Related topics: |  Key Data | Budget & Plan| Budget 2000

APPENDIX IX

DOUBLE DEDUCTION ON SHIPPING
FREIGHT FROM SABAH OR SARAWAK

             In order to widen their market and enhance trade potential, manufacturing companies in Sabah or Sarawak are given double deduction on shipping freight charges for their goods to Peninsular Malaysia provided they use local ports.

            This measure is effective from year of assessment 2000 (current year basis) and implemented through Income Tax (Deduction For Freight Charges From Sabah Or Sarawak To Peninsular Malaysia) Rules 2000 [P.U.(A) 50].

APPENDIX X

REVIEW OF THE CAPITAL ALLOWANCE RATE AND STRUCTURE FOR PLANT AND MACHINERY

            In order to simplify the computation of capital allowance and to prepare for the self-assessment system for companies which will be implemented in 2001, the initial capital allowance is maintained at the current rate of 20% while the annual capital allowance is restructured into 3 classes and 3 rates as follows:

Certain types of plant and machinery such as computer and pollution control equipment which have been given special capital allowance at rates exceeding 20% will continue to enjoy the higher rates.

This proposal is effective from year of assessment 2000 (current year basis) and implemented through Income Tax (Qualifying Plant Annual Allowances) Rules 2000 [P.U.(A) 52].

APPENDIX XI

TAX INCENTIVES FOR BANKS THAT
ACHIEVE LOAN GROWTH TARGET

             The Government requires banks to achieve an annual growth in net lending at a minimum rate of 8%. As an incentive for banks to intensify their efforts towards achieving higher loan growth, income or interest derived from net lending exceeding the minimum rate of 8% is exempted from income tax provided that the bank achieves at least 10% growth in net lending to productive sectors, in accordance with the stipulated guidelines.

APPENDIX XII

TAX TREATMENT ON
INTEREST-IN-SUSPENSE

APPENDIX XIII

REDUCTION OF STAMP DUTY ON INSTRUMENTS
FOR ISLAMIC BANKING PRODUCTS

        The procedure in transacting Islamic banking products involves the repetitive payment of stamp duties and in some cases, the rates imposed are higher than those of the conventional banking products. According to the syariah principles, the Islamic banking scheme requires a new agreement (customer’s consent) whenever there is an adjustment to the duration or loan amount. Thus, Islamic banking products will involve more than one document and each document will attract stamp duty. As a result, Islamic banking products are less competitive as an alternative to conventional banking products.

         To enhance the competitiveness of Islamic banking products, all instruments related to Islamic banking are subject to stamp duty similar to instruments used in conventional banking.

APPENDIX XIV

TAX INCENTIVES FOR
CORPORATE DEBT RESTRUCTURING

            As an incentive for companies to restructure their loans, all instruments involved in the corporate debt restructuring scheme as certified by the Corporate Debt Restructuring Committee (CDRC) or Pengurusan Danaharta Nasional Berhad (Danaharta) are exempted from stamp duty and all expenses incurred in debt restructuring scheme are allowed as a deduction for purpose of income tax computation.

APPENDIX XV

TAX INCENTIVES FOR MERGERS OF INSURANCE COMPANIES AND STOCKBROKING FIRMS

In order to accord similar treatment to stockbroking firm mergers and insurance company mergers as that given to bank mergers, the following treatment is granted:

1. the duration of exemption of real property gains tax (RPGT) and stamp duty accorded to insurance companies that undergo mergers is extended until 30 September 2000; and
2. stockbroking firms are given RPGT and stamp duty exemption on all instruments related to mergers completed between 30 October 1999 and 31 December 2000.

        The above measures are implemented through Stamp Duty (Exemption) (No. 5) Order 2000 [P.U.(A) 45], Stamp Duty (Exemption) (No. 35) Order 1999 [P.U.(A) 499/99], Real Property Gains Tax (Exemption) (No. 7) Order 1999 [P.U.(A) 502/99] and Real Property Gains Tax (Exemption) (No. 2) Order 2000 [P.U.(A) 59].

        Insurance companies and stockbroking firms are also given tax credit similar to that enjoyed by banks. This incentive (calculated as a sum equivalent to half of the losses suffered by the acquired entity x the current income tax rate) is given to the acquiring insurance companies and stockbroking firms. The tax credit can only be claimed against tax payable for 2 years of assessment immediately following the year in which the merger is completed.

        This incentive may be claimed upon the completion of the merger exercise by applying to the Ministry of Finance.

APPENDIX XVI

TAX INCENTIVES FOR BOND MARKET

           The bond market needs to be developed further in order to reduce dependence on the banking system as a source of funding. Asset Backed Securities (ABS) is a type of bond that involves asset securitisation, that is the conversion of the asset into a tradable instrument. The asset concerned has to be transferred from the owner to a special purpose vehicle established to issue and sell the ABS.

APPENDIX XVII

INCOME TAX EXEMPTION FOR
GOVERNMENT SPONSORED UNIT TRUST

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