The Finance Bill 2021 contains a wide range of tax-related measures. These measures were also announced in the budget. Released on 9 November 2021, the finance bill 2021 also incorporates some other tax provisions.
Following are the tax measures proposed in this bill for taxation of businesses:
- The tax exemption regarding foreign-source income has been revoked.
- The time for the use and carrying forward of special reinvestment allowances has also been extended for another two years. Previously, this period was 15 years.
- The unabsorbed business losses can be carried forward to 10 years. Previously, this time period was 7 years.
- One-time “Prosperity Tax” known as “Cukai Makmur” is also imposed. The rate of this tax is 33% on those companies having a chargeable income that exceeds RM100 Million.
- Extension of the tax rebate offered to limited liability partnerships (LLPs) and small and medium-sized enterprises (SMEs) up to 31 December 2022.
- Imposition of withholding tax (at a rate of 2%) on the payments made to dealers, agents, or distributors.
- Tax exemption on interest that involves asset-backed securities
- The Finance Bill 2021 also incorporates certain requirements that R&D (research and development) companies must meet while obtaining a particular administrative approval.
- The interest income obtained through a unit trust is exempted from tax if it is distributed to specific unit holders. This trust must be an RMMF (republic money market fund).
Besides, certain administrative and “Labuan tax” measures are also included in the Finance Bill 2022. Taking about the indirect taxes, some additional proposals are also incorporated in this bill. There are proposals to revise the stamp tax (duty) and real property gains tax imposed on different instruments or documents.
Last but not the least, the Finance Bill 2022 is meant to expand specific tax relief for almost every individual taxpayer.