On September 27, 2022, the DESIRE Dialogue No.1/2022 was hosted by the Inland Revenue Board of Malaysia (IRBM) in collaboration with the Chartered Tax Institute of Malaysia (CTIM) and other professional organisations to explore concerns about compliance and operations.
CTIM comments:
PEs not registered with the Companies Commission of Malaysia are also required to select in the declaration section of Form C Y/A 2022. Which option should they choose?
We request IRBM to reconsider options under the “declaration section” of the Form e-C 2022 by including an option under Option 4 that “This return is based on financial statements prepared under any other written law”.
Concerning a PE which is not registered with the CCM, we understand from the 3rd sentence of IRBM’s response that a PE in Malaysia may submit Form C based on the Head Office audited financial statements prepared under the written law of the respective jurisdiction.
This shall include a “segment reporting” (i.e., a reporting of the operating segments of a company in the disclosures accompanying its financial statements) on the PE or the financial statements of the PE, which has been audited under the written law of the respective jurisdiction.
Kindly confirm:
In this scenario, the PE may select option 1 in the “declaration section” of Form e-C 2022.
In the situation where the financial statements of the PE have not been audited, but the P&L of the PE has been drawn up, and it forms part of the Head Office statutory audited account for the period, the PE may select option 1 in the “declaration section” of Form e-C 2022. Kindly confirm.
In addition, we would like to request IRBM to include, i.e. the Labuan company incorporated under the Labuan Companies Act 1990, which has elected to be taxed under ITA 1967.
IRBM's response:
PEs not registered with the Companies Commission of Malaysia are not required to submit a tax return form based on audited financial statements since the Income Tax Act of 1967 does not contain a particular provision requiring such reporting. However, to comply with paragraph 82(5) of the Income Tax Act 1967, PE may be compelled to prepare audited financial statements when the tax audit is carried out.
So, for the purposes of e-C 2022, PE should choose option "2" if they don't have audited financial statements. Additional options will be considered in the e-C Form 2023.
The IRBM has also noted the Labuan companies and the requirement for revisions to be incorporated into Form C beginning with the assessment year 2023.
IRBM also takes note of Labuan companies and the need for amendments to be taken into account in Form C from the assessment year 2023. Companies formed under the Labuan Companies Act of 1990 can also choose how to file in the declaration section. Elections must be made under the act of establishment.
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