Goh Ka Im, Anand Raj, Irene Yong, Foong Pui Chi, Jess Ngo Hui Zhong, Boo Sha-Lyn
The Malaysian legal system is based upon common law and, in keeping with such traditions, judicial proceedings are adversarial in nature. Historically, much of Malaysian tax and revenue jurisprudence originated in the British and other Commonwealth jurisdictions. Shearn Delamore & Co explains the rules that apply to taxpayers in Malaysia.
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. Before January 17 2017, if these technical and non-technical services are performed outside Malaysia, payments for them would not be subject to withholding tax. However, from January 17 2017, payments for such services performed outside Malaysia would also be subject to withholding tax. From January 17 2017, the definition of royalty was also extended and includes, among others, sums paid for the use of, or the right to use, software. 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. The 2012 guidelines were updated recently in respect of the meaning and application of the arm's-length principle and transfer pricing documentation, among others.
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 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.
The Income Tax (country-by-country reporting) Rules 2016 and the Income Tax (automatic exchange of financial account information) Rules 2016 both came into operation on January 1 2017. They impose additional reporting obligations.
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 MYR50 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 2017 PU (A) 5/2017 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 specified goods.
Service tax was abolished with effect from April 1 2015 with the implementation of GST in Malaysia. Service tax was previously payable on specified services.
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, Northern 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 (LBATA), Labuan Financial Services and Securities Act 2010, Labuan Foundations Act 2010 and Labuan Limited Partnerships and Limited Liability Partnerships Act 2010.
Pursuant to LBATA, 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 MYR20,000 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 LBATA.
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.
Malaysia has faced risks to the economy over the past year. The country is going through a financial scandal worth billions of dollars regarding the country's state investment fund, 1 Malaysia Development Berhad (1MDB), which other countries including the US and Singapore are investigating. However, this has not meant a slowdown in the country's economic growth, which has exceeded economists' expectations. The World Bank predicts Malaysia's GDP growth will be 4.9% for 2017 – higher than the previous projection range of 4.3 – 4.8%. The main reasons behind this are private consumption and private investments.
Malaysia has moved in line with most other jurisdictions on BEPS developments and has introduced, among other things, country-by-country reporting. In the Finance Act 2017, Malaysia introduced penalties for companies that do not comply with the rules. The Finance Act also expanded the scope of withholding tax for income of non-residents, which now includes amounts paid to non-residents for services rendered outside of Malaysia. The definition of royalty was also extended.
On the enforcement side of things, Malaysia is flexing its muscles. In December, the country appointed a new CEO of the Inland Revenue Board who has taken a new approach to audits, with a focus on aggressive tax planning structures. A special team has been set up, comprising 272 intelligence officers and tax investigators who aim to investigate tax evasion, increase compliance and also increase direct tax collection. MNEs which shift profit to low-tax jurisdictions have been a particular focus for the team.
Bob Kee and Chang Mei Seen of KPMG Malaysia wrote in an article for International Tax Review in June that the Inland Revenue Board is investigating and auditing 30 Malaysian large enterprises, most of which are Malaysian, looking to claw back about MYR1.9 billion ($446 million) in additional taxes and penalties.
"Although the MYR1.9 billion might not be fully due to transfer pricing non-compliance, it is still daunting to know that the Inland Revenue Board had focused its attention on so many local large enterprises in a relatively short period of time," Kee and Seen wrote. "This gives us a glimpse of the tax enforcement environment in the near future, as well as the degree of seriousness the tax authority is taking on tax compliance."
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
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Business Tax 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 and Band 1 for Tax practice (2016 and 2017); The Asia Pacific Legal 500 (from 2005 to 2017 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 2017; 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, 2015, 2016 and 2017. She is also featured in the 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016 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, 2015, 2016 and 2017. 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 to 2017 and in Who's Who Legal: Corporate Tax Lawyers 2016 and 2017, and has been recognised for his work as Competition Counsel by the Global Competition Review, Chambers Asia Pacific and Asialaw Profiles and also as the 2017 Asia Tax Disputes and Litigation Practice Leader of the Year by the International Tax Review.
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, the GST Appeal Tribunal 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, 2015 and 2016 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 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.
Pui Chi is a member of the International Fiscal Association, Malaysia Branch and 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/M&A, Corporate Secretarial Service, Dispute Resolution, Employment and Administrative Law, Energy, Natural Resources & Green Technology, Engineering & Construction, Environmental, Financial Services, Immigration, Infrastructure & Projects, Intellectual Property, Private Wealth & Family Business, Regulatory Compliance & Enforcement, Real Estate, Shipping & Maritime, Technology & Communications and Privacy & Data Protection.
|Corporate Income Tax||24%||A|
|Real property gains tax rate||30%||B|
|Royalties from, for example, patents, know-how||10%||C|
|Distributions by real estate Investment trusts and property Trust funds||10%||25%||E|
|Payments to non-resident contractors||13%||F|
|Payments for specified services and use of movable property||10%||G|
|Branch Remittance Tax||24%|
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 MYR2.5 million 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 nonresidents 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.
Axcelasia, Taxand Malaysia is a tax advisory firm comprising tax specialists. The firm offers services in compensation tax, energy tax, indirect tax, individual tax, international tax, M&A, real estate, tax dispute resolution, transfer pricing and businesses restructuring.
Beng Hoe Kang is the executive director at Taxand Malaysia. Kang has 40 years of industry experience where he has assisted multinationals with corporate tax planning and advisory work, including implementation of business strategies and corporate restructuring. Other key members of the tax practice include Thang Mee Lee, Leow Mui Lee, chairman Veerinderjeet Singh and managing director Peter Tang.
The tax team at Azman Davidson & Co offers services in personal taxation, corporate taxation, indirect taxation, goods and services tax, stamp duty and taxation litigation matters. Datuk Francis Tan and Dato Davidson are the two main contacts at the firm.
Deloitte is a leading firm in the Malaysian tax market and constitutes one of the largest tax practices operating in the country. The firm has 15 tax partners who are led by Yee Wing Peng.
The firm offers services in international tax, M&A, audits and investigations, research and development, government incentives, business process outsourcing, global employer services, transfer pricing, indirect tax and customs. Clients of Deloitte mainly come from the real estate, oil and gas and financial service industries.
This year, the firm assisted a local company operating a non-profit international school to obtain a customised tax incentive in the form of income tax exemption for five years from the Ministry of Tax Advisory. It also assisted a Malaysian property developer in reaching a settlement with the tax authority in regards to back-duty taxes.
One client stated: "I would recommend them. Deloitte offers both a technical perspective and a commercial perspective. This is essential given the practical challenges that a new tax regime can bring."
Amarjeet Singh is the Malaysia tax leader tax and business tax service leader at EY. The firm comprises professionals with a background in accounting, tax, law and business economics. The tax practice has 22 partners and 546 other fee earners, 300 of which specialise in tax compliance and tax accounting.
The professionals at EY offer services in tax advisory, corporate services, cross border tax advisory, global trade, global compliance and reporting, private client services, tax policy, transactional tax, transfer pricing, VAT, GST and other sale taxes.
Tai Lai Kok oversees the tax practice KPMG. The firm comprises 15 partners and 301 other partners, including Dato Tan Sim Kiat who joined the firm in March 2017.
Soh Lian Seng heads the firm's dispute resolution practice which handles tax audit and investigation activities. The transfer pricing practice is led by Bob Kee and Chang Mei Seen.
The firm offers global mobility services, indirect tax services, corporate tax services, tax risk management and global transfer pricing services. In April 2017, Ong Guan Heng, Ng Sue Lynn and Chang Mei Seen provided tax advisory and structuring assistance to a client in relation to the acquisition of a commercial property by an offshore private equity fund. The team also provided tax due diligence and implementation assistance, including reviewing cash flows, term sheets and transaction documents. In addition, the firm advised a separate client on the new price control and anti-profiteering regulations. This involved reviewing the pricing and costing information from an anti-profiteering perspective and working in collaboration with the Ministry of Domestic Trade Co-operatives and Consumerism to determine the mechanics prescribed under the regulations.
Lee Hishammuddin Allen & Gledhill offers clients a broad range of tax services including tax litigation, tax audits, international tax, withholding tax, stamp duty, excise duty, double taxation agreements, transfer pricing, thin capitalisation, tax advisory and planning. Datuk Naban and S Saravana Kumar are partners at the firm. Naban and Saravana's practice focuses on income tax, goods and services, real property gains tax, petroleum income tax, stamp duty, private clients, customs duty, excise duty and anti-dumping duty.
The professionals at PwC offer services in corporate services, global employee mobility, indirect tax, international tax services, M&A, corporate tax compliance and advisory, goods and services tax, transfer pricing, tax audits and investigations.
The firm advises clients on management of critical tax issues arising from business transactions. The team has strong expertise in several industries including 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.
Jagdev Singh oversees the tax practice. Singh assists multinationals and local companies with tax planning, transfer pricing, tax audits and investigations.
Raja, Darryl & Loh is one of the largest law firms in Malaysia. The firm's tax team provides tax advice and representation to national and international clients in the areas of direct taxes, indirect taxes, real property gains tax, stamp duty and Labuan international businesses, financial centres and other offshore regimes. The firm also advises clients in relation to tax incentives, pre-transaction tax sensitivity analyses and reports, M&A, corporate finance instruments, cross-border tax issues, transfer pricing, investigations, audits and tax litigation.
Clients of the firm come from a wide range of industries, including insurance, shipping, aviation, construction, property development, hospitality, engineering, automotive, healthcare and oil and gas.
Vijey Mohana Krishnan is a partner at Raja, Darryl & Loh. Krishnan's practice focuses on tax planning, dispute resolution, income tax appeals and real property gains tax, among other things.
Shearn Delamore & Co's tax practice is led by Goh Ka Im. The firm comprises four partners and two other professionals, including Boo Sha-Lyn who joined the firm in December 2016.
The firm's tax group is one of oldest and largest practices dedicated to tax law in Malaysia. The team handles a full range of direct and indirect tax advisory, structuring, planning, litigation, audit and investigation matters. This includes alternative dispute resolution with tax authorities, customs duties and other indirect taxes, goods and services tax, international trade and investments, tax planning, foreign direct investments and private equity investments, among other things.
In 2016, the firm advised a leading global provider of business travel management solutions on the implications of withholding tax on certain cross border payments. It also advised an international bank on all aspects of Malaysian tax laws, including the implications of goods and services tax and withholding tax on the provision of international mortgage services.
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.
Wong & Partners is a member firm of Baker McKenzie led by Adeline Wong. The firm has three partners and 16 other professionals including Kelvin Hong, Syn Joe Ong and Joyce Khoo who joined the firm in 2016.
The professionals at the firm offer tax services in international tax planning; Malaysia corporate tax; tax controversies, including audits, raids and litigation; indirect tax; trade and diagnostics; wealth management; supply chain; and transfer pricing. The tax team also participates in regional projects that involve multi-jurisdictional tax planning and restructuring.
This year, Wong & Partners advised a French cosmetics entity in relation to the preparation of an anti-profiteering compliance framework in accordance with the Price Control and Anti Profiteering Act and its subsidiary legislations. It also advised a US-based Fortune 500 company in connection with the post-acquisition integration exercise in Malaysia. This included multiple share transfers and the transfer of assets in relation to the client and its subsidiaries in Malaysia.
Clients of the firm include multinationals from the financial services, software, manufacturing, retail, technology, life sciences, fashion and luxury, fast-moving consumer goods and marine engineering industries.