The Inland Revenue Board of Malaysia (HASiL) has issued its Practice Note No. 1/2023 dated 15 June 2023 to explain the tax treatment on foreign exchange (forex) gains and losses, under the principles set-out in the Public Ruling No. 12/2019 and MFRS 121 Guidelines, for a chargeable person under the Petroleum (Income Tax) Act 1967 (PITA) as follows:
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Forex gains/losses arising from: |
Tax treatment |
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1. Forex transaction in petroleum operations that are revenue in nature and are realised |
Such gains or loses shall be subject to tax or allowed as a deduction under S.15(1) of the PITA. |
| 2. Forex transactions in petroleum operations that are revenue in nature and are unrealised |
Such gains or losses shall neither be subject to tax nor allowed as deduction under S.15(1) of the PITA imntil they are realised. |
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3. Forex transactions in petroleum operations that are capital in nature whether realised or unrealised |
Such gains or losses shall neither be subject to tax nor allowed as deduction under S.15(1) of the PITA. |
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4. Translation of the functional currency to the presentation currency in the financial statements for accounting purposes |
Such gains or losses shall neither be subject to tax nor allowed as deduction under S.15(1) of the PITA. |
