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In order to be eligible for RA, a company is required to show that its PER has increased
after the investment was made. A grace period of 2 years will be given to show the
increase in PER.
As regards agricultural projects, where a company resident in Malaysia which has
been in operation for not less than 12 months has incurred in the basis year for
a year of assessment capital expenditure in relation to an agricultural project in
Malaysia for the purposes of any qualifying project, there shall be given to the
company for that year of assessment a RA of 60% of that expenditure. Productivity
increase is not a requirement for agricultural projects.
RA is to be given in respect of capital expenditure incurred in the basis periods
for 5 consecutive years of assessment beginning from the year of assessment for the
basis period in which the capital expenditure was first incurred.
Where an asset is disposed of at any time within two years from the date of acquisition
of that asset, RA given in respect of that asset shall be deemed to have not been
given to the company which would otherwise have been entitled thereto. It should
be noted that this specific provision is to take effect from year of assessment 1999.
In this connection 'disposed of' means sold, conveyed, transferred, assigned, or
alienated with or without consideration.
The 70% of statutory income ceiling of RA deduction therefrom continues to apply.
However, where the qualifying project is located within the States of Sabah, Sarawak,
the Eastern Corridor of Peninsular Malaysia and such other areas which the Minister
may from time to time determine or where the qualifying project has achieved the
level of productivity as prescribed by the Minister, the amount to be exempted shall
be equal to the allowance (or to the aggregate amount of any such allowances as the
case may be) but not exceeding the statutory income for that year of assessment.
According to the relevant appendix to the 1998 Budget Speech, PER will be used to
measure productivity for 100% of statutory income deduction purposes. In this connection,
a company is required to show that its PER has increased by at least the same rate
as the GDP growth rate for that industry. The company will be given 2 years to show
the increase in PER. The desired rate of increase in PER may be changed from time
to time but adequate notice will be given.
Where, by reason of the restriction of the allowance to 70% of the statutory income
or of an insufficiency or absence of statutory income from a business of the company
for the basis period for a year of assessment, effect cannot be given or cannot be
given in full to any RA to which the company is entitled for that year of assessment
in relation to the source consisting of that business, so much of the RA as cannot
be given for that year shall be given to the company for the first subsequent year
of assessment for the basis period for which there is statutory income from that
business, and for
subsequent years of assessment until the company has received the whole of the RA
to which it is entitled. |
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This report is reproduced with permission from Kassim
Chan Tax Services Sdn Bhd (36421-T) and Deloitte Touche Tohmatsu Tax Services
Sdn Bhd (151497-P). 7th Floor, 3 Cangkat Raja Chulan 50200 Kuala Lumpur, Malaysia
or P.O.Box 11151, 50736 Kuala Lumpur, Malaysia.
Telephone: (603) 232 0711, Facsimile: (603) 2304746, (603) 230 0585
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No part of this report may be reproduced in any
form without the prior consent of Kassim Chan Tax Services Sdn Bhd and Deloitte
Touche Tohmatsu Tax Services Sdn Bhd.
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