Place of Business: Tax Guidelines

Join us in this important webinar featuring Deloitte and KPMG where they will share their thoughts on the latest development of “Place of Business” (POB), and profit attribution exercise.

The introduction of Sections 12(3) and 12(4) of the Malaysian Income Tax Act 1967 (the Act), effective from 28 December 2018, provides more certainty in assessing whether the business profits of a non-resident that is from a non-treaty country (e.g. US, Jersey etc.) would fall within the Malaysian income tax net. However, there are several grey areas in the law itself and as such, the issuance of the Guidelines on the Application of Subsections 12(3) and 12(4) of the Income Tax Act 1967 in Determining a “Place of Business” are useful as they alleviate a number of uncertainties.

With this, certain operations carried on in Malaysia by non-residents from non-treaty countries may constitute Place of Business (POB) in Malaysia because of the rules/guidelines that result in:

1. Certain activities are no longer considered preparatory or auxiliary when the overall nature of the business is considered;
2. The expansion of the agency POB definition such that sales/ marketing activities without contract conclusion may nevertheless trigger a POB
3. Fragmented activities or contracts being aggregated when considering whether a POB exists
4. Building site, construction, installation, assembly project and related supervisory activities exceeding 5 months in in aggregate in any 12-month period would trigger a POB

Where there is POB in Malaysia, the profits attributable to the POB in Malaysia shall be deemed derived from Malaysia and is subject to Malaysian income tax. The challenging issue here is the profit attribution for the Malaysian operations of the NR, which is complex and often subject to dispute. We expect the MIRB to issue separate guidelines on profit attribution to the POB in due course.

With the latest development, MNCs from the US and other non-treaty countries should revisit their existing and proposed modus operandi in Malaysia with a view to assessing the implications and the way forward.

EVENT DETAILS

Date: Wednesday,1 July 2020

Time: 11:00 am – 12:30 pm

Platform: Webinar powered by CISCO Webex Events

TICKETS

This event is free to registered AMCHAM Members. Non-Members are required to pay a participation fee to attend.

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