the notice of appeal.".
Amendment of section 47A financial 19 20. Section 47A of the principal Act is amended by replacing subsection (2) of the following subsection: "(2) The Collector may, if he thinks fit, reduce or remit any such penalty or the further amount is shown under paragraph 9 (1) (c).".
Amendment Of First Schedule 21. The first schedule of the principal Act is amended — (a) in paragraph 27 (d), by substituting for the word "borrowing company in Malaysia approved by the Minister of Finance" with the words "finance company licensed under the Banking and Financial Institutions Act 1989 or under the Islamic Banking Act 1983 or a scheduled institution as defined under section 2 of the Banking and Financial Institutions Act 1989"; and (b) in paragraph 32 (c), by substituting for the word "borrowing company in Malaysia approved by the Minister of Finance" with the words "finance company licensed under the Banking and Financial Institutions Act 1989 or under the Islamic Banking Act 1983 or a scheduled institution as defined under section 2 of the Banking and Financial Institutions Act 1989".
Laws of Malaysia ACT 61920 laws of MALAYSIA Act 619 of the FINANCE ACT 2002 LIST AMENDMENT law short title force amend from – No – 21 laws of MALAYSIA Act 619 of the FINANCE ACT 2002 AMENDED SECTION LIST Section Power amend with effect from – THERE are –