[World Tax News] Malaysia Presents Budget 2024 | Extends Tax Relief for Providing EV Charging Facility and More

Editorial Team – [2023] 155 taxmann.com 425 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Malaysia Presents Budget for 2024; extends tax relief for providing EV charging facility

Malaysia tabled its Budget for 2024 On October 13, 2023. The Key highlights of the Budget 2024 are as follows:

(a) Extension Of Individual Income Tax Relief For Electric Vehicle Charging Facilities

Individual income tax relief up to RM2,500 on expenses related to installation, rental, purchasing including hire-purchase equipment or subscription fees for Electric Vehicle (EV) charging facilities was given for the year of assessment 2022 and the year of assessment 2023. To further support the development of the local EV industry, it is proposed to extend the relief for a period of 4 years i.e., from the year of assessment 2024 until the year of assessment 2027.

(b) Capital gains tax on disposal of unlisted shares

Capital Gains Tax on the disposal of unlisted shares for companies are as follows:

• • If the shares are acquired before March 01, 2024: The taxpayers can either pay 10% on the net gain of the disposal of shares; or 2% on the gross sales value.
  • If the shares are acquired after March 01, 2024: 10% on the net gain of the disposal of shares

(c) Stamp Duty For Property Ownership By Non-Citizen

Earlier, Foreign-owned companies and non-citizen individuals were required to pay stamp duty based on the sale price/ Market value of property ranging from 1% to 4%. Now, it is proposed a flat rate stamp duty of 4% be imposed on the instrument of transfer executed by foreign-owned companies and non-citizen individuals (except Malaysian permanent residents). The proposal will be applicable for instrument of property ownership transfer executed from January 01 2024.

(d) Tax Incentive For Women Career Comeback Programme

Women on career break and returning to work are eligible for income tax exemption on employment income received for a maximum period of 12 consecutive months, which is to be extended from the the year of assessment 2025 until the year of assessment 2028.

(e) Extension Of Tax Incentive For Rental Of Electric Vehicle

In the 2023 Budget, companies that rent non-commercial electric vehicles (EV) were given tax deduction up to RM300,000 effective from the year of assessment 2023 until the year of assessment 2025. To encourage the use of EVs and to support the green mobility ecosystem in line with the National Energy Transition Roadmap, it is proposed tax deduction on EV rental costs be extended for a period of 2 years, i.e., Until the year of assessment 2027.

Source: Budget 2024

Tax Measures

2. USA provided tax relief to taxpayers in Israel

On October 13 2023, the Internal Revenue Service (IRS) of the United States announced tax relief for individuals and businesses affected by the attacks in the State of Israel. The IRS provided relief to certain taxpayers who, due to the attacks, may be unable to meet a tax-filing or tax-payment obligation or may be unable to perform other time-sensitive tax-related actions.

IRS extends the deadlines for filing taxes and making payments that fell or will fall between October 7, 2023, and October 7, 2024 (the postponement period). Consequently, individuals and businesses affected by this change will have until October 7, 2024, to complete their return filings and settle any taxes initially due in this timeframe.

This extension encompasses, among other things:

1. Individuals who had a valid extension to file their 2022 return due to run out on October 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. So, these individuals filing on extension have more time to file but not to pay.
2. Calendar-year corporations whose 2022 extensions run out on October 16, 2023. Similarly, these corporations have more time to file but not to pay.
3. Individual & business returns and payments normally due on March 15 and April 15, 2024. So, these individuals and businesses have both more time to file and more time to pay.
4. Quarterly estimated income tax payments normally due on January 16, April 15, June 17 and September 16, 2024.

However only the following persons will qualify for the above exemption:

1. Any individual whose principal residence or business entity or sole proprietor whose principal place of business is in Israel, the West Bank or Gaza (the covered area).
2. Any individual, business or sole proprietor, or estate or trust whose books, records or tax preparer is located in the covered area.
3. Anyone killed, injured, or taken hostage due to the terrorist attacks.
4. Any individual affiliated with a recognized government or philanthropic organization and who is assisting in the covered area, such as a relief worker.

Source: News Release dated 13-10-2023

3. Microsoft is asked to pay additional tax of $ 28.9 Billion to US

Microsoft has disclosed that it has received Notices of Proposed Adjustment from the IRS, pertaining to the tax years 2004 to 2013, in an SEC Form 8-K filing dated October 11 2023. The Inland Revenue Services (IRS) is requesting an additional tax payment of USD 28.9 billion, in addition to penalties and interest, related to intercompany transfer pricing matters.

Accompanying the Form 8-K submission, Microsoft’s Corporate Vice President for Worldwide Tax and Customs, Daniel Goff, has explained the IRS’s claim.

The main disagreement is how Microsoft allocated profits among countries and jurisdictions. This is commonly referred to as transfer pricing, and the IRS has established regulations that allow companies to use a specific arrangement for Transfer Pricing, called cost-sharing.

Many large multinationals use cost-sharing because it reflects the global nature of their business. Because Microsoft’s subsidiaries shared in the costs of developing certain intellectual property, under those IRS cost-sharing regulations, the subsidiaries were also entitled to the related profits.

However, Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years.

Source: SEC Form 8-K filing dated October 11 2023