RESOURCES

1.      ACCOUNTING AND AUDIT

         1.1     Financial reporting standards (FRS)

         1.2     Private entity reporting standards (PERS)

         1.3     Malaysian approved standards on auditing

         1.4     MIA recommended practice guidelines (RPG)

2.      COMPUTATION OF RECOMMENDED AUDIT FEE

3.      TAXATION

3.1     Personal tax

·         For resident individuals (income tax rates vary from 1% to 26%)

·         For non-resident individuals (taxed at a flat rate of 26%)

3.2     Corporate tax

·         Companies with paid-up capital of RM2.5m and below at the

beginning of the basis period   

            First RM500,000 chargeable income                                     20%               20%

            Subsequent chargeable income                                            25%               25%

·         Companies with paid up capital above RM2.5m at the beginning

      of the basis period                                                                     25%               25%

3.3      Business income and deductions

Generally the Income Tax Act 1967 allows for deductions of all outgoings and revenue expenses wholly and exclusively incurred in the production of income for the basis period for a year of assessment.

3.3.1     What types of expenses would be deductible?

            Normally, the following expenditure would be deductible if:

            i)    The expenditure must be in respect of the business activities carried on by the taxpayer;

            ii)    The expenditure should not be specially prohibited by any provisions in the Act;

            iii)   The expenditure must be incurred in the accounting year;

            iv)   The expenditure must be incurred wholly and exclusively in the production of income. However, if a specific portion of the expenses can be ascertained as incurred in producing the income, such portion would be allowed as a deduction;

            v)   The expenditure is not capital in nature; and

            vi)   It should not be in the nature of personal expenses of the taxpayer.

3.3.2`    What types of expenses would not be deductible?

The specifically non-allowable deductions include:

i)    Domestic or private expenses;

ii)    Expenses (preliminary and pre-operating) incurred prior to commencement of business;

iii)   Income tax or similar taxes;

iv)   Capital expenditures;

v)   General provisions;

vi)   Depreciation and amortization;

vii)  Employer’s contribution to approved schemes in excess of 19% of the employee’s remuneration;

viii) Employer’s contribution to unapproved fund/pension/scheme;

ix)   Interest expenses not attributable to business income;

x)   50% of entertainment expenses with certain exceptions;

xi)   Employee’s leave passage;

xii)  Payment to non-resident where applicable withholding tax is not deducted and paid;

xiii) Cost of annual corporate filing and meeting expenses including secretarial and SGM expenses;

xiv) Cost of filing of tax returns and tax appeals.

3.4     Withholding taxes (WHT)

 WHT is the deduction of tax at source applied to amounts paid to a non-resident (NR) by a resident company or individual. Examples of such payments would be interest, royalties or service contacts for technical advice or assistance. The rates imposed would be dependent on the Double Taxation Agreement (DTA) (if any) between the resident and the NR’s country.

The responsibility of WHT payment lies with the Resident payer and has to be remitted to the IRB within 1 month from the date of paying or crediting to the NR.

Withholding tax rates

3.5     Tax incentives

Investment incentives available under the Promotion of Investments Act 1986 and the Promotion of Investment (Amendment) Act 2004 (PIA) are as follow:

a.     Pioneer status

b.    Investment tax allowance

c.     Infrastructure allowance

d.    Investment allowance

e.     Export incentives

f.     Allowance for increase of exports

g.    Hotel incentives

         Incentives under the Income Tax Act 1967 (as amended) are as follow:

h.     Reinvestment allowance

i.      Double deduction of expenses

j.      Agriculture allowance

k.     Tax exemptions

4.      COMPANY SECRETARIAL FEES

5.      SHARE VALUATION

Share valuation reports for would-be investors or purchasers of businesses in their evaluation of the potential financial value of a company’s shares.

          Different methodologies used

                                          a.   Asset-based valuation

                                                - Net tangible assets

                                          b.   Entity-based valuation

                                                - Net present value of future cash flows

                                                - Capitalization of future earnings

                                          c.   Market-based valuation

                                                - Price-earnings multiple

                                          d.   Free cash flow based valuation

                                                - Discounted net cash flow

6.      DUE DILIGENCE

·   Guidelines by the Securities Commission