CHAPTER 6: CORPORATE TAXATION NO.

1 TERMS Accounting Fees - Accounting, Audit fees, and expenses incurred - Payments made to accountant for tax advice Advances and Loans - Advances to supplier to secure source of supply - Advanced of money to a new company. - Losses incurred as a result of advance to a subsidiary. Advertising cost(Allowable under section 33(2) - Advertising expenditure incurred on foreign country of Malaysian branded goods. - Promotional activities relating to sports and cultures not qualify as advertisement expenditure but full on entertainment. Bonus Travelling expenses - Travel between home and work. - Travelling from home which is also the office or base - Travelling between places of work - Travelling in the course of work - Travelling to attend conferences Defending capital assets(improvement/fixed capital asset) (must be no alteration) Devaluation losses Fines and Penalties Terminating of redundant employees / / / / / / / / / / / A / / / N.A DD

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4 5

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6 7 8 9

10 Legal expenses incurred in a restructuring exercise - generally disallowable, but refer to some cases 11 Audit fees 12 Medical expenses for the director of the companies 13 Guarantee fees related to syndicated loans 14 Stamp duties - Revenue Expenditure - Capital Expenditure 15 Insurance premiums - Incurred by business - Professional insurance premiums( Key-man) 16 Renovation of workplace for disabled employees 17 Gift of new computer and broadband consm. For employees

NO. TERMS 18 Community projects 19 Employees recruitment expenses incurred prior to commencement of business 20 Registration of patents and trademarks 21 Cost of sales - Depreciation on fixed assets - Royalty paid 22 Remunerations - Director's salaries - EPF directors (19% x salaries) ( < 19% ) - Medical insurance - Leave passage - Employees salaries for an unemployed - Employees salaries for disabled staff - EPF employees ( 19% x salaries+allowance+bonus) (approved fund) (cannot be unapproved fund !!! ) - Contribution to unapproved fund 23 - Insurance expenses paid to foreign country for the goods imported by the company - Insurance premium for imported cargo (incorporated in Malaysia) 24 Repairs and maintenance - Repainting of office premisses - Replacement of a corrugated iron roof with tile roof/ Replacement from an old one to a new one - Rebuilding of a retaining wall that collapsed - Resurfacing part of damaged factory car park - Depreciation of fixed assets - Extension of the factory punch of the M. Director's parking - Upgrading of the factory's security system - Directors motor vehicle Elements of : Improvement Enlargement 25 Employees benefits: (business purpose-allowable) - Entertainment allowances (50%) - Accomodation provided to employees - Entrance fee to a club for the managing director's - Subsidized meals for employees - Business entertainment expenses(entertain supplier/tax agents) (50%) - Dinner for clients(50%) - Sponsorship of a cultural activity (approved) S34 - Cost of souvenirs to promote Malaysia's product

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N.A

DD

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NO

TERMS - Annual dinner for employees - Gift with business logo for customer's annual dinner. (100%) - Gift without business logo for customer's annual dinner. (50%) - Wedding gift to customer (100%) - Entertainment to suppliers (50%) - Free trip as an incentive to sales agent for achieving the sales target (100%)

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N.A

DD

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26 Professional fees - Registration of a new trademarks - Renewal of trademarks - Accounting, tax and secretarial services - Appeal to Special Commissioner of Income Tax - Advice from local consultants - Recruitment of staff - Technical assistance fees - Legal fees - Legal fees on recovery of trade debt - Legal fees for handling income tax appeal - Business zakat ( add first/ to be deduct later) 27 Bad debts - Write off (trade) - Recovered (trade) - General - Specific 28 Lease rental - Payments in respect of MV other than those qualifying are restricted to a maximum of RM 50,000 per vehicle. - Payments in respect of MV other than those qualifying are restricted to a maximum of RM 100,000 per vehicle. Conditions: - The vehicle must be a new vehicle. It must not be been used by any person for any purpose prior to the rental. - The total cost of the vehicle does not exceed RM 150,000. 29 Compensation during process in business 30 Interest - Loan buying assets - Loan business 31 Approved donations: sec 44(6) - Approved cash donations - An amount equal to the payment of zakat perniagaan which is paid in the basis period. - Contributions towards sport activities approved by the Minister of Finance and sport bodies approved by the

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Commissioner of Sports - Contributions for projects of national interest approved by the Minister of Finance. 32 Double Deductions: - Interest on Loan to small business - Employment of Disabled Employees - Insurance Premium for Import of Cargo - Training of Handicapped Persons - Export Credit Insurance Premium - Freight Charges - Research Expenditure - Contributions to Approved Research Institutes - Overseas Expenses for Promotion of tourism - Expenditure for Approved Training - Expenses Incurred in International Trade Fairs - Halal certification Expenses - Fees Incurred in Packaging Design - Expenditure on Advertising Malaysian branded products. - Expenses on promoting brand names - Contributions to Low Cost Housing Fund - Expenses incurred to promote export of services - Expenses for promotion of exports - Expenses for promotion of Higher Education - Expenditure Incurred in Employing unemployed Graduates - Employing of retrenched workers - Promoting Malaysia as an International Islamic Financial Centre. FORMULA: Profit before tax (-) Non-Allowable expenses (-) Other income Adjusted income (-) Capital allowances (-) Capital allowances *new Statutory Income (-) Unabsorbed loss (+) Other income : Dividend & Interest (exempted/NIL) Aggregate income (-) Donation ( < 10% x AI ) (-) Zakat ( 2.5% x AI ) Chargeable income Tax payable (25% x CI )

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