The Finance Bill 2020 (‘Bill') was passed by the Dewan Rakyat (House of Representatives) and the Dewan Negara (Senate) of the Malaysian Parliament on 17 and 28 December 2020 respectively. The Bill will be presented to the Yang di-Pertuan Agong for Royal Assent whereafter it will become law upon its publication in the Gazette.
Chapter III of the Bill contains proposed amendments to the Real Property Gains Tax Act 1976 (‘Act'). The amendments to the Act will come into operation on 1 January 2021 when the Bill comes into operation.
The salient amendments to be made to the Act pursuant to the Bill are as follows:
Remittance of penalties
The Bill introduces two new provisions for remission of certain payments:
- A new section 14(5A) will confer discretion on the Director General for good cause shown, to remit, in whole or in part, the 10% penalty payable under section 14(5) of the Act by a person who furnishes an incorrect or wrong notification to an acquirer under section 13 that results in the acquirer failing to retain and remit the retention sum required under section 21B of the Act; and
- A new section 15(4A) will confer discretion on the Director General for good cause shown, to remit, in whole or in part, the 10% additional assessment payable under section 15(4) of the Act by a person who furnishes an incorrect or wrong notification to an acquirer under section 13 that results in the acquirer failing to retain and remit the retention sum required under section 21B of the Act.
Clarification of ‘disposer'
Section 21B(1A) of the Act will be amended to clarify that the rates of tax under Part III of Schedule 5 of the Act apply not only to a disposer who is not a citizen, not a permanent resident or not a company incorporated in Malaysia, but also to a disposer who is an executor of the estate of a deceased person who is not a citizen or not a permanent resident of Malaysia.
Tax not deferred on account of other litigation
A new section 21C will be introduced to provide that a person shall not be relieved from liability to pay any tax, debt or other sum under the Act by reason of the institution of any proceedings under any other written law against the Government of Malaysia or the Director General.
Directors of defaulting company may be barred from leaving Malaysia
Section 22 of the Act permits the Director General to request any Commissioner of Police or Director of Immigration by issuing a certificate electronically to prevent a person who is about or likely to leave Malaysia without paying any tax payable under the Act or any sum or debt payable under sections 21(4) or 21(B(2) of the Act, from leaving Malaysia.
The powers under this section will be extended to any person who is a director of a company at the time when the tax, debt or other sum is or becomes payable and is therefore jointly and severally liable with the company for payment of the same under subparagraph 5(1A) of Schedule 1 of the Act.
Liability of a society
Schedule 5 of the Act will be amended to make it clear that a society registered under the Societies Act 1966 which is a chargeable person will be subject to the rates of tax under Part II of the said Schedule which apply to a company incorporated in Malaysia or a trustee of a trust.
Some of the amendments to be introduced under the Bill clarify certain provisions of the Act. Some amendments confer discretion on the Director General to exercise compassion for good cause to remit penalties or additional assessment payable. On the other hand, several amendments will enhance the enforcement powers of the tax authority under the Act. If the amendments are personified, they can be likened to an iron fist in a velvet glove.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.