Goh Ka Im, Anand Raj, Irene Yong, Foong Pui Chi, Wen-Ly Chin, Jess Ngo Hui Zhong, Harveynder Singh Tyndall
The Federal Constitution provides that tax shall only be levied by or under authority of federal law. This means the general body of tax law is to be found in tax statutes, supplemented by other legislative instruments such as subsidiary legislation and ministerial orders. However, the Director General of Inland Revenue and the Inland Revenue Board (Revenue) are responsible for administrative functions, such as the care and management of direct tax matters. In the exercise of their administrative powers, the Revenue purportedly issued a number of public rulings and guidelines which are, strictly speaking, not legally binding upon taxpayers before the year of assessment (YA) 2007, as public rulings and guidelines issued before January 2007 are given legislative endorsement retrospectively only with effect from YA 2007 onwards. While the Revenue may insist upon applying these public rulings and guidelines, their conduct may be open to challenge particularly in regard to public rulings and guidelines which the Revenue has issued and applied in YA 2006 and previous YAs.
The Income Tax Act 1967 (ITA) is the principal legislation for taxing income. The general scope encompasses the income of any person accruing in or derived from Malaysia or received in Malaysia from abroad. It is a question of fact as to what constitutes income, that is, gains or profits from a business or employment, dividends, interests, discounts, rents, royalties, premiums, pensions, annuities or other periodical payments, and other gains or profits.
Special provisions govern the taxation of income of, for example, insurance companies, shipping and air transport companies, banks and financial institutions, leasing companies, unit trusts and property trusts.
Malaysian income tax is imposed on a territorial, not worldwide, basis. The prevailing corporate tax rate is 24% (with effect from YA 2016) but with applicable tax holidays, incentives, exemptions and concessionary or reduced tax rates, effective tax rates can be significantly reduced. With the abolition of the imputation system, a single-tier tax system has been in force from YA 2008.
Withholding tax is applicable in Malaysia if a non-resident payee derives, or is deemed to derive, from Malaysia interest, royalty, rent for use of moveable property, contract payments for projects carried out in Malaysia, technical fees and other similar types of fees. The Revenue takes the view that even non-technical service fees would be subject to withholding tax. However, if these technical and non-technical services are performed outside Malaysia, payments for them would not be subject to withholding tax. Under a legal provision that came into force on January 1 2009, withholding tax may be applicable to miscellaneous income under section 4(f) of the ITA, not being gains or profits falling under section 4(a) to (e).
The introduction of a new section 109H into the ITA with effect from January 1 2013 allows an aggrieved payer, who is of the view that he is not liable to make any withholding tax payments, to appeal to the Special Commissioners of Income Tax within 30 days from the date the supposed withholding tax is due to be made to the Revenue. For the purposes of the ITA, a company is tax resident in Malaysia if it is managed and controlled from Malaysia, meaning that a company is deemed to be tax resident in Malaysia if the board of directors holds at least one board meeting a year in Malaysia to discuss the substantive business affairs of the company.
Where deductible business expenses are more than the gross income of the taxpayer's business, the difference, that is, an adjusted loss, can be offset against the adjusted income of the taxpayer's other business sources (if any) or carried forward (indefinitely) for deduction against its business income for future years. Capital allowances for qualifying expenditure would be claimable on the plant and machinery of a business. With effect from YA 2006, accumulated losses and unabsorbed capital allowances of a company cannot be carried forward if there is a change of more than 50% of its shareholdings. However, the Ministry of Finance has clarified that this restriction is only applicable to dormant companies, where there is a change of more than 50% of its direct shareholdings.
Business losses move with the corporate taxpayer. Therefore, in a transfer of assets and liabilities to the purchaser, the seller retains the right to use these losses. Unabsorbed capital allowances of a business, however, may only be carried forward and offset against income from the same business source by the same company. There is only limited group relief in Malaysia whereby a surrendering company (as defined in the ITA) may surrender up to 70% of its adjusted losses to one or more related companies as specified in the ITA.
With effect from January 1 2014, the limitation period for the issuance of assessments is five years from expiry of that YA. However, with effect from December 30 2014, a new section 91(5) has been introduced into the ITA to increase the limitation period for transfer pricing cases from five to seven years. No time bar applies if there appears to be any form of fraud, wilful default or negligence by the taxpayer.
The Revenue has a general power to invoke anti-avoidance provisions in transactions with little or no commercial purpose, apart from tax avoidance. With effect from January 23 2014, a new section 140(2A) has been introduced into the ITA. It provides that in exercising his powers under the anti-avoidance provision, the Director General of Inland Revenue may require by notice any person to pay to him within the time specified in the notice the amount of tax that would be deducted by that person under the ITA in consequence of his exercise of those powers.
Section 141 ITA seeks to prevent profit shifting by a non-resident carrying on a business with a resident over whom it exercises substantial control. In July 2003, the Revenue purportedly issued the Transfer Pricing Guidelines under section 140, the general anti-avoidance provision. Largely based on the OECD Transfer Pricing Guidelines, the guidelines' legality is open to question, even though they are seemingly followed in practice. These guidelines have been replaced by the Transfer Pricing Guidelines 2012, issued by the Revenue on July 20 2012.
After the proposal in the Budget 2009 to introduce specific transfer pricing legislation in Malaysia, the arm's-length principle has been introduced via section 140A(1) ITA, with effect from January 1 2009. Section 140A(1) is to apply subject to any rules prescribed under the ITA. Such rules are only to implement and facilitate the operation of the arm's-length principle, and have been gazetted as the Income Tax (Transfer Pricing) Rules 2012 PU (A) 132/2012.
Thin-capitalisation legislation was also introduced with effect from January 1 2009 and provides that the portion of interest and finance charge, among other things, in respect of the financial assistance which is excessive, may be disallowed as a deduction. The Ministry of Finance has deferred implementation of the thin capitalisation rules to the end of December 2015 and this has further been deferred to December 31 2017. Under section 138C ITA taxpayers may enter into advance pricing arrangements to determine the prices in cross-border transactions with associated persons.
The Revenue have also introduced a new Form MNE [1/2011] – Information on Cross-Border Transactions as part of the Revenue's measures to monitor cross-border transactions. Among other things, taxpayers would be required to provide information pertaining to their group structure, cross-border related party transactions, particulars of financial assistance with respect to related parties outside Malaysia and confirm whether transfer pricing documentation had been prepared for the relevant year of assessment. A new section 140B has also been introduced into the ITA whereby with effect from YA 2014, if in a basis period for a YA, a company makes any loan or advances of any money from its internal funds to a director of that company, the company shall be deemed to have a gross income consisting of interest from such loan or advances for that basis period.
With the implementation of the self-assessment system, there has been a corresponding shift towards the use of criminal proceedings under the ITA by the Revenue. The ITA provides for criminal proceedings to be instituted against persons who are alleged to have committed the offences contained in part VIII. Fines, imprisonment and/or penalties may be imposed.
There is no general capital gains tax in Malaysia. However, a tax known as real property gains tax (RPGT) is levied on capital gains accruing from the disposal of property and shares in a real property company.
For the purposes of the tax, real property is broadly defined as 'any land situated in Malaysia, and any interest, option or other right in or over such land'. This would mean, for instance, that the holding or grant of a lease may amount to an interest in land as a lease is extensively defined in the Real Property Gains Tax Act 1976 (RPGTA).
The tax is imposed on the gain, if any, at a rate between 30% and 5%, depending on how long the property is held for and whether the vendor is a company or Malaysian national or permanent resident.
If the vendor is a company, with effect from January 1 2014 any disposal made within three years of the date of acquisition of the chargeable asset is taxed at 30%, in the fourth year at 20%, in the fifth year at 15%, and in the sixth year onwards, at 5%.
In the case of an individual who is not a citizen and not a permanent resident, any disposal made within five years of acquisition of the chargeable asset would be taxed at 30% and after that at 5%.
In the case of an individual who is a citizen or a permanent resident, with effect from January 1 2014, such gains are taxed at 30% for properties held for three years of less, 20% for properties held for four years, 15% for properties held for five years and tax exempt if held for more than five years.
Malaysia imposes stamp duty on certain prescribed instruments, defined to include any written document. In a business or asset sale, stamp duty is charged on all instruments conveying the assets, meaning movable or immovable property. It is payable by the purchasers/transferees at these rates:
With effect from January 1 2009, loan, services and equipment lease agreements, amongst others are also subject to ad valorem stamp duty. However, service agreements executed between September 15 2009 and December 31 2010 are subject to a stamp duty of RM50 under the Stamp Duty (Remission) Order 2009 PU (A) 391/2009 while service agreements executed on or after January 1 2011 are subject to stamp duty at the rate of 0.1% of the sum of money under the Stamp Duty (Remission) (No. 4) Order 2010 PU (A) 476/2010.
Any instrument required to effect transfers of properties and other transactions is subject to stamp duty. There are other rates of stamp duty on other classes of instruments, which are generally lower than the rates above.
The Royal Customs and Excise Department Malaysia (Customs) have the care and management of indirect taxes.
Customs duties are levied upon specified goods imported into, or exported from, Malaysia and are to be paid by the importer or exporter, as the case may be. The relevant rates are set out in the Customs Duties Order 2012 PU (A) 275/2012 whereas valuation of the goods would be in accordance with the Customs (Rules of Valuation) Regulations 1999 PU (A) 507/1999 giving effect to the WTO Valuation – WTO Guidelines.
Excise duties are levied upon specified goods manufactured in or imported into Malaysia.
Sales tax was abolished with effect from April 1 2015 with the implementation of GST in Malaysia. Sales tax was previously charged and levied at rates ranging from 5% to 15% on all taxable goods that are:
Service tax was abolished with effect from April 1 2015 with the implementation of GST in Malaysia. Service tax was previously payable on any taxable service provided by any taxable person, that is, a person carrying on the business of providing such taxable service. The rate of tax was increased from 5% to 6% with effect from January 1 2011.
GST was implemented with effect from April 1 2015 with the passing of the Goods and Services Tax Act 2014 (GST Act). The GST rate has been fixed at 6% and several GST orders and regulations have also been gazetted to facilitate its implementation. The GST is a broad-based consumption tax levied and charged on all supplies of goods and services, whether domestic or imported, at all levels of the supply chain. Among others, businesses would have to consider whether their supplies should be treated as standard-rated, zero-rated, exempt or out of scope supplies. Certain special schemes may also apply. There are also numerous penal provisions in the GST Act for failure to comply with the provisions of the GST Act. The GST is under the purview of the Customs and the Director General of Customs and Excise. Appeals can be lodged to the GST Appeal Tribunal save for excluded matters.
Malaysia has an aggressive and progressive approach towards the grant of special tax incentives, such as pioneer status, an investment tax allowance and a reinvestment allowance, to attract foreign direct investments. There are also many promoted activities, products and areas such as free zones, Iskandar Development Region, Northen Corridor Economic Region, East Coast Economic Region, Sabah Development Corridor, Sarawak Corridor of Renewable Energy and the Multimedia Super Corridor.
Malaysia has concluded a wide-ranging network of double taxation treaties with numerous jurisdictions for the prevention of double taxation of income and fiscal evasion.
Though part of Malaysia, the federal territory of Labuan has specific laws which are only applicable there. They were introduced in 1990 to promote Labuan as an international business and financial centre. Relevant laws include the Labuan Companies Act 1990, Labuan Business Activity Tax Act 1990 (LOBATA), Labuan Financial Services and Securities Act 2010, Labuan Foundations Act 2010 and Labuan Limited Partnerships and Limited Liability Partnerships Act 2010.
Pursuant to LOBATA, a Labuan company carrying on Labuan trading activities enjoys a lower tax rate of 3% or alternatively, may elect to pay a flat tax of RM20,000 regardless of its income level. Income from Labuan non-trading activities carried on in Labuan would not be charged to tax. With effect from YA 2009, a Labuan company may elect to be taxed on its Labuan business activity under the ITA instead of LOBATA.
Tax exemption is given for dividends received from a Labuan company out of income derived from a Labuan business activity or income exempt from tax. Labuan companies are also exempt from having to withhold tax on royalties, interest and fees for technical advice, assistance or services paid to non-residents. Labuan also has other incentives and special rules.
With effect from January 1 2009, Labuan companies are also exempted from withholding tax obligations on gains or profits falling under paragraph 4(f) of the ITA, that is, miscellaneous income, paid to non-residents.
The preferential tax rate of 3% and other incentives and exemptions previously only available to Labuan companies have been extended to other Labuan entities, including Labuan foundations, Labuan Islamic foundations and partnerships, Labuan limited partnerships and limited liability partnerships, Labuan trusts, Labuan Islamic trusts and Labuan financial institutions.
Malaysian taxpayers are increasingly prepared to challenge the Revenue and Customs. Malaysian courts have taken a robust and objective approach to adjudicating tax disputes. Taxpayers have won a substantial number of them.
A taxpayer may challenge the Revenue's assessment or notification of non-chargeability by lodging a notice of appeal (Form Q) within 30 days of the disputed assessment or notification. The Special Commissioners of Income Tax would hear the appeal, with further rights of appeal being available to both parties to the High Court and thereafter, to the Court of Appeal. However, with effect from January 23 2014, section 99 of the ITA has been amended to limit a taxpayer's right to appeal against his own deemed assessment, except in cases where he is aggrieved by a Revenue's public ruling made under section 138A of the ITA. Thereafter, section 99 of the ITA was amended again and with effect from December 30 2014, a taxpayer can also appeal against his own deemed assessment where he is aggrieved by any practice of the Director General of Inland Revenue generally prevailing at the time when the assessment is made. The High Court also has original jurisdiction to hear tax disputes which have proceeded through an application for judicial review or for declaratory relief. Appeals of High Court decisions go to the Court of Appeal and, with leave, to the Federal Court.
The minister of finance has set up a taxation review panel to review all Malaysian revenue legislation with a view to updating and, if necessary, consolidating it.
Goh Ka Im (email@example.com), partner;Anand Raj (firstname.lastname@example.org), partner;Irene Yong (email@example.com), partner;Foong Pui Chi (firstname.lastname@example.org), partner;Wen-Ly Chin (email@example.com), legal assistant; Jess Ngo Hui Zhong (firstname.lastname@example.org), legal assistant; andHarveynder Singh Tyndall (email@example.com), legal assistant.Shearn Delamore & Co, Kuala Lumpur
Effective management of indirect taxes in Malaysia has become increasingly important over the past few years, especially since the implementation of GST on April 1 2015. Various tax practitioners pointed out GST as the main tax trend in Malaysia as it was introduced as a completely new tax regime.
"Businesses will continue to face challenges under the relatively new GST regime due to uncertainties in the interpretation and application of the legal provisions, as well as practical implementation and compliance issues," said Adeline Wong, head of tax at Wong & Partners.
With slowing economic growth it had been increasingly challenging for government to raise tax revenue, and the implementation of GST has helped the government to meet the fiscal budget targets. "With the Malaysian government declaring that GST is a contributing factor to the stability of the Malaysian economy, it is clear that GST is an important source of revenue for the country and we can expect that the government will place more emphasis on GST in the years to come," said Chang Mei Seen of KPMG. The 2016 GST target collection set by the government is at RM39 billion ($10 billion).
Various recalibration measures, across the different taxes in Malaysia, were announced in January 2016. This included measures to increase revenue and expedite tax collection, meaning the government is doubling up its efforts on compliance and audit activities.
Further, the number of cases related to voluntary disclosures has increased followed by the government's introduction of a tax amnesty programme in 2016, seeking to encourage taxpayers to disclose undeclared income and mistakes made in previous years.
"The number of tax audits has increased and also, the depth and coverage of the potential areas which can be disputed by the Inland Revenue Board (IRB) in the tax audits. It is expected that there will be increased efforts in tax audits being carried out by the IRB going forward," said Jagdev Singh, head of tax at PwC.
In addition, due to liberalisations introduced by free trade agreements (FTAs), Malaysia expects to have greater developments in the trade and customs space. There has been a considerable increase in terms of the volume of investments in the manufacturing, transportation, financial services, real estate and infrastructure sectors, where the leading sources of foreign investment are generally US, Japan, China, Hong Kong and Singapore. Moreover, in light of the Trans-Pacific Partnership (TPP) trade deal, the Minister of International Trade and Industry announced 26 amendments to 17 laws, including investment, labour, customs and intellectual property laws, as well as government procurement rules, to ensure that Malaysia will be TPP-compliant.
"The net effect of the TPP investment chapter on Malaysia is that a significant number of sectors will be liberalised," said Wong. "The TPP investment chapter also contains an Investor-State Dispute Settlement (ISDS) provision."
Although it is not Malaysia's first FTA with an ISDS mechanism, the TPP is its first FTA with the US. Overall, ISDS mechanism under TPP is expected to provide investment security, which will strengthen foreign investors' confidence in Malaysia.
"The electronics and electrical, textile and automotive sectors have been identified in a cost-benefit analysis report procured by the Malaysian government to be the biggest winners if and when TPP comes into force," Wong added. "As such, we expect the investment climate in these sectors to undergo a significant boost post-TPP"
Ernst & Young Tax Consultants Sdn Bhd
Level 23A, Menara Milenium
Pusat Bandar Damansara
50490 Kuala Lumpur
Tel: +60 3 7495 8000
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Eng Ping Yeo
Tel: +60 3 7495 8288
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Tel: +60 3 7495 8353
Business Tax Services
Tel: +60 3 7495 8353
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Chow Yang Wong
Tel: +60 3 7495 8349
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Tel: +60 3 7495 8247
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Tel: +60 7 334 1746
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Tel: +60 88 235 733
Global Services APTC
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People Advisory Services
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Tax and Revenue Practice Group:
We advise and represent a broad range of clients in all areas of tax and revenue law including tax planning and advice, structuring, litigation, audit and investigation work, covering the full spectrum of commercial activities. We appear frequently before the Special Commissioners of Income Tax and the Superior Courts of Malaysia on tax appeals and other tax proceedings. We have a special interest in the Labuan International Business & Financial Centre which offers preferential tax treatment to Labuan companies and other Labuan entities.
The group's practice areas and experience cover the following:
Corporate and Income Tax, Tax Controversy, Disputes & Litigation, Tax Audits and Tax Investigations, Alternative Dispute Resolution with Tax Authorities, Labuan Tax Planning, Trusts, Labuan Trusts, Labuan Foundations and other Labuan entities, Tax Law Advice on International Transactions, Foreign Direct Investments and Private Equity Investments, Tax Treatment of Land and Development Activities, Tax Risk Management, Sales Tax, Service Tax, Customs Duties and Other Indirect Taxes, Goods and Services Tax, Tax Law Advice on Capital Markets Instruments & Transactions, Tax Law Advice for Mergers & Acquisitions, Joint Ventures and Corporate Reorganisations, Tax Treatment & Incentives for Investments into Malaysia & Holding Companies, Taxation of Specialised Industries – Oil & Gas Companies, Financial Institutions and Telcos, Transfer Pricing & Taxation of Cross Border Transactions, and Tax Considerations for Employers.
The practice group has been consistently recognised by tax directories and publications over the years including by Chambers Asia Pacific (from 2009 to 2015 editions) ranking the group as Malaysia's No. 1 firm in Tax; The Asia Pacific Legal 500 (from 2005 to 2015 editions), recognising the group as the No. 1 law firm in Malaysia in Tax; The International Tax Review, a Euromoney publication at the Annual Asia Tax Awards, awarding the group Malaysia Tax Litigation Firm of the Year Award (2007 to 2015) and Malaysia Tax Controversy Firm of the Year 2016; and by Pacific Business Press' Asian-Counsel Representing Corporate Asia Survey (2011, 2012 and 2014), selecting the group as Asian-Counsel Firm of the Year in Taxation (Malaysia). The practice group was recognised as Best in Tax among law firms in Asia Pacific at the Asialaw Asia-Pacific Dispute Resolution Awards 2015, and was also named as the winner of the prestigious South East Asia Tax and Trusts Law Firm of the Year Award 2014 by the Asian Legal Business, placing it as the top tax and trusts law firm in South East Asia.
Goh Ka Im
Ms. Goh Ka Im graduated with an LL.B (Hons.) degree from the University of Bristol, U.K. in 1986 and was called to the Bar of England & Wales as a member of Gray's Inn in 1987. She was admitted as an Advocate and Solicitor of the High Court of Malaya in 1988 and became a partner of Shearn Delamore & Co. in 1997. Ms. Goh is the head of the Tax and Revenue Practice Group of Shearn Delamore & Co. and advises on all aspects of tax and revenue law including income tax; corporate tax; GST; real property gains tax; double taxation treaties; Labuan tax planning; Labuan companies; Labuan partnerships; Labuan trusts; customs duties; sales tax; service tax; stamp duty; transfer pricing; tax incentives for investments; trusts and asset protection planning. She has wide experience in all areas of Tax and Revenue law and for tax litigation, she has appeared extensively before the Special Commissioners of Income Tax, the High Court of Malaya and the Court of Appeal as well as the Federal Court in Malaysia. Ms. Goh is the Past Chair of the Tax Committee of the Inter Pacific Bar Association, the Malaysian Jurisdictional Editor of the International Tax Planning Association and is a member of the International Bar Association and International Fiscal Association. She has been recognised as a leading tax lawyer in the 2006, 2007, 2008 and 2009 International Who's Who of Corporate Tax Lawyers as well as a leading global tax lawyer in Malaysia in the Tax Directors Handbook 2010, 2011, 2012, 2013, 2014 and 2015. She is also featured in the 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015 editions of Asialaw Leading Lawyers in Malaysia and recognised as a Band 1 Leading Individual For Tax – Chambers Asia 2009, 2010, 2011, 2012, 2013, 2014 and 2015. Ms. Goh won the "Best in Tax" award at the Asia Women In Business Law Awards, 2014, and is also the winner of the Malaysia – Corporate Tax category in the Client Choice Awards 2014, 2015, and 2016 as well as Tax & Revenue Lawyer of the Year – Malaysia in Corporate Live Wire's 2016 Finance Awards. She has spoken at numerous international and local Revenue Law conferences and seminars, and has written and contributed significantly to the International Tax Planning Association and other prestigious publications.
Anand Raj was admitted as an Advocate & Solicitor of the High Court of Malaya in 1996 after obtaining an LLB (Honours) degree from the University of London in 1994 and the Certificate of Legal Practice in 1995. Anand has been a member of Shearn Delamore & Co.'s Tax and Revenue Practice Group from 1996 and has been a partner of firm since 2003. Anand is a member of the International Fiscal Association and Malaysia Branch Chairman, and a member of the IFA Asia Pacific Regional Committee.
He presently chairs the Bar Council's Tax and GST Subcommittee and is the former chair of the Tax Committee of the American Malaysian Chamber of Commerce (AMCHAM). Anand is the Malaysia Reporter for the International Bar Association's Tax and Antitrust & Competition Committee.
Anand has experience of corporate and investment work and has extensive experience in all aspects of tax and revenue law advisory, structuring, planning, litigation, GST, transfer pricing, audit and investigation work. Anand has appeared as Counsel for taxpayers before all levels of the Malaysian courts and a substantial number of his cases have been reported. Anand has prepared and presented papers at domestic and international forums and has written articles and contributed to domestic and international tax and accounting journals on the subject. He is one of the authors of Bloomberg BNA's Business Operations in Malaysia.
Anand has been recognised for his work as Tax counsel in, amongst others, successive editions of the International Tax Review, Asia Pacific Legal 500, Asialaw Profiles, Asialaw Leading Lawyers and Chambers Asia Pacific. Anand has also been listed in The International Who's Who Legal: Competition Lawyers for 2013, 2014, 2015 and 2016, and has been recognised for his work as Competition Counsel by the Global Competition Review, Chambers Asia Pacific and Asialaw Profiles.
Irene Yong was admitted as an Advocate & Solicitor of the High Court of Malaya in 1999 after obtaining an LLB (Honours) degree from the University of London in 1997 and the Certificate in Legal Practice in 1998. In 2003, she completed her MBA at Warwick Business School, UK. Irene was a member of Shearn Delamore & Co.'s Tax and Revenue Practice Group from 1999 to 2002 and rejoined the practice group in 2004 after completing her MBA and practising as a foreign legal adviser in Singapore. She was admitted as a partner of Shearn Delamore & Co. in 2008.
Irene practises in all aspects of tax and revenue law advisory, structuring, planning, goods and services tax (GST), transfer pricing, audit, investigation, dispute resolution (including advising taxpayers on the settlement of tax cases with the Revenue or in dealings with governmental authorities) and litigation (including tax appeals, declaratory proceedings, judicial review applications, civil suits, windings up etc.) work. She has appeared as Counsel for taxpayers before the Special Commissioners of Income Tax and the Superior Courts of Malaysia. Irene has presented papers on Malaysian Tax and Revenue Law and written articles and contributed to domestic and international tax journals. She is an author for tax publications for Bloomberg BNA.
Irene is a member of the International Fiscal Association, Malaysia Branch and the Bar Council's Tax Subcommittee. Irene has been recognised as Tax Counsel in the Asia Pacific Legal 500 (2008/2009, 2011/2012, 2013/2014 and 2014 editions) and a Leading Advisor for 2013, 2014 and 2015 by the International Tax Review's Tax Controversy Leaders.
Foong Pui Chi
Foong Pui Chi was admitted to practice as an Advocate and Solicitor of the High Court of Malaya in August 2007 after obtaining an LL.B (Hons) degree from the University of London in 2005 and the Certificate in Legal Practice in 2006.
Pui Chi has been a member of Shearn Delamore & Co.'s Tax and Revenue Practice Group since 2007. She was admitted as a partner of the firm on January 1, 2016.
Pui Chi has been recognised as Tax Counsel in the 2010/2011, 2011/2012 and 2012/2013 editions of the International Tax Review and she has also recently been named as one of the nominees for the award of "Rising Star in Tax" at the Euromoney Legal Media Group Asia Women in Business Law Awards 2015.
Pui Chi practises in all aspects of Malaysian tax and revenue law advisory, structuring, planning, litigation, transfer pricing, audit and investigation work. She has appeared as Counsel for taxpayers in numerous tax appeals before the Special Commissioners of Income Tax and judicial review applications as well as other tax proceedings before the Superior Courts of Malaysia.
She has regularly contributed articles on Malaysian Tax and Revenue Law to tax and accounting journals such as the Tax Guardian (published by the Chartered Tax Institute of Malaysia) and The Malaysian Accountant (published by the Malaysian Institute of Certified Public Accountants). She is one of the authors of Bloomberg BNA's Business Operations in Malaysia.
Shearn Delamore & Co is one of the oldest and largest law firms in Malaysia. Established in 1905, it has over the last century evolved into a firm that covers a comprehensive range of legal practice areas. We have about 100 lawyers and a total staff strength of about 350 in our office in Kuala Lumpur.
Our international affiliations include the World Law Group (WLG) and the World Services Group (WSG). Our lawyers are also active office bearers or members of the Inter Pacific Bar Association (IPBA), the International Tax Planning Association (ITPA), and the International Fiscal Association (IFA). Our clients range from domestic and international institutions, multinational conglomerates, public listed companies, institutional bodies, multi-lateral agencies, industrial and commercial corporations, professional firms and organisations, government and local institutions and individuals.
The main practice groups within the firm are Tax and Revenue, Competition Law & Antitrust, Corporate and Commercial, Corporate Secretarial Service, Dispute Resolution, Employment and Administrative Law, Energy, Natural Resources & Green Technology, Environmental, Financial Services, Immigration, Infrastructure & Projects, Intellectual Property, Regulatory Compliance & Enforcement, Real Estate, Telecommunications, Media and Technology and Personal Data Protection & Privacy Laws.
|Corporate Income Tax||24%||A|
|Capital Gains Tax||30%||B|
|Net Operating Losses (years)|
|Distribution by real estate - trust funds||10%||25%||E|
|Payments to non-resident contractors||13%||F|
|Payments for specified services and use of movable property||10%||G|
|Royalties from, for example, patents, know-how||10%||C|
|Branch Remittance Tax||0%|
A Effective from the 2016 year of assessment, the main rate of corporate tax decreases by 1% from 25% to 24%, while the rates for resident companies that have paid-up capital in respect of ordinary shares of MYR2,500,000 or less and that satisfy specified conditions are also reduced by one percentage point; that is, the rates are 19% on the first MYR500,000 of chargeable income and 24% on the remaining chargeable income. The above rates do not apply to petroleum companies, which are taxed at a rate of 38%.
B Real property gains tax is imposed on gains derived from disposals of real property or shares in real property companies. The maximum rate is 30%.
C This is a final tax applicable only to payments to non-residents.
D Interest on approved loans is exempt from tax. Bank interest paid to non-residents without a place of business in Malaysia is exempt from tax. Interest paid to non-resident companies on government securities and on Islamic securities is exempt from tax.
E The 25% withholding tax is imposed on distributions to non-resident corporate unit holders by Real Estate Investment Trusts (REITs) and Property Trust Funds (PTFs) that have been exempted from Malaysian income tax as a result of meeting certain distribution conditions. Distributions by such REITs and PTFs to individuals, trust bodies and other non-corporate unit holders are subject to withholding tax at a rate of 10%.
F This withholding tax is treated as a prepayment of tax on account of the final tax liability.
G This is a final tax applicable to payments to non-residents for specified services rendered in Malaysia and to payments for the use of movable property excluding payments made by Malaysian shipping companies for the use of ships under voyage charter, time charter or bare-boat charter. The rate is reduced under certain tax treaties.
H Withholding tax is imposed on “other income,” which includes, among other payments, commissions and guarantee fees.
Azman Davidson & Co provides a range of tax services including individual tax, corporate tax, GST, other indirect taxes, stamp duty and litigation. Datuk Francis Tan and Dato Davidson are the two main tax professionals, representing the tax practice as consultants.
Tan, the firm's former managing partner, has been a full-time consultant at the firm since 2009, but joined the firm in 1985. He has years of experience with government as well as working with the private sector.
Davidson specialises in arbitration, energy and taxation. He was member of Brunei Bar and a partner of Abrahams, Davidson & Co in Brunei from 1986 to 2000.
Deloitte has 15 executive directors and more than 460 tax professionals and strong supplementary support from offices in eight locations in Malaysia. Deloitte Malaysia is the only firm among Big 4 with a bigger tax practice than audit practice.
The tax team aims to provide proactive and innovative tax solutions for all clients. The firm's service lines – business tax, global employer services, transfer pricing and indirect taxes and customs – are all led by partners. The business tax service line comprises six main areas: international tax, M&A, audit and investigations, research and development (R&D) and government incentives, business process solutions and other tax services.
Many of the firm's key clients come from the financial services, oil and gas and real estate sectors. The team have a separate Chinese services group and a Korean services group to assist its clients in those jurisdictions more effectively. Through this organisational structure, the firm has settled numerous major projects from Chinese and Korean investors.
One client said: "Their knowledge of indirect tax both in Malaysia and the region has meant that we have received practical and commercial advice when many other firms have been unable to provide this."
Yee Wing Peng, country tax leader at Deloitte, has more than 20 years of experience in audit and taxation, particularly in cross-border tax planning, structuring, corporate tax restructuring, tax due diligence and tax advisory assignments.
EY's tax team is led by Amarjeet Singh. As one of the Big 4 firms, its tax practice is capable of providing strong support in tax-related matters to give clients the best chance to help clients operate their businesses well in a shifting tax landscape. The firm offers services from tax advisory and compliance services to tax accounting, tax policy and controversy.
KPMG in Malaysia provides the full range of tax services, from corporate and indirect tax to tax risk management, global mobility and global transfer pricing services. Its tax team aims to provide the most cost-effective business strategies for clients by using the strong industry knowledge of its local and global network of the team members.
Its tax department boasts nearly 300 people with 14 partners. The team is headed by Tai Lai Kok, who specialises in tax compliance and advisory work for corporate and individual clients. He is particularly strong in privatisations, corporate restructurings, tax planning and tax incentives. In March 2016, KPMG hired Anston Cheah Kwok Kheong from PwC as an associate director.
Followed by implementation of GST last year, managing GST risks has been focal point for many clients. The tax team at KPMG has been assisting businesses in various industries to remain GST compliant through the review of GST returns before submission to the tax authorities. Its GST team has also been proactively participating in discussions with Customs.
In April 2016 Soh Lian Seng, the firm's head of tax disputes, worked on an application for a new incentive for green technology. It was the first company in Malaysia to obtain the incentive for green technology, which entitled the company to an investment tax allowance of 60% on the qualifying capital expenditure incurred within a period of five years, to be utilised against 70% of the statutory income.
Lee Hishammuddin Allen & Gledhill's tax advisory practice provides assistance in tax advisory and planning, international tax, dispute resolution including litigation and support through tax audits and investigation, GST, transfer pricing and thin capitalisation, double taxation agreements and many other fields.
There are two representative partners for the tax department: DP Naban and S Saravana Kumar. Naban is a senior partner of the firm who focuses on income tax, GST, real property gains tax, petroleum income tax, customs duty and anti-dumping duty, stamp duty and private clients.
Kumar also advises on income tax, GST, real property tax, petroleum income tax and customs duty, as well as tax litigation, advisory, audit, transfer pricing, international tax and more. He is an adjunct professor at Universiti Tenaga Nasional (UNITEN) and chairs the taxation section of LAWASIA, an international organisation of lawyers' associations.
PwC's tax department provides industry-focused tax services working closely within its international network of firms. Considering overall strength, the firm has one of the strongest tax practices in Malaysia.
The tax group has 36 partners and directors, nearly 100 managers and more than 300 other professionals, who advise across all industries and are led by Jagdev Singh.
Within the tax compliance and advisory group, the firm has respective experts in a number of industries including financial services, banking and capital markets, consumer and industrial products, construction and property, logistics and shipping, oil and gas, energy and utilities and technology, media and telecommunications (TMT).
The PwC tax practice also has a technical research and technology team which develops solutions to industry and tax issues with the regulators. This team consists of infrastructure engineers, business analysts, system support engineers and software engineers.
Vijey Mohana Krishnan is a partner at Raja, Darryl & Loh, a firm focusing on tax law, corporate law and commercial law.
He is the head of tax and he also works on revenue matters including corporate and individual tax planning, dispute resolution, income tax appeals, double taxation treaties, real property gains tax, customs and more.
The firm's tax practice brings tax services to diverse clients from different sectors, including: banking, insurance, manufacturing, trading, shipping, aviation, construction, plantation, property development, hospitality and engineering.
For its clients, the firm covers direct tax, indirect tax, real property gains tax, stamp duty and the Labuan International Business and Financial Centre and various offshore regimes.
Founded more than four decades ago, Shearn Delamore & Co's tax and revenue department is one of the most experienced and the largest tax law practice groups of the law firms in Malaysia. The practice has five partners and two other fee earners, and is led by Goh Ka Im. It expanded with the addition of a partner Foong Pui Chi in January 2016.
Goh specialises in all aspects of tax and revenue areas including income tax, corporate tax, real property gains tax, double taxation treaties, offshore companies, custom duties, transfer pricing, tax incentives for investments, sales tax and more.
The tax practice handles the full scope of direct and indirect tax advisory, cross-border transactions, structuring, planning, litigation, audit and investigation matters and transfer pricing. It also focuses on the particular tax aspects of certain industries, including oil and gas, financial services, telecoms,
The team advised a multinational company in the oil and gas industry on all aspects of Malaysian tax laws, including the implications of the new goods and services tax, on the structuring of their project in Malaysia, which is to undertake the engineering, procurement, construction and commission of a major oil and gas facility in Malaysia. This is an important project affecting the development of the oil and gas industry in Malaysia and involves sums in excess of $1 billion.
One client said: "They are quite creative in thinking about solutions within legal parameters. Different partners are good for tax litigation and another for tax advice/opinion."
Taxand Malaysia is a tax advisory firm comprising dedicated and specialised professionals. It aims to serve clients with a vast range of services including corporate tax, individual tax, international tax, transfer pricing, GST and other indirect taxes, tax compliance and knowledge management.
Its tax practice is led by the managing director Renuka Bhupalan, who has extensive experience in both Malaysian and international taxation from tax compliance and advisory to corporate tax and transfer pricing. She serves a variety of industries for both multinationals and individuals.
The professionals at the Taxand Malaysia have good knowledge and experience in all kinds of taxation in the various fields of industries. For corporate tax, they are capable of providing tailored services such as identifying and advising on tax issues related to corporate structures and business plans. For international tax, the team understands various regimes and is capable of handling cross-border tax including double tax treaties and royalty planning.
Adeline Wong leads the tax practice at Wong & Partners, which is a member firm of Baker & McKenzie International. The tax practice consists of three partners, 12 qualified lawyers, and five consultants, analysts, and advisers. The firm hired six new professionals into the team, including Kellie Allison Yap from Lee Hishammuddin as associate.
The tax practice covers the full range of tax law-related matters in Malaysia and has established separate sub-practices advising on certain areas of tax, including transfer pricing, GST, trade remedies, customs-related disputes, wealth management and estate planning.
The firm has been kept busy, advising on anti-dumping investigations by the Ministry of International Trade and Industry of Malaysia for the past years while at the same time helping clients with the transition to the new GST regime in Malaysia.
As Malaysia moved ahead in establishing itself in the wealth management space, Wong & Partners saw a significant increase in demand for comprehensive corporate tax, personal tax and legal advice to trusts and trustees, private banks and high net-worth individuals.
One of the most significant corporate tax matters for the firm over the past year was its tax advisory opinion on planning, structuring and executing the Malaysian aspect of a client's multi-jurisdictional disposal of its information management business to the multinational financial services company.