Laws of MALAYSIA Act REPRINTING 631 of the FINANCE ACT 2003 Contains all amendments to 1 January 2006 1Finance 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 6312 FINANCE ACT 2003 the date of Royal Assent.................. 17 December 2003 date of publication in the Gazette............ 25 December 2003 REPRINT BEFORE Reprinting The first ... ... more 2005 Financial 3 laws of MALAYSIA Act 631 of the FINANCE ACT 2003 CHAPTER I preliminary ARRANGEMENT of SECTIONS 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 2 5. Amendment of section 34 6. Amendment of section 34A 7. Amendment of section 35 8. Amendment of section 36 9. Amendment of section 39 10. New section 46A 11. Amendment of section 48 12. Amendment of section 77 13. Amendment of section 77A 14. Amendment of section 103 15. Amendment of section 103A 16. Amendment of section not 17. Amendment of section 108 18. Amendment of Schedule 1 the laws of Malaysia ACT 6314 section 19. Amendment of Schedule 3 20. Amendment of Schedule 6 CHAPTER III AMENDMENT to the FINANCE ACT (No. 2) 1998 21. Amendment of section 3 of CHAPTER IV AMENDMENTS to the INCOME TAX ACT (Amendment) Act 2000 22. Amendment of section 24 of CHAPTER V AMENDMENTS to the PETROLEUM (income tax) 1967 23. Amendment of section 18 of CHAPTER VI AMENDMENTS to TAX ACT LABUAN OFFSHORE BUSINESS ACTIVITY 1990 24. Commencement of activity Tax Act amendments to the Labuan Offshore business 1990 25. New section 8A 26. Amendment of section 11 5 Financial laws of MALAYSIA Act 631 of the FINANCE ACT 2003 an act to amend the income tax Act 1967, the Finance Act (No. 2) 1998, the income tax Act (Amendment) Act 2000, the Petroleum (income tax) Act 1967 and the Activity Taxation Labuan Offshore business, 1990.
[] enacted by the Parliament of Malaysia as follows: CHAPTER I preliminary short title 1. This Act may be cited as the Finance Act 2003.
Amendment Of Act 2. The income tax Act 1967 [Act 53], the Finance Act (No. 2) 1998 [Act 591] the income tax Act (Amendment) Act 2000 [Act A1093] Act, Petroleum (income tax) 1967 [Act 543] and Tax Act Labuan Offshore Business Activity, 1990 [Act 445] is amended in the manner set out in Chapters II, III, IV, V and VI.
CHAPTER II AMENDMENTS to the income tax Act 1967 commencement amendments to the income tax Act 1967 3. (1) sections 4, 6, 8 and 16 and paragraph 17 (a) and 7 (b) with effect from year of assessment 2003 and for the next year of assessment.
Laws of Malaysia ACT 6316 (2) sections 12 and 15 effect for the year of assessment 2003.
(3) sections 5, 7, 9, 11, 13, 14, 18 and 20 effect for the year of assessment 2004 and the next year of assessment.
(4) section 10 effect for the year of assessment 2003, 2004 and 2005.
(5) Paragraph 17 (b) is deemed to have come into force on 1 January 2001.
(6) Subparagraph 19 (a) (i) is deemed to have come into force on 13 September 2003.
(7) Subparagraph 19 (a) (ii) effect for the year of assessment 2000 (current year) and for any subsequent year of assessment.
Amendment of section 2 4. Income tax Act 1967, which is referred to as "the principal Act" in this chapter, is amended in section 2 by inserting after subsection (7) of the following subsection: "(8) Subject to subsection (7), any reference in this Act to the disposal of an asset or a lease shall exclude any disposal of an asset or lease by or to a person listed to a scheme of financing in accordance with the principles of Shariah.".
Amendment of section 34 5. Subsection 34 (6) of the principal Act is amended — (a) by replacing paragraph (k) with the following paragraph: "(k) an amount equal to the expenditure incurred by the relevant person in the relevant period for sponsoring any local or foreign arts or cultural activity approved by the Ministry of Culture, Arts and Tourism: Likely that the amount deducted in respect of expenditure incurred for sponsoring those activities shall not in aggregate vehicles three hundred thousand ringgit Financial 7 of which the amount is deducted in respect of expenditure incurred in sponsoring foreign arts or cultural activities shall not:-new vehicles two hundred thousand dollars; ";
(b) by replacing paragraph (c) with the following paragraph: "(m) an amount equal to the expenditure, not being capital expenditure, incurred by a company in the relevant period for the purposes of — (i) obtaining certification for recognized quality systems and standards, and halal certification, evidenced by a certificate issued by a certification body as determined by the Minister; or (ii) obtaining accreditation for a laboratory or as a certification body, as evidenced by a certificate issued by the Department of Standards Malaysia:, likely that the expenditure incurred in the relevant period shall be deemed to be incurred by that company in the basis period for the year of assessment in which the certificate is issued; ";
(c) in paragraph (n), by replacing the full stop at the end of subparagraph (ii) with the word "; and "; and (d) by inserting after paragraph (n) of the following paragraph: "(o) an amount equal to the expenditure incurred by a company in the relevant period for participating vendors in international standardization activities approved by the Department of Standards Malaysia.".
Amendment of section 34A of 6. Section 34A of the principal Act is amended — (a) in subsection (4) — (i) by replacing the full stop at the end of that subsection with the periods overlap; and the laws of Malaysia ACT 6318 (ii) by inserting under that subsection proviso to subsection that follows: "Likely that where subsection (4A) applies, the amount of the deduction to be made shall be the amount of expenditure incurred.";
(b) by inserting after subsection (4) of the following subsection: "(4A) A pioneer company may, in a return of income for the year of assessment in which the expenditure referred to in subsection (1) limits been incurred, elect that the amount of that expenditure be deducted in the first basis period in respect of its post-pioneer business for a year of assessment"; and (c) by inserting after subsection (5) of the following subsection: "(6) For the purposes of this section, the words" pioneer company "and" post-pioneer business "have the respective meanings assigned to them under the Promotion of Investments Act 1986.".
Amendment of section 35 7. Subsection 35 (2) of the principal Act is amended by substituting for the word "and" with the words "34A, 34A and 34B".
Amendment of section 36 8. Section 36 of the principal Act is amended — (a) in subsection (1) — (i) in paragraph (a) — (A) in subparagraph (iii), by deleting the word "or";
Finance 9 (B) in subparagraph (iv), by substituting for the word "and" with the word "or"; and (C) by inserting after subparagraph (iv) the following subparagraph: "(v) such other transaction as may be comes; and "; and (ii) in paragraph (b), by inserting after the word "adjusted income" the words "and statutory income"; and (b) in subsection (2) — (i) by substituting for the word "adjusted income" and the word ", adjusted income and statutory income"; and (ii) in paragraph (b), by inserting after the word "adjusted income" the words "and statutory income".
Amendment of section 39 9. Paragraph 39 (1) (l) of the principal Act is amended — (a) by substituting for the words "any expenses" with the words "a sum equal to fifty percent of any expenses"; and (b) in the proviso to paragraph — (i) by deleting the word "or" appearing at the end of paragraph (vi); and (ii) by inserting after paragraph (vi) of the following paragraph: "(vii) the provision of entertainment which is wholly related to sales arising from the business of that person; or ".
Laws of Malaysia ACT 63110 new section 46A 10. The principal Act is amended by inserting after section 46 the following section: "Deduction for individuals on acquisition of expended 46A. (1) Subject to this section, in the case of an individual who is a resident for the basis year for the relevant year, there shall be allowed for that above normal year personal deduction in respect of acquisition of expended in that year by the individual basis to finance the purchase of a residential property: Likely that — (a) the residential property is the first residential property purchased by the individual to be occupied as his place of residence;
(b) the residential property limit's been purchased from a housing developer or statutory body or co-operative society;
(c) the purchase price of the residential property is not less than RM100, 000 and not more than RM180, 000.00; and (d) the Sale and Purchase Agreement for the purchase limit been and be on or after 1 June 2003 but not later than 31 May 2004.
(2) The amount of deduction to be made under subsection (1) shall be a but of — (a) RM5, 000 for the year of assessment 2003;
(b) the RM3, 000 for the year of assessment 2004;
(c) RM2, 000 for the year of assessment 2005.
(3) Where — (a) two or more individuals are each Government to claim deduction for the relevant year under this section for reporting expended in respect of the same residential property; and 11 (b) the total amount of interest expended by those individuals in the basis year for that above normal year vehicles the amount of deduction allowable for that relevant year under subsection (2), there shall be allowed to each of those individuals for that above normal year an amount is to be determined in accordance with the following formula: A x B — C where A is the total amount of deduction allowed under subsection (2) above for that year;

B is the total interest expended in the basis year for that above normal year by that individual; and C is the total interest expended in the basis year for that above normal year by all such individuals.
(4) For the purposes of subsection (1), any amount expended by the wife or the husband in the relevant year, where — (a) subsection 45 (2) applies, shall be deemed to have been expended by the husband of the wife who elects or by the wife of the husband who elects, as the case may be; or (b) the wife or the husband has no total income, shall be deemed to have been expended by the wife or husband of that the wife of that husband, as the case may be: Likely that where paragraph 45 (2) (b) applies or the husband has no total income, any amount expended by the husband shall be deemed to have been expended by the wife who has been allowed a deduction under section 45A.
(5) For the purposes of this section — "co-operative society" means a co-operative society registered or deemed to be registered under the co-operative Societies Act 1993 [Act 502];
Laws of Malaysia ACT 63112 "first residential property" includes a second residential property purchased by the individual following the disposal of a low cost property by him;
"housing developer" means a housing developer licensed under the Housing Development (Control and Licensing) Act 1966 [Act 118];
"low cost property" means the only residential property owned by the individual and that's been held by property limits the individuals for not less than five years and purchased by him for not more than RM42, 000;
"the above normal year" means the year of assessment 2003, 2004 or 2005;
"residential property" means a completed house, condominium unit, apartment or flat which limits been built as a dwelling house;
"statutory body" means a body incorporated by a State or Federal law. ".
Amendment of section 48 11. Paragraph 48 (2) (a) of the principal Act is amended by substituting for the words "eight hundred" with the words "one thousand".
Amendment of section 77 12. Section 77 of the principal Act, in force for year of assessment 2003, amended — (a) in subsection (1A), by substituting for the word "six" with the word "seven"; and (b) in subsection (1B), by substituting for the word "six" with the word "seven".
Financial 13 amendment of section 77A 13. Section 77A of the principal Act, in force for the year of assessment 2004 and the next year of assessment is amended — (a) in subsection (1), by substituting for the word "six" with the word "seven"; and (b) in subsection (2), by substituting for the word "six" with the word "seven".
Amendment of section 103 14. Paragraph 103 (12) (a) of the principal Act, in force for the year of assessment 2004 and the next year of assessment is amended by replacing the word "sixth" with the words "seventh".
Amendment of section 103A 15. Subsection 103A (12) of the principal Act, in force for year of assessment 2003, is amended by substituting for the word "sixth" with the words "seventh".
Amendment of section not 16. Not be section of the principal Act is amended — (a) in subsection (7), by inserting after the words "sixth month" the words "or the ninth month, or in both months"; and (b) by replacing subsection (12) with the following subsection: "(12) For the purposes of this section —" due date "means the tenth day of a calendar month;" revised estimate "means a revised estimate made in the ninth month of the base-period or if there is no revised estimate made in the ninth month of the base period, the revised estimate made in the sixth month of the base-period.".
Laws of Malaysia ACT 63114 amendment of section 108 17. Section 108 of the principal Act is amended — (a) in subsection (5), by substituting for the word "six" with the word "seven"; and (b) in subsection (14A) — (i) in paragraph (a), by deleting the word "or" which appears at the end of the paragraph;
(ii) in paragraph (b), by replacing the full stop at the end of the proviso to paragraph with the words "; or "; and (iii) by inserting after paragraph (b) the following paragraph: "(c) the amount of tax paid under subsection 129 (2)."
Amendment of Schedule 1 18. Part I of Schedule 1 to the Act is amended in paragraph 2A by substituting for the words "100,000" in wherever there is the word "500000".
Amendment of Schedule 3 19. Schedule 3 of the principal Act is amended — (a) in paragraph 27 — (i) by replacing the word "ten" with the word "six"; and (ii) in the proviso to paragraph, by inserting after the words "the beginning of" the words "the year of assessment following"; and (b) by inserting after paragraph 80, the following paragraph: "81. The Minister may prescribe any capital expenditure incurred by a person in his business as qualifying agriculture expenditure under paragraph 7 and the amount of the allowance or allowances in respect of that qualifying agriculture expenditure which would otherwise fall to be made to him under paragraphs 22 and 23. ".
15 amendment of Schedule 6 20. Schedule 6 to the principal Act is amended — (a) by substituting for paragraph 28 with the following paragraph: "28. (1) Without prejudice to the provisions of section 130, the income of any person, other than a resident company carrying on the business of banking, insurance or sea or water transport, for the basis year for a year of assessment derived from sources on the efforts of Malaysia and received in Malaysia.
(2) Paragraphs 5 and 6 of Schedule 7A shall apply mutatis mutandis to the amount of income derived and received by a resident company exempted under subparagraph (1). ";
(b) by inserting after paragraph 32D the following paragraph: "32E. Income of an individual for the basis year for a year of assessment being payment by way of fees or honorarium in respect of services, likely for purposes of validation, moderation or accreditation of franchised educational building in higher educational institutions and the services are verified by the National Accreditation Board:, likely that the exemption shall not apply where the payment arises to the individual as part of his emoluments in the exercise of his official duties. "; and (c) by inserting after paragraph 34 the following paragraph: "34A. Interest paid or credited to any individual in respect of Independence Bonds issued by the Central Bank of the country. ".
CHAPTER III AMENDMENT to the FINANCE ACT (No. 2) 1998 amendment of section 3 21. (1) section 3 of the Finance Act (No. 2) Order 1998 is amended — (a) in subsection (1), by inserting after the words "6," the word "8,"; and the laws of Malaysia ACT 63116 (b) by inserting after subsection (3) of the following subsection: "(3A) of section 8 shall be deemed to have come into operation for the year of assessment 1995 and the years following assessment.".
(2) the Amendment in subsection (1) is deemed to have come into force on 1 January 1999.
(3) for the avoidance of doubt, it is hereby declared that subparagraph (3A) (a) (iii) and (4A) (a) (iii) of section 60, the income tax Act 1967 as amended by section 8 of the Finance Act (No. 2) 1998 effect for the year of assessment 1995 and the next year of assessment.
CHAPTER IV AMENDMENTS to the INCOME TAX ACT (Amendment) Act 2000 amendment of section 24 22. (1) the income tax Act (Amendment) Act, 2000 is amended by replacing section 24 with the following section: "review of the remaining 24. Notwithstanding the provisions of section 23 of this Act, if after 1 January 2001, there is an assessment, review any assessment or remission of tax, for the year of assessment 2000 based on the current year or the previous assessment years, the credit balance of the company as at 31 December 2000 can be increased or reduced (hereinafter referred to in this section as a revised balance) of the amount of tax or additional tax imposed the amount of the increase in taxation referred to in subsection 101 (8), the amount of tax is released or the amount of tax remitted, as the case may be, for the years of assessment (less any rebates under section 6B or any discharge granted for the years of assessment under section 132 or 133). ".
(2) subsection (1) shall be deemed to have come into force on 1 January 2001.
Financial 17 Chapter V AMENDMENTS to the PETROLEUM (income tax) Act 1967 amendment of section 18 23. (1) of the Petroleum (income tax) Act 1967 is amended in paragraph 18 (1) (n) by substituting for the words "any expenses" with the words "a sum equal to fifty per cent of any expenses".
(2) subsection (1) with effect from year of assessment 2004 and the next year of assessment.
CHAPTER VI AMENDMENTS to TAX ACT LABUAN OFFSHORE BUSINESS ACTIVITY 1990 commencement of activity Tax Act amendments to the Labuan Offshore business 1990 24. Section 25 and 26 effect for the year of assessment 2004 and the next year of assessment.
New section 8A 25. Business activity Tax Act Offshore Labuan 1990, called "the principal Act" in this chapter, is amended in part II by inserting after section 8 the following section: "Tax Rebate 8A. (1) a rebate shall be given to the offshore companies on the tax imposed under section 4, 7 or 8 for each year of assessment for any zakat paid the basis period for the year of assessment to and evidenced by a receipt issued by the Islamic religious authority, Labuan.

(2) if the total amount of the rebate under subsection (1) exceeds the tax payable (before any rebates) for any year of assessment, the surplus cannot be paid to the offshore company or used as credit for pushing tax liability for the year of assessment or any subsequent year. ".
Laws of Malaysia ACT 63118 amendment of section 11 26. The principal Act is amended by replacing section 11 with the following section: "payment of tax 11. An offshore company shall — (a) upon filing a statutory declaration and statement of its profit for the year of assessment under section 5, to make full payment for the account — (i) tax will apply for the year of assessment; or (ii) tax will apply for the year of assessment tu after reduction of the rebate under section 8A; or (b) upon filing a statutory declaration under section 7 or 8, full payment of — (i) tax will apply for the year of assessment; or (ii) tax will apply for the year of assessment after the reduction in rebates under section 8A. ".
19 financial laws of MALAYSIA Act 631 of the FINANCE ACT 2003 LIST AMENDMENT law short title force amend from – no – laws of Malaysia ACT 63120 laws of MALAYSIA Act 631 of the FINANCE ACT 2003 LIST SECTION of the AMENDED law short title force amend from – THERE are –