Crowe Chat Vol.1/2025

Tax Edition

Welcome to our Crowe Chat Vol.1/2025. In this issue, we will cover the following topics:

Filing Programme for Documents Specified Under Section 82B of the Income Tax Act 1967 (ITA) through Malaysian Income Tax Reporting System (MITRS)
Public Ruling (PR) 5/2024 – Tax Incentive for Investment in BioNexus Status Company
PR6/2024 – Tax Incentive for Organizing Arts, Cultural, Sports and Recreational Activities
PR7/2024 – Co-Operative Society
Gazetting of the Finance and Tax Acts 2024

Filing Programme for Documents Specified Under Section 82B of the ITA through MITRS

Introduction

Effective from the year of assessment (YA) 2025, Section 82B of ITA requires taxpayers who operate as companies and limited liability partnerships (LLP) to submit tax worksheets and financial information specified by the IRBM. The last day of submission is 30 days from the due date for filing of annual income tax returns.

MITRS is a digital platform built by the IRBM to digitise the submission of tax-related documents and is accessible by taxpayers beginning 1 April 2025.

Filing Programme

In conjunction with the launching of MITRS, the IRBM has issued the Filing Programme for Documents Specified Under Section 82B Through MITRS in providing more details of the various tax requirements in using MITRS for submission of taxpayers’ documents.

Details of the MITRS Filing Programme

The highlights of the new tax requirements are as follows:

Submission of the information and specified documents through MITRS will be implemented in phases from the year of assessment (YA) 2025 starting with taxpayers in the categories of Companies and Limited Liability Partnerships (LLP).
The following documents, which must be worded in either Bahasa Malaysia or English, are required to be uploaded to the MITRS:
- Audited financial statements or unaudited financial accounts (applicable if audit exemption is granted);
- Income tax computation;
- Complete schedule of capital allowances claimed; and
- Complete calculation of tax incentives claimed (if any)
The file format is restricted to PDF format for it to be acceptable by the MITRS. The total file size must not exceed 15 Megabytes (MB) for the YA.
The responsibility for submitting the required documents under Section 82B of the ITA rests with the taxpayers, and taxpayers may appoint a licensed tax agent to assist them in submitting the documents via the MITRS.
Failure to comply with Section 82B of the ITA will constitute an offence under Section 120(1)(d) of the ITA. Upon conviction, the taxpayer shall be liable to:
- Fine of not less than RM200 and not more than RM20,000,
- Imprisonment for a term not exceeding 6 months, or
- Both

Crowe’s Comments

The first batch of taxpayers affected by Section 82B requirements will be those companies and LLPs with financial year ended on 31 January 2025. Their tax returns will be due for filing by 31 August 2025 (assuming no extension of time is given by the IRBM) and the specified documents shall be submitted to the MITRS within 30 days from 31 August 2025, i.e. by 30 September 2025.

With the new MITRS requirements approaching, the affected taxpayers are advised to prepare and complete all specified documents in a timely manner to avoid any penalties.

PR 5/2024 – Tax Incentive for Investment in BioNexus Status Company

“BioNexus status company” means a company incorporated under the Companies Act 2016 (CA) which is engaged in a business of life sciences such as biology, medicine, anthropology, ecology or any other branches of science, which deal with living organisms and their organisation, life processes and relationships to each other and their environment.

The Government offers tax incentives for investors by granting a tax deduction on the investment cost in approved BioNexus status company. The PR 2/2023 was issued to provide the technical and operational details for taxpayers claiming the tax incentive, and has now been replaced by PR 5/2024.

PREVIOUS PR

The previous PR 2/2023 – Investment Holding Company was issued on 4 October 2023.

UPDATED PR

The IRBM issued an updated PR 5/2024 - Tax Incentive for Investment in Bionexus Status Company on 27 December 2024.

Details of the UPDATED PR

PR 5/2024 replaces PR2/2023 with various changes, including:

The relevant subsidiary legislation has been updated to incorporate the Income Tax (Deduction for Investment in BioNexus Status Company) (Amendment) Rules 2024 which were gazetted on 30 January 2024.
Paragraph 5 is updated regarding the criteria for investors. According to the new ruling, applications to invest in a BioNexus Status Company must be submitted to the Minister of Finance for approval on or after 1 January 2023 but not later than 31 December 2024. This is an update from the previous dates, i.e. between 1 January 2021 and 31 December 2022.
Paragraph 6 of the tax incentive has been updated to specify that the investment must be made between 1 January 2023 and 31 December 2024. Previously, the period stated was between 1 January 2021 and 31 December 2022.

PR 6/2024 – Tax Incentive for Organizing Arts, Cultural, Sports and Recreational Activities

In Budget 2020, it was proposed that a 50% income tax exemption be given on the statutory income of companies that organise:

Arts and cultural activities approved by the Ministry of Tourism, Arts and Culture (MOTAC), and
International sports and recreational competitions approved by the Ministry of Youth and Sports (KBS).

The incentive was valid from the YA 2020 to YA 2022.

In Budget 2022, it was proposed that the income tax exemption be extended for another three (3) years to YA 2025. To legislate the above proposals, the Income Tax (Exemption) (No. 12) Order 2021 was gazetted on 27 December 2021.

New PR 6/2024

The IRBM issued PR 6/2024 - Tax Incentive for Organizing Arts, Cultural, Sports and Recreational Activities on 27 December 2024.

The objective of this new PR is to provide an explanation of the tax incentive available to a promoter that organises approved art or cultural activities as well as sports or recreational competitions in Malaysia.

Approved Activities

To be eligible for a tax exemption, the promoter must organise all events in Malaysia as follows:

arts or cultural activities approved by the MOTAC and held at the Istana Budaya, National Visual Arts Gallery or Petronas Philharmonic Hall; or
sports or recreational competitions of an international standard held at an approved organising location by the KBS.

Application for Tax Exemption for Organising Arts and Cultural Activities

Promoters of international arts and cultural activities must submit the application form and required documents to MOTAC at least 30 days before the event.
After reviewing the application for the proposed activity, MOTAC may issue an authorisation letter for organizing the activities.
The promoter would have to submit an application to MOTAC not later than 90 days after the activity has been carried out to obtain an approval letter for tax exemption.

Application For Tax Exemption For Organising Sports And Recreational Competitions

The promoter must submit an online application to KBS at not later than 90 days before the activity is carried out.
After reviewing the application for the proposed activity, KBS may issue an authorization letter for the organisation of the activity.
The promoter would have to submit an application to KBS not later than 90 days after the activity has been carried out to obtain an approval letter for tax exemption.

PR 7/2024 – Co-Operative Society

The ITA defines a co-operative society as any co-operative registered under any written law, i.e. Co-operative Societies Act 1993, Companies Act 2016, etc. related to the registration of co-operative societies in Malaysia. For income tax purposes, the principle of mutuality does not apply to co-operative societies.

Tax is levied on income derived from both mutual and non-mutual activities. Examples of income from mutual activities include interest, processing fees, and membership fees received by a co-operative society from its members and staff.

PREVIOUS PR

The previous PR 9/2011 – Co-Operative Society was issued on 16 November 2011.

UPDATED PR

The IRBM issued an updated PR 7/2024 - Co-Operative Society on 31 December 2024.

Details of the UPDATED PR

PR 7/2024 replaces and updates PR9/2011 with various changes, including:

Paragraph 5 has been updated regarding the tax treatment for co-operative society. A new example has been added to explain on the definition of “members’ funds”.
New Paragraphs 7 and 8 have been added in, regarding Tax Incentive for Qualifying Capital Expenditure and Tax Incentive on Statutory Income on Qualifying Activity or Special Qualifying Activity in the East Coast Economic Region. These tax incentives are applicable to an agro-based co-operative society, a Farmers’ Organization, an Area Fishermen’s Association, a National Fishermen’s Association and a State Fishermen’s Association.