Labuan Business Activity Tax Act 1990

Original Language Title: Labuan Business Activity Tax Act 1990

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Laws of Malaysia Act Reprinting 445 Tax Act laBUan offshore business activity 1990 Contains all amendments to 31 May 2009 published by the Commissioner of law revision, under the authority of Law Revision Act 1968 2009 2 laws of Malaysia Act 445 Tax Act laBUan offshore business activity, 1990 date of Assent.................. 22 August 1990 date of publication in the Gazette............ August 30, 1990 3Cukai Labuan Offshore business activity laws of Malaysia Act 445 Tax Act laBUan offshore business activity 1990 arrangement of sections part i preliminary section 1. short title 2. interpretation of part ii Tax kebolehkenaan the scope of the imposition of a 3. offshore business activity taxable 3a. offshore business activity that is taxable under the income tax Act 1967 on the selection of Tax-based Statement 4. offshore trading activities 5. Filing of statutory declaration and statement of profit 6. Tax Assessment levied on Selection 7. The selection of 8. the absence of a basis period 8a. tax rebate 4 laws of Malaysia Act 445 part iii Tax ketiDakbolehkenaan section 9. the offshore non-trade activities 10. statutory declaration on the activities of non-trade offshore 10a. (Cut)
Part iV Tax payment and get 11. Tax payment 12. Payment of the difference and repayment 13. Notice request 14. get the tax through legal part V obligations for compliance 15. the person who is liable to tax 16. Officer in charge of compliance additional part Vi Administration 17. the Director General of 18. Delegation of the functions of the Director-General 19. power of Minister to give directions 20. Statement of profit, etc., are considered confidential 21. power of Minister to make regulations Various 22. power to request information 23. offence and penalty 5Cukai Labuan Offshore business activity Section 24. Compounding of offences 25. Penalty for false statutory declaration 26. Exemption by Minister 6 laws of Malaysia Act 445 7Cukai Labuan Offshore business activity laws of Malaysia Act 445 Tax Act laBUan offshore business activity 1990 an act to make provision about the imposition, assessment and collection of tax on offshore business activity carried out by an offshore company in or from labuan and matters connected therewith.
[1 October 1990, P.U. (B) 589/1990]
Be it enacted by the Seri Paduka baginda yang di-Pertuan agong with the advice and consent of the Dewan negara and Dewan rakyat in Parliament assembled, and by the authority of the same, as follows: part i preliminary short title 1. (1) this Act may be cited as the Tax Act labuan offshore business activity, 1990.
(2) this Act shall come into effect for the year of assessment 1991 and subsequent years of assessment.
interpretation 2. (1) in this Act, unless the context otherwise requires — "offshore non-trade activity" means an activity relating to investment holding in securities, stocks, 8 laws of Malaysia Act 445 shares, loans, deposits and immovable property by an offshore company on behalf of its own;
"offshore trading activities" includes banking, insurance, Commerce, management, licensing or any other activities rather than an offshore non-trade activities;
"offshore business activity" means an activity offshore trade or non-trade offshore activities carried out in or from labuan in currencies other than the Malaysian currency by an offshore company with a non-resident or to an offshore company to another, but does not include the shipping arrangements: provided that — (a) in relation to offshore companies that conduct business offshore bank , the activities can be carried out with the resident and, if allowed under subsection 20 (2) Offshore Banking Act 1990 [Act 443], transactions can be carried out in a currency of malaysia;
(b) in relation to offshore companies that do business insurance offshore, the activities can be carried out with the resident and, if allowed under subsection 21 (2) the offshore Insurance Act 1990 [Act 444], transactions can be carried out in a currency of malaysia;
(c) in relation to investment holding by an offshore company in a domestic company, holding the can in the Malaysian currency;
(d) in relation to offshore companies which carry out money brokerage business, the activities can be carried out with the resident 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 activities can be carried out with the resident if permitted under paragraph 7 (3) (a) offshore companies Act 1990; or (f) the Minister may approve the activities, with the resident or the transaction in currency of malaysia;
9Cukai Labuan Offshore Business Activity "offshore trust" has the meaning as may be conferred upon him by labuan offshore trust Act 1996 [Act 554];
"the Malaysian offshore banks licensed" has the meaning assigned to it by the offshore banking Act 1990, which is the Office of a bank of malaysia;
"Director General" means the Director General of Inland Revenue referred to in section 134 of the income tax Act 1967 [Act 53];
"labuan" means the Federal territory of labuan;
"Minister" means the Minister is charged with the responsibility for finance;
"shipping operations" means the carriage of passengers or cargo via sea or based on hire on the basis of carter carter ship or travel times;
"person" includes a corporation, partnership, group of people and a single Corporation;
"official officer" means a person who has responsibilities under, or employed to implement, the provisions of the income tax Act 1967;
"resident" means — (a) in relation to a natural person, a citizen or permanent resident of malaysia; or (b) in relation to any other person, a person who has established a place of business, and is operating, in malaysia, and includes a person designated as a resident by virtue of subsection 43 (2) of the Exchange Control Act 1953 [Act 17];
"offshore limited partnership" has the meaning assigned to it in the limited Partnership Act offshore labuan 1997 [Act 565];
"offshore bank business" has the meaning assigned to it by the offshore banking Act 1990;
10 laws of Malaysia Act 445 "offshore insurance business" has the meaning assigned to it by the offshore Insurance Act 1990;
"domestic company" has the meaning as in the offshore Companies Act 1990;
"offshore company" means an offshore company incorporated under the companies Act 1990, offshore and includes a foreign offshore companies registered under the Act, a licensed offshore bank of malaysia, a limited partnership offshore and an offshore trust;
"assessment year" means the calendar year;
"basis period", in relation to a year of assessment, means the period or periods of the accounting period ending in the calendar year immediately before the year of assessment.
(2) If a corporation carries on offshore trading activities in both offshore and offshore non-trade activities, the company is deemed to be carrying on a commercial activity offshore.
(3) for the avoidance of doubt, it is declared that the provisions of the income tax Act 1967 apply in respect of — (a) an activity in addition to offshore business activity carried out by an offshore company;
(b) (Cut by the Act 624);
(c) an offshore insurance business carried out by the insurers offshore malaysia as defined under the offshore Insurance Act 1990, which is a branch of Malaysian insurers; or (d) an offshore business activity carried out by an offshore company that makes an election under section 3a.
11Cukai Labuan Offshore Business Activity part ii Tax kebolehkenaan the scope of imposition of offshore business activity liable to tax 3. subject to this Act, an offshore company that runs an offshore business activity shall be taxed in accordance with this Act for each year of assessment in respect of the offshore business activity.
offshore business activity that is taxable under the income tax Act 1967 upon selection of 3A. (1) Notwithstanding any other provision of this Act, an offshore company that runs an offshore business activity may make an irrevocable election in the prescribed form that any profits that offshore companies for any basis period for a year of assessment the basis period and subsequent taxable in accordance with the income tax Act 1967 in respect of the offshore business activity.
(2) a selection referred to in subsection (1) shall be made and submitted to the Director-General within three months after the beginning of the basis period for a year of assessment:

Provided that for the basis period ended a day of the year of assessment 2008, election under this section may be made and submitted before 1 August 2008.
Tax Statement-based offshore trading activities 4. (1) Tax at the rate of three per cent shall be charged for a year of assessment on the profit will be 12 laws of Malaysia Act 445 tax for an offshore company that runs an offshore business activity that is offshore trading activities for the basis period for the year of assessment.
(2) taxable profit for an offshore company that runs an offshore business activity that is offshore trading activities for a year of assessment is the net profit as shown in the audited accounts in respect of such offshore trading activities for offshore companies to the basis period for that year of assessment.
Filing of statutory declaration and statement of profit 5. An offshore company that runs an offshore business activity that is offshore trading activities shall, within three months (or such extended period as may be allowed by the Director-General) from the start of a year of assessment, filed with the Director General a statutory declaration and statement of the offshore company's profit for the year of assessment in the prescribed form.
assessment 6. on receipt of the statement of the company's profits offshore as is mentioned in section 5 for a year of assessment, the Director General shall make an assessment in the prescribed form for the year of assessment and shall serve a notice of assessment, either in person or by post, to the offshore company concerned.
Tax levied on Selection Selection 7. (1) Notwithstanding section 4, an offshore company that runs an offshore business activity that is offshore trading activities may, within three months (or any extended period allowed by 13Cukai Labuan Offshore Business Activity Director-General) from the start of a year of assessment, selecting, in the prescribed form, to impose tax of twenty thousand dollars for the year of assessment.
(2) an offshore company shall, when making a choice under subsection (1), file with the Director General a statutory declaration in the prescribed form.
(3) the provisions of section 5 shall not apply to an offshore company who choose taxable under subsection (1).
the absence of a basis period 8. (1) Notwithstanding section 4 and 7, if an offshore company that runs an offshore business activity that is offshore trading activities do not have a basis period for a year of assessment, the offshore company shall be subject to tax of twenty thousand dollars for the year of assessment.
(2) a company offshore taxable under subsection (1) for a year of assessment shall, within three months (or such extended period as may be allowed by the Director-General) from the start of a year of assessment, filed with the Director General a statutory declaration in the prescribed form.
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 of any of the following year.
14 laws of Malaysia Act 445 part iii ketiDakbolehkenaan Tax offshore non-trade activities 9. Notwithstanding section 3, an offshore company that runs an offshore business activity that is non-trade activities offshore for the basis period for a year of assessment shall not be liable to tax for the year of assessment.
statutory declaration on the activities of non-trade offshore 10. An offshore company that runs an offshore business activity that is not offshore trade shall, within three months (or such extended period as may be allowed by the Director-General) from the start of a year of assessment, filed with the Director General a statutory declaration in the prescribed form.
10A. (Cut by the Act 591).
Part iV Tax payment and obtain tax payment 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 15Cukai Labuan Offshore Business Activity (ii) tax will apply for the year of assessment after the reduction in rebates under section 8a; or (b) upon filing a statutory declaration under section 7 or 8, full payment of — (i) taxation for the year of assessment; or (ii) tax payable for year of assessment after the reduction in rebates under section 8a.
Payment of the difference and the repayment of 12. If there is a difference between the amount paid under paragraph 11 (a) and the amounts assessed by the Director General under section 6, the offshore company shall pay the difference or the Director-General shall repay the excess, as the case may be.
Notice request 13. (1) If a company fails to comply with the offshore section 11 or 12, the Director General shall issue a notice requests that will be served as well or by post to the offshore company.
(2) the Director General shall, in the notice of the request to the tax or balance unpaid tax of ten percent and the amount of such databases as tax due are paid.
(3) the tax payable under the notice of the request shall be paid when the notice of request served.
Get the tax through legal 14. (1) the Tax due and payable can be obtained by the Government through civil proceedings as a debt due to the Government.
16 laws of Malaysia Act 445 (2) the Director General and all authorized officers shall be deemed to be a public officer authorized by the Minister under subsection 25 (1) of Act Government Proceedings 1956 [Act 359], in respect of all proceedings under this section.
(3) an "authorised officer" means an officer officially authorized by the Director General for the purposes of this section.
Part V the responsibility for compliance with the taxable Person 15. Offshore companies are the ones that can be assessed and may be subject to tax imposed under this Act.
The officer responsible for the compliance with 16. the responsibility for doing all such acts and things required to be done by or on behalf of an offshore company for the purpose of this Act is located in association and several on — (a) the Manager or other principal officer in malaysia; (b) independent residents as provided under the companies act offshore 1990; (c) the Secretary; (d) in the case of a trust, the trustee or trustees; (e) any person (however called) which perform the functions of any person referred to in the paragraph above;
(f) in the case of a company under company or acceptance, liquidator or receiver, as the case may be; and (g) in the case of a partnership, the partner or partner-partner.
17Cukai Labuan Offshore Business Activities part Vi additional Director General of Administration 17. the Director General is powerful safeguard and manage tax.
Delegation of functions of the Director-General of 18. (1) any of the functions of the Director General under this Act may be exercised by any officer appointed under section 134 income tax Act 1967.
(2) the Director may in writing delegate any of its functions under this Act to any other official officer.
power of Minister to give directions 19. Minister may give directions of a General (not inconsistent with this Act) to the Director General in relation to the implementation of the functions of the Director-General under this Act; and the Director-General shall enforce any such instructions.
Statement of profit, etc., are considered confidential 20. (1) any statement of profit, statutory declaration or information made or received for the purposes of this Act shall be treated as confidential and will not be communicated or disclosed to any person except for the purposes of this Act.
(2) where any officer official, either during the period of his employment or after that, contravenes subsection (1), he commits an offence and, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding two years or to both.
18 laws of Malaysia Act 445 power of Minister to make regulations 21. the Minister may make regulations generally for the purpose of implementing, or enforce the provisions of this Act and in particular, but without prejudice to what is mentioned above, to set any form as may be prescribed by this Act or as he may deem necessary.
A wide range of

power to request information 22. (1) the Director may by notice in writing require any person to give any information or particulars as may be required by him for the purposes of this Act.
(2) if any person, without reasonable excuse, fails to comply with a notice referred to in subsection (1), he commits an offence and, on conviction, be liable to a fine not exceeding three thousand dollars.
offences and penalties 23. any person who without reasonable grounds — (a) fails to submit a statutory declaration and statement of profit under section 5; or (b) fails to file a statutory declaration under section 7, 8 or 10 commits an offence and, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term of two years or both.
Compounding of offences 24. (1) the Director General may, in the case if he deems fit and proper to do so, compound any offence committed by any person under section 22 or 23, by making an offer in writing to that person to compound the offence to pay to 19Cukai Labuan Offshore Business Activities the Director General within the time specified in the offer such sums of money as may be specified in the offer , which shall not exceed fifty per cent of the amount of the maximum fine that may be imposed to that person if he or she has been convicted of the offence.
(2) an offer under subsection (1) may be made at any time after the offence has been committed, but before any prosecution had been initiated, and if the amount specified in the offer is not paid within the time specified in the offer, or within any extension of time that can be granted by the Director General, a prosecution for the offence may be commenced at any time after that to the person to whom the offer is made.
(3) If an offence has been compounded under subsection (1), no prosecution shall be instituted subsequently in respect of the offence against the person to whom the offer of compounding is made.
Penalty for false statutory declaration 25. If any person willfully or carelessly make any statutory declaration is incorrect or false under section 5, 7, 8 or 10, he commits an offence and, on conviction, be liable to a fine not exceeding ten thousand ringgit or to imprisonment for a term not exceeding three years or to both.
Exemption by Minister 26. (1) the Minister may, by order published in the Gazette, exempt any offshore company from all or any provisions of this act either generally or in respect of any taxable profits for the company.
(2) any order made under subsection (1) shall be presented in the House of Commons.
20 laws of Malaysia Act 445 laws of Malaysia Act 445 Tax Act laBUan offshore business activity of 1990 List Amendment law short title force amend the a815 Act Tax Act from the business activities of the year of assessment 1992 labuan offshore (Amendment) and 1992 next assessment Act 544 of the Finance Act 1996 year of assessment 1996 and subsequent years of assessment Act 557 of the Finance Act 1997 the year of assessment 1997 and subsequent assessment years 591 Finance Act Act (No. 2) 1998 assessment year 1999 and subsequent assessment years 624 Finance Act Act (No. 2) Order 2002 year of assessment 2004 and subsequent years of assessment Act 631 of the Finance Act 2003 assessment year 2004 and subsequent years of assessment Act 644 Finance Act 2005 year of assessment 2006 and subsequent years of assessment Act 683 Finance Act 2007 year of assessment 2009 and subsequent years of assessment Act 693 Finance Act 2009 year of assessment 2009 and subsequent years of assessment 21Cukai Labuan Offshore Business Activity laws of Malaysia Act 445 foreign business activity Tax Act In the offshore laBUan 1990 List Section amended Section power amend with effect from assessment year a815 Act 1992 and subsequent years of assessment Act 544 year of assessment 1996 and subsequent years of assessment Act 557 year of assessment 1997 and subsequent years of assessment Act 591 year of assessment 1999 and subsequent years of assessment Act 624 year of assessment 2004 and subsequent years of assessment Act 683 year of assessment 2009 and subsequent years of assessment 3a Act 683 year of assessment 2009 and subsequent years of assessment Act 693 year of assessment 2009 and subsequent years of assessment Act 8a 631 year of assessment 2004 and subsequent years of assessment Act a815 assessment year 10a 1992 and subsequent years of assessment Act 591 year of assessment 1999 and subsequent years of assessment Act 11 631 year of assessment 2004 and subsequent years of assessment Act 16 624 year of assessment 2004 and subsequent assessment years 22 laws of Malaysia Act Section 445 power amend with effect from 18 644 Act year of assessment 2006 and subsequent years of assessment Act 26 624 year of assessment 2004 and subsequent assessment years PRINTED by PERCETAKAN NASIONAL MALAYSIA BERHAD, KUALA LUMPUR on BEHALF and by ORDER of the GOVERNMENT of MALAYSIA jw514137 08-06-2009