P.U. (A) Remarks
(Please access the Orders for the full details)

251/2023

Income Tax (Exemption) (No. 2) Order 2023

(Gazetted on 23 Aug 2023)

1.The Order is deemed to have effect from the year of assessment (YA) 2019. According to the Order, the Minister exempts a principal hub (PH) from income tax in respect of statutory income derived from core income generating activities (excluding intellectual property income*) for 5 consecutive YAs. The commencement of the exemption period shall be determined by the Minister.

*Details can be found in Para 5 of the Order.

2. An application for the exemption shall be made in writing by the PH and received by the Minister through MIDA on or after 1 Jan 2019 but not later than 31 Dec 2020. The exemption shall be subject to the PH complying with the conditions in Sch 2 and Sch 3 of the Order and the approval letter.

3. The statutory income from core income generating activities shall be determined in accordance with the formula in Para 4(5)(a) of the Order in relation to the PH's qualifying services or Para 4(5)(b) of the Order in relation to the PH's qualifying trading activities.

4. A PH is a company:

  1. Incorporated under the Companies Act 2016 and resident in Malaysia;

  2. Already operating in Malaysia which:
    i. Doesn't have an operational headquarters (OHQ), international procurement centre (IPC) or regional distributioncentre (RDC) status; or

    ii. Has been approved by the Minister as having an OHQ, IPC or RDC status; and 
    · Has been approved incentive for OHQ, IPC or RDC; or
    · Hasn't been approved incentive for OHQ, IPC or RDC; and
  3. Has a paid-up capital of more than RM2.5 million

5. The terms “core income generating activities”, “qualifying trading activities”, “qualifying services”, “related company” and“network company” are defined in Para 2 of the Order.

6. The Order also covers “Tax treatment for PH that suffered losses” - Para 6, “Withdrawal of exemption" - Para 7, “Surrender of exemption" -Para 8. “Separate source and separate account” - Para 9 and “Non-application” - Para 10.

252/2023

Income Tax (Exemption) (No. 3) Order 2023

(Gazetted on 23 Aug 2023)

 1. The Order is deemed to have effect from YA 2019. According to the Order, the Minister exempts a PH from income tax in respect of statutory income derived from core income generating activities (excluding intellectual property income*) for 5 consecutive YAs. The commencement of the exemption period shall be determined by the Minister.

*Details can be found in Para 5 of the Order.

2. The Order is similar to the P.U.(A) 251/2023. Notable exceptions are:

  1.  A PH refers to a new company that prior to the application to MIDA for the exemption:
    i. Doesn't have an existing entity or related entity in Malaysia which carries on any qualifying services in Malaysia; or
    ii. has an existing entity or related entity in Malaysia which has not carried on qualifying services in Malaysia.

  2. Formulas in Para4(5) of the Order to determine the statutory income from core income generating activities.
  3. Conditions in Sch 2 of the Order.
  4. "Externsion of exempt years of assessment" in Para 7 of the Order.

References:

1.  P.U. (A) 251/2023 – Income Tax (Exemption) (No. 2) Order 2023

2.  P.U. (A) 252/2023 – Income Tax (Exemption) (No. 3) Order 2023

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