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Qualifying Plant Allowances for Computers and IT Equipment and Cost of Prov. of Computer Software

Updated: Jun 5


The Inland Revenue Board of Malaysia (IRBM) has issued their responses dated 16 February 2023 to CTIM members’ issues dated 18 January 2023 on the following: -

  1. Deduction for Expenses in relation to the Cost of Detection Test of Covid-19 for Employees [P.U. (A) 404/2021 as amended by P.U. (A) 291/2022]

  2. Qualifying Plant Allowances for Computers and Information Technology Equipment, and Cost of Provision of Computer Software [P.U. (A) 187/1998 and P.U. (A) 272/1999]

  3. Income Tax (Deduction For Incorporation Expenses) Rules 2003 [P.U. (A) 475/2003] as amended by P.U. (A) 472/2005

  4. Amended Guidelines On Tax Deduction Of Secretarial Fees And Tax Filing Fees From YA 2022 Onwards dated 17 August 2022

In this article, we will see IRBM's response regarding item no. 2, the Qualifying Plant Allowances for Computers and Information Technology Equipment, and Cost of Provision of Computer Software [P.U. (A) 187/1998 and P.U. (A) 272/1999].


The P.U. (A) 187/1998 and P.U (A) 272/1999 were deemed to be effective from the year of assessment (YA) 1996 and 1999, respectively.


Rule 8(1) of the Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment) Rules 2008 [P.U. (A) 358/2008] revokes P.U. (A) 187/1998 and P.U. (A) 272/1999.


Rule 1(2) of the P.U. (A) 358/2008 states, “These Rules shall have effect from the year of assessment 2009 until the year of assessment 2013, except rule 7.”


Under the Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment) Rules 2014 [P.U. (A) 217/2014] and the Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment) Rules 2018 [P.U. (A) 156/2018], the accelerated capital allowance claim is effective from YA 2014 and is restricted to a Malaysian resident person.


CTIM Comments:


Given the above, CTIM seeks confirmation from IRBM that P.U. (A) 187/1998 and P.U. (A) 272/1999 are still in force for a non-resident person, effective from YA 2014.


Feedback from IRBM:


Below is a summary of tax rates and tax treatment based on the issues raised:




Based on the above table, non-residents are no longer eligible to claim the Accelerated Capital Allowance (ACA) under P.U. (A) 187/1998 and P.U. (A) 272/1999 from YA 2009 onwards, as those Rules were revoked through P.U. (A) 358/2008. P.U. (A) 217/2014 and P.U. (A) 156/2018 that were subsequently introduced, but they only apply to residents.


However, non-residents are still eligible to claim a capital allowance under Schedule 3 from YA 2009 onwards, provided they meet the qualifying conditions for the capital allowance claim under Schedule 3 of the Income Tax Act 1967 as stated in the Minutes of Dialogue on 12 December 2008 – Post 2009 Budget.


You may read Minutes of Dialogue on 12 December 2008 – Post 2009 Budget in full by downloading the attachment below: -


90.1 Minutes of Post 2009 Budget Dialogue 12 Dec 2008
.pdf
Download PDF • 188KB

You may read CTIM's circular on the extension of the Accelerated Capital Allowance For Information And Communication Technology Equipment in full by downloading the attachment below: -

90
.2 Accelerated Capital Allowance for Information and Communication Technology Equipment
Download 2 ACCELERATED CAPITAL ALLOWANCE FOR INFORMATION AND COMMUNICATION TECHNOLOGY EQUIPMENT • 98KB

You may read the amendment to Rule 7 of the P.U. (A) 217/2014 in full by downloading the attachment below: -

90.3 Income Tax (ACA) (ICT Equipment) (Amendment) Rules 2015 [P.U.(A) 284-2015]
.pdf
Download PDF • 151KB

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