Business leaders appreciate that there are taxation implications that flow on from most business decisions. A sound knowledge of Malaysian taxation law is essential to ensure quality input into the strategic decision-making process by an individual, partnership or company.
This is the local variant of the taxation subject in the CPA Program.
Note: From Semester 2 2018 this subject will be offered directly through Sunway TES. For candidates wanting to complete Malaysia Taxation after this date, you will need to enrol with Sunway TES. For candidates who would prefer to complete the subject while it is offered in the CPA Program, it is recommended you do so this semester. You cannot defer this subject in Semester 1 2018.
The Malaysia Taxation exam is comprised of a combination of multiple-choice and extended-response questions.
The aims of this subject are to provide you with an:
- overview of the Malaysian taxation system, a sound foundation of the principles of taxation of income and a good appreciation of how these principles and the provisions of the Income Tax Act 1967 are applied in the taxation of individuals, unincorporated businesses and corporations
- understanding of the investment incentives in Malaysia as well as the provisions of the Real Property Gains Tax Act 1976
- understanding of the indirect taxation system including the Goods and Services Tax Act 2014.
On completion of this subject, you should be able to:
- apply the principles and concepts of taxation and the relevant provisions of the tax legislation to situations you will encounter
- correctly compute the chargeable income tax payable, real property gains tax payable and indirect taxes in certain situations.
The "weighting" column in the following table provides an indication of the emphasis placed on each module in the exam, while the "proportion of study time" column is a guide for you to allocate your study time for each module.
||Recommended proportion of study time (%)
|| Weighting (%)
|1. Overview of the Malaysian tax regime
|2. General knowledge of income tax
|3. Income tax (Corporate)
|4. Income tax (Business)
|5. Income tax (Individuals)
|6. Income tax (Others)
7. Cross-border activities
|8. Investment incentives
|9. Real property gains tax
|10. Indirect taxation
The Malaysia Taxation subject comprises 10 modules. A brief outline of each module is provided below.
Note: The relevant year of assessment for this edition of the study guide is YA 2016.
Module 1: Overview of the Malaysian tax regime
Module 1 provides an overview of the Malaysian taxation system. It introduces you to the key features of the Malaysian taxation system and the legislative provisions that govern the administration of taxation within this jurisdiction.
- Taxation and public finance
- Taxation in Malaysia: History and policy
- Introduction to various taxes
- Self-assessment system of taxation
- Sources of authority and information
Module 2: General knowledge of income tax
The module consists of various sections related to the scope and basis of taxation, the principles of deductions, an overview of capital allowances and deductions in respect of business losses and donations, the treatment of unabsorbed capital allowances and business losses, and aspects of tax administration.
- Scope of taxation
- General principles of deduction of expenses
- Capital allowances on plant and machinery
- Industrial building allowances
- Unabsorbed current year capital allowances and business losses
- Tax administration
Module 3: Income tax (Corporate)
This module focuses on the parts of the Income Tax Act that apply to companies. It introduces the scope of Malaysian taxation that a company is subject to. It focuses on the topics covered in Module 2 in their application to a company, tax computations and the obligations of a company in relation to its tax affairs.
- Taxation of companies
- Income chargeable to tax
- Capital allowances
- Industrial building allowances
- Unabsorbed losses
- Group relief
- Tax reliefs
- Tax computation
- Filing obligations of a company
- Transfer pricing
Module 4: Income tax (Business)
Module 2 outlines the basis of assessment, the charging sections, badges of trade, outgoings and deductions. Module 4 elaborates on this with a discussion about the tax treatment and rules that are specific to both sole proprietorships or self-employed persons and partnerships.
- Who is a sole proprietor or self-employed person?
- Deductibility or non-deductibility of expenses incurred by a sole proprietor
- Capital allowances
- Business losses
- Treatment of unabsorbed business losses and capital allowances
- Filing returns
- Payment of tax
Module 5: Income tax (Individuals)
This module elaborates on the tax treatment of income derived by individuals from income other than the carrying on of a trade, business, profession or vocation. In particular, it focuses on employment income and tax exemptions or concessions given to individuals for other types of income. It also discusses the conditions for claiming personal reliefs or rebates. It rounds off with the preparation of tax computations for an individual by applying the information presented in the module.
- Residency status and the resulting tax implications
- Employment income
- Taxation of other types of non-business income
- Tax rates and tax computations
- Filing obligations
Module 6: Income tax (Others)
This module examines the taxation of specialised activities or industries, such as: banks, insurance, shipping and airline operations, leasing, cooperative societies, investment holding companies, unit trusts, trade associations, clubs or similar institutions, trust bodies, deceased persons’ estates and charitable organisations under the Income Tax Act.
- Principle of mutuality
- Tax treatment of specialised activities
- Clubs or similar institutions
- Trade association
- Deceased persons’ estates, trusts and settlements
- Charitable organisations
Module 7: Cross-border activities
This module provides an overview of the general rules relating to the various withholding taxes on payments made to non-residents and the international aspects of income taxation including double tax agreements.
- Types of income subject to withholding tax
- Withholding tax rules
- International aspects of income taxation
Module 8: Investment incentives
This module elaborates on the special schemes and tax incentives granted to attract investments under the Promotion of Investments Act 1986 and the Income Tax Act.
This includes: pioneer status, investment tax allowance, reinvestment allowance, double deductions, operational headquarters, international procurement centres, regional distribution centres, and sectoral and export incentives. The module also covers the incentives available for Islamic transactions and the tax regime in Labuan.
- Incentives under the Promotion of Investments Act 1986
- Incentives under the Income Tax Act
Module 9: Real property gains tax
This module provides an overview of Real Property Gains Tax Act 1976 in relation to real property transactions and transactions involving shares in real property companies.
- Chargeable assets, chargeable persons and chargeable gains
- Disposals and disposal price
- Acquisitions and acquisition price
- Special treatment
- Tax rates
- Real property companies
- Tax returns and administrative provisions
Module 10: Indirect taxation
Module 10 gives an overview of the major provisions of the Customs Act 1967, Excise Act 1976, and the Goods and Services Tax Act 2014. The focus of the module is on the Goods and Services Tax (GST) that was introduced in April 2015. This part of the module sets out the operation of the GST system, the various types of supplies and entities affected and how they are affected. This includes sales tax and service tax which are the taxes on selected goods and services respectively that have been replaced by the GST.
- Custom duties
- Excise duty
- Sales tax
- Service tax
- Customs rulings and customs appeal tribunal
- Goods and services tax