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KOLEJ POLY-TECH MARA

PTX2023 Business Taxation
Chapter 4

Company Taxation

Adjusted income
Gross income
Less : Deductible/Allowable expenditure
Adjusted Income

RM

XX
(XX)
XX

Deductible/Allowable expenditure
General expenditure Section 33
Subject to this Act, the adjusted income from a source for the basis period for a year of assessment shall be
an amount ascertained by deducting from the gross income from that source for that period all outgoings
and expenses wholly and exclusively incurred during that period in the production of gross income from that
source.
Business deductions Section 34
Specifically legislated to allow certain specific expenses revenue deductions notwithstanding such expenses
do not satisfy under Sec 33 wholly and exclusively test. These expenses are encouraged by the Government
as they can achieve some national objectives or bring social benefits to the public.
(i)

Sec 34 (2)

Specific provision for bad debts on trade debtors arising from sales

(ii) Sec 34 (4)

19% of the employees remuneration

(iii) Sec 34 (6)(e)

Provision of equipment and renovation expense to disabled person, necessary to

assist in the performance of employees duties

(iv) Sec 34 (6)(f)

Translation or publication in Bahasa Melayu approved by Dewan Bahasa dan Pustaka

(v) Sec 34 (6)(g)

Provision of library facilities to public library, contribution to public libraries of

schools and higher educational institutions of up to RM100,000

(vi) Sec 34 (6)(h)

Provision of services, public amenities and contribution to the charity, community

project pertaining to education, health, housing, conservation or preservation of
environment, enhancement of income of the poor, infrastructure, ICT

(vii) Sec 34 (6)(ha)

Infrastructure expenses for public use in relation to business

(viii) Sec 34 (6)(i)

Provision and maintenance of child care centre for the benefit of employees

(ix) Sec 34 (6)(j)

Establishing and managing musical or cultural group approved by Minister (including

equipment, instruments and related expenses)

(x) Sec 34 (6)(k)

Sponsoring any local arts, cultural or heritage activity approved by Ministry of

Culture, Arts and Heritage max RM500,000
Sponsoring any foreign arts, cultural or heritage activity approved by Ministry of
Culture, Arts and Heritage restricted to RM200,000

(xi) Sec 34 (6)(l)

Provision of scholarship to students

- To staff or director's child - considered as staff amenities
- To outsider, allowable if monthly income parents or guardian, do not exceed RM5,000

(xii) Sec 34 (6)(n)

(xiii) Sec 34 (6)(o)

Practical training in Malaysia to resident non-employees

Participating in ISO activities approved by Department of Standards Malaysia

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Other deductible/allowable expenses
(i)

Audit and accounting fees

(ii) Expenses incurred on computers or broadband subscription fees, from YA2008 to YA2010
(iii) Recruitment cost incurred before the commencement of operations of a company including
participation at job fairs, payment to employment agencies and head hunters
(iv) Legal expenses incurred in the course of collecting trade debts from customers

Double expenditure
Refers to the revenue expenses incurred that us given twice the amount of deduction in arriving at the
adjusted income of a business. This is a tax incentive provided by the government to provide tax relief to
business persons and to encourage the use of promoted activities such as :
(i)

Expenses for promotional of export [section 41(3), PIA 1986]

Publicity and advertisement in any media outside Malaysia
Provision of samples without charge to prospective customers outsider Malaysia, including the
cost of delivery of the samples
Carrying out export market research or the obtaining of export marketing information
Expenses for giving technical information to person outside Malaysia after purchase
Participate in exhibition for international trade fair held outside Malaysia, approved by the
Minister
Expenses for services rendered for public relations work connected with export
Cost of maintaining sales offices overseas for the promotion of exports from Malaysia

(ii) Revenue expenses for approved training [PU (A) 61/92]

Allowances payable to trainers/instructors are subject to a max of RM400 per day including
allowance for food, lodging and internal transport expenses
Allowances payable to trainees are subject to a max of RM100 per day for training conducted
locally and RM200 per day for training conducted overseas including allowance for food, lodging
and internal transport expenses. Remuneration (salaries, allowances etc) payable to the trainees
as employees should be excluded
Course fees
Economy rates of traveling
Consultation cost to conduct training
(iii) Research expenditure [section 34, ITA 1965]
Any research expenditure including contributions in cash to approved research companies/institutions
approved by Minister
(iv) Remuneration of handicapped employees [PU (A) 73/82]
Remuneration paid to an employees who is physically and mentally disabled and is not able to perform
the work of a normal person
(v) Insurance premium paid for the import of cargos [PU (A) 72/82]
Insured with an insurance company incorporated in Malaysia
(vi) Insurance premium paid for the export of cargos [PU (A) 79/95]
Insured with an insurance company incorporated in Malaysia
(vii) Approved international trade fair [PU (A) 361/91]
Expenses incurred for participation in an approved international trade fair held in Malaysia for the
promotion of exports, approved by MITI (Min of International Trade and Industry)

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(viii) Interest payable on loans to small scale business [PU (A) 90/82]
Employer is required to produce certificate of approval
(ix) Advertising on Malaysian brand name goods [PU (A) 62/2002]
Advertisements on the internet where the host website is located in Malaysia
Advertisements in magazines and newspapers - printed in Malaysia
Advertisements on local licensed televisions stations
(x) Freight charges incurred for the export of rattan and wood based product [PU (A) 422/91]
The person claiming the deduction must be engaged in the manufacture of rattan and wood based
product
(xi) Ship freight charges for shipping goods from Sabah and Sarawak to Peninsular Malaysia
[PU (A) 50/2000]
Provided it was incurred by manufacturer and used ports in Peninsular Malaysia.
(xii) Registration of patents, trademarks and product licensing in overseas [PU (A) 14/2007]
(xiii) Quality standard and Halal certification [section 34(6)(ma), ITA 1965]
Effect from YA 2005, including obtaining certification for recognized quality system and standards, Halal
certification issued by a certification body as determined by the Minister

NON deductible or NON allowable expenditures Section 39

(i)

Companys general meeting expenses printing of notice of general meeting, minutes, postage for
sending out notice of general meeting, report and cost of nasi beriani etc. (did not form part of the
profit earning expenditure

(ii) Compensation to competitor to restrict competition (restrictive covenant)

(iii) Payment of fines or penalty or any payment relating to violation of laws
(iv) Failure to pay withholding tax to tax authorities within one month of the payment to non-resident the
gross payment would be NON DEDUCTIBLE expenditure
(v) Lease rental based on group of RM50,000 or RM 100,000
(vi) Depreciation
(vii) Provision for gratuity/provision for retirement benefits
(viii) Provision for warranty cost, provision for stock obsolesces
(ix) Stamp duty and any cost related to increase the share capital
(x) Preliminary expenses written off
(xi) Donation and business zakat
(xii) Loss on disposal of assets/investment

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Miscellaneous expenditure
Deductible/
Allowable
Normal repair

Non deductible/
Non allowable
Initial repair

Part of an entire

An entire
assets

Audit and accounting fees

Tax, secretarial and

consultation, designing fees

Losses due to theft or

embezzlement

By employees

By employer/ director of a
company

Provision of bad debts

Specific

General

For employees
Relates wholly to sales

For client (50% NOT

allowable)

Repairs
Replacement

Professional fees

Entertainment expenses

For client (50% allowable)

Employer/employees
If facilitate a YEARLY event within
Malaysia
(including family members)

Employer/employees
(local or outside
Malaysia)

Patent/trademark

Annual payment

Registration/ entrance fees

Foreign exchange

Related to the
goods or raw materials

Not related to the

goods or raw materials

Leave passage

FORMAT OF TAX COMPUTATION FOR A COMPANY WILL BE :

Section 4(a) Business Income
Aggregate statutory income from Business Income (BUSS 1 + BUSS 2)
Less :
Unabsorbed business loss

Section 4(c)
Interest income
Less :
Deductible/Allowable expenses

XX
(X)

Dividend income

Section 4(d)
Rental income
Less :
Deductible/Allowable expenses

RM
(X)
XX

XX
XX

XX
(X)

XX
Note 1

Note 2

XX

Aggregate income (sec 4a + 4c + 4d)

Less :
Current year business loss
Approved donation

XX
(X)
(X)

Total income/Chargeable income

XXX

Income tax payable (at 25% from Chargeable Income)

XX

Note 3
Note 4

Note 5

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Note 1
BUSINESS 1
Adjusted income
(+) Balancing charge
(-) Capital allowance :
Unabsorbed capital allowance b/f
Current capital allowance
Balancing allowance
Statutory income

XX
XX
XX
X
X
X

BUSINESS 2
Adjusted income
(+) Balancing charge
(-) Capital allowance :
Unabsorbed capital allowance b/f
Current capital allowance
Balancing allowance
Statutory income

(XX)
XX

XX
XX
XX
X
X
X

Aggregate statutory income from Business Income (BUSS 1 + BUSS 2)

Less :
Unabsorbed business loss

Combine
BUSS 1 + BUSS 2

(XX)
XX
XX
(X)
XX

Note 2
w.e.f 1.1.2008, Malaysia began to operate on single tier dividend system. The income tax paid by the resident company
is a final tax and will not be imputed to shareholders. Any dividend paid out from profit after tax will be treated as tax
exempt dividend to shareholders.

Note 3
Only business sources can have adjusted loss in the basis year. It would be available to set off against other non
business income (section 4c and sec 4d) as well as business income in the same basis year against the Aggregate
Income.
If the adjusted loss cannot be fully utilized in the current basis year, the balance is carried forward to be available to set
off ONLY against business sources at the Aggregate Statutory Income from business in future years.

Note 4
(i) Approved donations - section 44(6)
The gift of money made to the Gov, State Gov or local authority or an approved institution
- cash donation to approved institution limited to 10% of the Aggregate Income for that year
- no limit on cash donation to the Gov, State Gov or local authority
(ii) Gift of artifact, manuscript or painting - section 44(6A)
Generally, the donation has to be in cash and not in kind. HOWEVER, w.e.f YA 1997, any gift of artifact, manuscript
or painting to the Gov or State Gov would be given a deduction.
(iii) Donation to approved libraries - section 44(8)
An amount not exceeding RM20,000 (cash donation) made by the co for the provision of library facilities which are
accessible to the public and to school and higher education.

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Note 4 (continue)
(iv) Donation of painting to National or State Art Gallery - section 44(11)
A deduction equal to the value of painting for the donation of painting to the National Art Gallery or any State Art
Gallery.
(v) Zakat perniagaan - section 44(11A) w.e.f YA 2005
Zakat perniagaan paid to Pusat Zakat of the various states in Malaysia does not exceed 2.5% of Aggregate Income
of the company.
(vi) Approved sport activity or project of national interest - section 44(11B), 44(11C)
Cash contribution or in kind to :
(a)
any sport activity approved by the Minister
(b)
any sport body approved by the Commissioner of Sports appointed under the Sports Development Act
1997
(c)
project of national interest approved by the Minister
w.e.f YA 2009 the amount shall not exceed 10% of the Aggregate Income of the company

Note 5
Income tax payable :
With effect from YA 2009, a resident company which has a paid up capital in respect of Ordinary Shares of
RM2.5million and below at the beginning of a YA shall be assessed at :
Chargeable income
RM500,000 and below
Excess RM500,000

Rate
20%
25%

A resident company which has a paid up capital in respect of Ordinary Shares of MORE THAN RM2.5million at the
beginning of a YA shall be assessed at :
Chargeable income
Chargeable income

Rate
25%