New rules are coming to town!! Changes in tax treatment of secretarial and tax filing fees.
Overview
On 18.09.2020, the IRB had issued a technical guideline on tax deductions for secretary and tax agent fees effective from YA2020.
Key takeaway
- What is the current practice (YA 2019 and before)?
- Changes in year 2020 onwards
-
What is the secretarial fee?
- Deductible
- NOT deductible
- What is tax filing fees?
Summary of learning
What is current practice (YA 2019 and before)?
Expenses incurred on secretarial and tax filing fees give a tax deduction of up to RM5,000 and RM10,000 respectively for each year of assessment (YA).
Changes in year 2020 onwards
Secretarial and tax filing fees being combined, such that a total deduction of up to RM15,000 per YA be allowed for both expenses from YA 2020 onwards.
Scenario:
ABC Sdn. Bhd. has received following invoices for financial year end is 31 December 2020 and made payment as follows:
What is the secretarial fee?
Secretarial fee charged in respect of secretarial services to comply with the statutory requirements under the Companies Act 2016 is deductible as follows:
- Lodgement of annual return and Financial statements.
- Change of name
- Add or delete business activities
- Retainer fees
- Issuance or transfer of shares
- Update register of members and directors
- Appointment of director or auditor
*Condition to be made: Must be incurred and paid
General secretary charges NOT deductible:
- Incorporation fee for new company (include professional fees)
- Fee for acquisition of shelf company (include professional fees)
- Name search fee to SSM (include professional fees)
- Preparation of registration documents
- Company profile printout from SSM
- Professional fee for preparation of ordinary/ special resolution
- Professional fee for preparation of other resolution, confirmation letter to bank or solicitor
- Professional fees for preparation of trust deed
- Preparation fees for CTC documents
- Attestation fees for commissioner for Oaths
What is tax filing fee?
A tax agent approved under the Income Tax Act 1967 (ITA) in respect of services provided for the:
- Preparation and submission of income tax returns
- Estimate of tax payables
A person in respect of services provided for the preparation and submission of returns in the prescribed form for the purposes of:
- Section 26 of the Sales Tax Act 2018
- Section 26 of the Service Tax Act 2018
- Section 19 of the Departure Levy Act 2019; or
- Section 19 of the Tourism Tax Act 2017
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Published : 31-Dec-2020