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REAL PROPERTY COMPANIES, SERVICE TAX, SALES TAX, DIGITAL SERVICE, DOUBLE…
REAL PROPERTY COMPANIES
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RPC
- Controlled co:
- NOT more than 50 shareholders
- controlled by not more than 5 members
- DV of acquired RP and RPC sh is at least 75% of TTA
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Para 3(b) shares vs RPC sh,
Para 3(b) prevails
SERVICE TAX
taxable services
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Group H
credit card provider, NO threshold
Group B
operators of restaurants or bars giving f&b, >1.5m
Group I
forwarding agent to clear goods from custom, NO threshold
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Group A
provider of accommodation, >500k
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timing of service
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imported taxable service
earlier of:
- payment is made
- invoice is recd
group relief
NO service tax on intra-group services (taxable services under group G) by a co to another co within the same group
same group - if one co controls other co, co controls another co if the firstmentioned co holds:-
- directly
- indirectly
- together directly or indirectly from subsi,
- more than 50% of sh cap of the 2nd mentioned co or
- from 20%-50% of sh cap of 2nd mentioned co and the 1st mentioned co has exercisable power to appoint or remove all or majority of bod in the 2nd mentioned co
NO EXEMPTION if value of same services to outside group is >5% of the total services provided by co within 12 mths ( service to co within same gp + 3rd party co all treated as taxable service)
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disbursement
:check: service tax
criteria:
- incur expenses as principal
- principal is responsible to pay for the service
- payment not authorised by client
- client has no knowledge that service is made by 3rd party
- principal has right to alter value of services
- payment is for the service made to client
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SALES TAX
Tax admin
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submission of return
submit SST return and pay ST not later than last day of month following the end of each taxable period
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registration
voluntary
- manufr who sold taxable goods but below threshold
- class of person who is exempted from reg
- NOT available to manufr of non-taxable goods
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Bad debt
refund
conditions
- ST been paid
- unpaid ST has been written off as bad debts due to indiv debtor bankrupt or co debtor under receivership/wound up
- no payment recd for 6 mths from date the goods is sold
- reasonable efforts made to recover debt
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repayment of sales tax
if DG has made refund + tax payable is subsq recd, the person shall repay to DG the tax claimed
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debit note
- issued when amt previously invoiced is increased due to addition of ST for any price adjmt
credit note
- ST dedn given if regd manufr issues a credit note
- if dedn for any taxable period > amt of ST payable, excess c/f to next taxable period until fully ded
DIGITAL SERVICE
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digital service
- service delivered or subscribed over internet or other network which cant be obtained without use of IT
- where delivery of service is essentially automated ( :red_cross:email :red_cross:CD)
FRDS
- person who is outside Msia providing digital service
- includes person who is outside Msia operating online platform for buy & sell goods/ provide service (whether digital service or not)
- make transactions for provision of digital service on behalf of any person
- achieve turnover of 500k
consumer
a person who:
- makes payment for digital services using credit or debit facility provided by fin inst or co in Msia or
- acq digital services using internet protocol address in regd in Msia or int mobile phone country code assigned to Msia or
- resides in Msia (billing address, home address, country selection)
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DOUBLE TAX AGREEMENT
advantages of DTA
tax residence
- situations can arise in which an individual or enterprise can be R in 2 countries at same time
- DTA contains rules to determine single residence status
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biz Y derived from Msia
S12(1)(a)
where gross Y from biz is not attb to the biz op carried out outside Msia, it is deemed to be derived fr Msia
S12(3)
deemed to have place of biz if:
- do biz thru:
- branch
- office
- workshop
- warehouse (DTA exclude warehouse)
- carries on supervisory activity in connection with CIA (DTA includes 6 months)
- has agent who
- habitually concludes contract
- habitually maintains stock of goods
- regularly fills orders on his behalf
bilateral credit (DTR)
lower of:
- foreign tax suffered on foreign income
- msian tax payable x stat foreign Y/ total Y
- must not exceed msian tax payable on foreign income
- total bilateral credit for a YA must not exceed total msian tax payable on CI
- only given ONCE
- can be claimed by R person in the country of residence
- excess DTR :red_cross:c/f :red_cross:refunded, permanent loss
- has to be claimed within 2yrs after end of that YA
PE
- biz profit of enterprise is only taxable in foreign country if enterprise carry on biz in foreign country thru PE situated there
- only taxable on the biz profit attb to that PE
activity test
existence of services
- supervisory activities in other territory related to CIA F=for >6 mths
- substantial equipmt is used in that other territory, by, for or under contract with enterprise
agency test
existence of dependent agent
- has authority to habitually conclude contracts
- habitually maintains stock of goods
- regularly fills orders on behalf of enterprise in that territory
independent agent :red_cross:PE
but if transactions were not made under arm's length conditions, NOT independent agent
premise test
existence of premise
- branch
- office
- workshop
- plantation
excludes
- keep facilities used solely for storage, display or delivery of goods belonging to enterprise
- maintenance of stock of enterprise solely for storage, display or delivery
- maintanence of stock for processing by another enterprise
- maintenance of fixed place of biz for purchasing or collect info
- maintenance of fixed place of biz for activity of preparatory or auxiliary character
- to relieve double tax burden
- does not itself impose liab to tax (only domestic law ie ITA impose tax)
- does not form part of the domestic law
- if there is conflict btw DTA & domestic law, DTA will apply
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WITHHOLDING TAX
S109B
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- payer pays special classes of income
S4A(ii)
- advice, assistance or service in Msia
HO day to day admin exp - WT :check:
ie share of o/h exp incurred by NR HO to msian branch or
by NR parent co to Msian subsi
common exp attracting WT
- mgt or marketing service
- consultancy service
- specially-tailored training course
out pocket exp
reimbursement
incurred by payee (NR)
- in course of rendering service to payer or
- iro use of any moveable property
and subsq reimburse by payer
- treated as part of contract value
- it is income of payee under S4A and subject to WT 10%
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disbursement
incurred by payer and paid to 3rd party on behalf of payee
- in connection with service rendered by payee or
- iro use of moveable property
payer has to bear this exp, CANNOT claim back fr payee
- treated as part of contract value - it is income of payee under S4A and subject to WT 10%
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S4A(iii)
- rent of any moveable property
S4A(i)
- use of property or rights belonging to NR
- installation or operation of P+M purch from NR
- in Msia
- special classes of Y must be derived from Msia
(i) if responsibility of payment lies with govt, st govt, local authority or
(ii)
- if a R is responsible for paying and
- if special classes of Y is charges as an exp against any income derived from Msia
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S109
- to any other person who known to him as NR
- royalty/interest must be derived from Msia
royalty derived from Msia if:
- responsibility of payment lies with govt, st govt, local authority or
- if a R is responsible for paying or
- if royalty is charged as an exp against any income derived from Msia
interest derived from Msia if:
(i) responsibility of payment lies with govt, st govt, local authority or
(ii)
- if a R is responsible for payment and
- in the case of int payable on borrowing, R has to
- employ borrowing for prodn of gross Y derived from Msia
- borrowing is laid out on assets used in prodn of gross Y derived from Msia
- borrowing is secured by any property situated in Msia
- payer must pay royalty or interest
- payer deduct WT upfront
- pay only net amt to NR
- remit amt of WT to DGIR within 1 month after paying NR
STAMP DUTY
charged on instrument (written doc), NOT on indiv/co
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Relief from stamp duty
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co
S15A full exemption
- trsfr of property btw asso co
- one co holds at least 90% of issued sh cap or
- 3rd co holds at least 90% of both disp & acqr co
- to achieve geo
- transferee incorp in Msia
withdrawal:
- considn is wholly/partly provided or recd by non-asso co
- property previously transferred by non-asso co
- transferor/transferee cease to be asso bcs of change in % of issued sh cap within 3 yrs from date of trsfr
- transferee dispose within 3yrs from date of transfer
S15 full exemption
- new co (transferee co) must be registered within 6 months bfr issued sh cap increased
- existing co trfr either - 90% of its sh cap or - its biz taking
- transferee co pay >=90% of considn in form of transferee's shares
withdrawal:
- any declaration made in application is untrue
- if existing co sells of shares in transferee co within 3 yrs
A= no of shares acqd
B= total no of sh in relevant co at date of acq
C= DV of RP and sh in another RPC at date of acq
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if custom valuation amt not given, use:
C- purch cost I- insurance F- freight
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Related co - :red_cross:PE
Sales assistance center - No sales concluded so :red_cross:PE
Scientific research centre - if only research centre (auxiliary nature) :red_cross:PE, but if sell results of research :check:PE
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WT not applicable if int/royalty is attb to biz carried on by NR in Msia via office, branch etc (PE of NR in Msia)
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WT not applicable S4A Y is attb to biz carried on by NR in Msia via office, branch etc (PE of NR in Msia)
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