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(tax imp if there is non-compliance), TAX ADMINISTRATION, ANTI-AVOIDANCE,…
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TAX ADMINISTRATION
power of DG
require full and free access to all lands, buildg, books, docs
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appeal procedure
general requirement
- form Q submitted within 30d after issue of NA
- specific grounds for making an appeal must be stated
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amidst the appeal, payment on NA still has to be pd
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instalmt payment for co, LLP, trust
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new
if 1st bp at least 6 mths, furnish ETP within 3 mths fr commencement date
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application of relief
errors or mistakes
conditions
taxpayer must
- have submitted ITRF
- pay all taxes for relevant YA
- alleges that assessment is excessive by reason of error or mistake
- make written application within 5 yrs after end of the YA in which the assessment is deemed
non-error and mistakes
incorrect return due to:
any exemptn, allowance or dedn granted for that YA after the YA in which the return is furnished
apply in wrting within 5 yrs after end of yr the exemptn, allw or dedn approval is granted
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Form C
- wilful evasion of tax
- deliberately
- omit income
- give false info
- prepare false a/c
on person advising co in completing return that results in lower tax without reasonable care
- fine 2000 - 20,000 or/and 3 yrs prison
on co
- fine 1000 - 20,000 or/and prison <=3 yrs and special penalty of 3 x tax undercharged
incorrect return
- without prosecution
- penalty = 100% of tax undercharged
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payment of tax
when assessment is raised, settle tax within 30d after date of NA
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underestimation of ETP
if tax liab > tax estimate or revised est by more than 30%, 10% penalty on amt in excess of the 30% bufffer
amended return
- only made once for each YA
- iro errors which result in addtl tax due to:
- non-declaration of taxable Y
- over-claim dedn
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director's liab
who hold <= 20% of ord sh cap, are jointly and severally liable to pay any tax or debt liable by co
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tax audit
to ascertain that right amt of Y should be declared and right amt of tax should be calc are in accordance with tax laws and reg
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ANTI-AVOIDANCE
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S140A
where DG believe that value of all -fin assistance granted by a person
- to an asso person who is R
- is excessive in relation to fixed cap of such person,
any int, fin charge or loss suffered shall, to the extent to which it related to the amt excessive, be DISALLOWED as dedn
above transactions or fin assistance shall be btw
- persons one of whom has control over the other
- indiv who are relatives
- persons both of whom are controlled by other person
when a person enters into transaction
- with asso person
- for acqn or supply of property/services
then the person shall apply arm's length price
DG believe price charged is less or greater than price which mightve been expected to fetch if partied are independent person dealing at arm's length,
he may substitute the arm's length price for the transaction
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S44(5)
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co which is in operation even with subst change in shholding, may c/f loss + CA
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S140
DG can only invoke if transactions not being carried out at arm's length ( :red_cross: btw independent partied dealing at arm's length)
- btw person on of whom has control over the other
- btw indiv who are relatives
- btw persons who both under control of other person
DG may disregard or vary transactions and re-compute tax liab of tax payer if:
- DG has reason to believe that any transaction produces effect of
- Hinder operation of the Act
- Alter incidence of tax
- Relieving from tax liab
- Evade tax
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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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S107A
- payer made contract payment to NR
- iro contract project carried out in Msia
- WT is imposed on service portion of contract
service portion = gross contract fee - cost of P&M, lab,mat
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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
S109F
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- payer pays s4(f) Y ( :red_cross:s4(a) Y)
- payment is revenue and NOT capital in nature
- NOT s4(a) Y
- miscellaneous income (occasional, outside ordinary course of trade)
- for an isolated transaction
- there is absence of repetition
S109A
- income of NR public entertainer (other than co) consisting of remuneration or other Y iro services rendered in Msia
- WT 15% (final tax)
- payer deduct WT upfront
- pay only net amt to NR
- remit amt of WT to DGIR within 1 month after paying NR
TRANSFER PRICING
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Pricing arrangement for transfer of goods, services and intangibles btw asso persons
asso person:
- one has control over the other
- both are controlled by some other person
- indiv who are relatives
control means:
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S140A(5)
- person of whom owns shares of other person or 3rd person who owns sh of both person, where shholding is >=20%
and
- one party depends on proprietary rights of other person
- one party has biz actvt with other person and not carried out at arm's length basis
- one party able to appoint >= 1 directors in other co
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EARNINGS STRIPPING RULES
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interest dedn on loans btw related co within same gp be limited to ratio of btw 20% of co's earnings
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De Minimis Threshold
int restriction NOT applicable if total amt of any int exp for all fin assistance from all biz source <= 500k in bp for a YA
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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dormant co = no signif acc transaction for one fin year bfr occurrence of subst change
no recording entry other than min stat exp
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- A = adj Y from biz source bfr any restriction on ded of interest is made under S140C
- B = any double ded exp
- C = int exp in relation to gross Y for fin assistance from biz source