1.1) Review Of Income Tax Treatment On Allowances, Benefits In Kind And Perquisites.

Proposal (i) – Effective from YA 2008 to YA 2010.
Proposal (ii - xi) – Effective from YA 2008.

	Allowances, Benefits In Kind And Perquisites (Within Approved Limit)	Reimbursement	Salary Increment
Employer – Tax Deductibility
Administrative Works	Low	High	Low
Increase Staffs' Taxable Income

Petrol card or petrol allowance or travel allowance between the home and work place up to RM2,400 a year;
Petrol card or petrol allowance or travel allowance and toll card for official duties up to RM6,000 a year;
Allowance or fees for parking;
Meal allowance;
Allowance or subsidies for childcare of up to RM2,400 a year;
Telephone and mobile phone, telephone bills, pager, personal data assistant (PDA) and internet subscription;
Employers’ own goods provided free of charge or at discounted value where the value of the discount does not exceed RM1,000 a year;
Employers’ own services provided free or at a discount provided such benefits are not transferable;
Subsidies on interest on loans totaling up to RM300,000 for housing, passenger motor vehicles and education. The exemption be given to existing and new loans;
Medical benefits exempted from tax be extended to include expenses on maternity and traditional medicines such as ayurvedic and acupuncture; and
Existing perquisites be extended to awards related to innovation, productivity and efficiency such as the Six Sigma Award and the exemption be increased from RM1,000 to RM2,000 a year.

Note:
“Approved allowances, benefits in kind and perquisites to Staffs” – Tax Exempted.
(These exemptions are not extended to directors of controlled companies, sole proprietors and partnerships)

1.2) Review Of Road Tax On Private Vehicles Owned By Individuals And Companies.

Effective from 1 September 2008.

Road tax imposed on private saloon and non-saloon diesel vehicles owned by individuals and companies be reduced to be equated with that of petrol vehicles. The current road tax treatment on green diesel vehicles which is 50% lower than diesel vehicles in the whole of Malaysia be withdrawn.

1.3) Tax Incentives To Enhance Training In Selected Fields

Double deduction – for expenses incurred by employers in training their employees in the following fields:

1.4) Tax Incentive To Enhance The Use Of ICT

Effective from YA 2009 to YA 2013.

Accelerated Capital Allowance (ACA) – 1 Year on ICT equipment.

Note:

Hire Purchase – to the capital portion of installment payment.
Claw back (Reverse Tax Benefit) if disposed off within 2 years.
Not applicable if Company granted incentive under Promotion of Investment Act (PIA) / Reinvestment Allowance (RA).

1.5) Implementation Of Advance Pricing Arrangement (APA)

Effective from 1 January 2009

The company be allowed to apply for APA to the Director General of Inland Revenue Board to determine in advance an agreed transfer price over a fixed period of time.

The parties involved in APA consist of:

Unilateral APA – Tax authority and a resident company in respect of transactions with its related companies abroad;
Bilateral APA – Tax authority and a resident company in respect of transactions with its related companies abroad with the Tax Authority of the foreign nation; or
Multilateral APA – Tax authority and a resident company in respect of transactions with more than one of its related companies and with more than one Tax Authorities of foreign nations.

1.6) Tax Incentives For Small And Medium Enterprises (SMEs)

Plant and machinery – Accelerated Capital Allowance (ACA) – 1 year
(Effective YA 2009 to YA 2010)
Small value assets (RM1,000) – No limit on claim for special allowance (within 1 Year)
(Effective from YA 2009)

SME refer to a company resident in Malaysia with paid up capital of ordinary shares ≤ RM2.5 million at the beginning of the basis period of a year of assessment (YA) and does not control / being controlled (> 50%) directly / indirectly by a company with paid up capital of ordinary shares > RM2.5 million.

Note:

Hire Purchase – to the capital portion of installment payment.
Claw back (Reverse Tax Benefit) if disposed off within 2 years.
Not applicable if Company granted incentive under Promotion of Investment Act (PIA) / Reinvestment Allowance (RA).

1.7) Extend Tax Incentive To Enhance Security Control

Effective YA 2009 to YA 2012

1.8) Widening The Scope Of Appeal To Special Commissioners Of Income Tax

Effective from 1 January 2009

Tax payer can file an appeal to Special Commissioners of Income Tax (SCIT) by using the Notification of Non-Chargeability instead of the notice of assessment. This will enable a taxpayer with no tax liability to file an appeal.

The appeal is to be filed through the Director General of Inland Revenue (DGIR) using Form Q.

1.9) Tax Treatment On Costs Of Dismantling And Removing Assets As Well As Restoring The Site

Effective from YA 2009

Balancing allowance to be given on the cost of dismantling and removing plant and machinery as well as restoring the site where the asset was located subject to the following conditions:

i. It is an obligation under any written law or agreement; and
ii. Such plant and machinery is not allowed to be used by that person in another business or used in the business of another person.

These costs (after reducing by amount when sold as scrap) will be added to Residual Value of the assets.

1.10) The Application Of Arm’s Length Principle On Business Transactions Carried Out Between Related Companies

Effective from 1 January 2009

Director General of The Inland Revenue Board will be empowered to make adjustments on transactions of goods, services or financial assistance carried out between related companies based on the arm’s length principle