TaXavvy Issue 8/2018

In this issue:

Public Ruling 3/2018 – Qualifying Expenditure and Computation of Industrial Building Allowances

The IRB has issued a new Public Ruling 3/2018 – Qualifying Expenditure and Computation of Industrial Building Allowances, which explains the IRB’s tax treatment in relation to qualifying building expenditure and computation of industrial building allowance. This follows the earlier issuance of Public Rulings 8/2016 and 10/2016 on the determination of industrial buildings. 

New public rulings on taxation of resident individuals

The IRB has issued 3 new public rulings on the taxation of resident individuals. The last update to a public ruling on this topic was in 2008. The new public rulings have effectively consolidated the earlier public rulings (Public Ruling 1/2005 and 2/2005) and re-issued them in 3 separate parts, the contents of which have been updated to reflect the latest position in the legislation. The 3 new public rulings are:

1. Public Ruling 4/2018 –Taxation of a resident individual Part I - Gifts or contributions and allowable deductions
2. Public Ruling 5/2018 – Taxation of a resident individual Part II - Computation of total income and chargeable Income
3. Public Ruling 6/2018 – Taxation of a resident individual Part III - Computation of income tax and tax payable

Amended guideline on deduction for expenses relating to secretarial fees and tax filing fees

Following the issuance of a guideline for deduction of secretarial and tax filing fees dated 17 August 2018, numerous clarification had been sought by taxpayers and professional bodies on the uncertainty in relation to the deductibility of such fees. The IRB has now issued an amended guideline which reflects the IRB’s position on the application of the gazette order (P.U.(A) 336/2014 - Income Tax (Deduction for expenses in relation to Secretarial Fee and Tax Filing Fee) Rules 2014) allowing deductions for such fees.

Revised guideline on research & development incentives

MIDA has issued a revised guideline on tax incentives for i) research and development (R&D) company, and ii) contract R&D company, which takes effect from 1 July 2018.Similar to the revised Green Technology guideline, this revision follows the review undertaken by the Forum on Harmful Tax Practices (FHTP) in 2017 under the Base Erosion Profit Shifting (BEPS) Action Plan 5: “Countering harmful tax practices more effectively, taking into account transparency and substance.” The guideline on R&D incentives is the second guideline to be revised to comply with the FHTP review.