Tax Alert 2017

Amendment on withholding tax-royalty, public entertainer and special classes of income

Section 2(1) - Interpretation

Section 2(1) of the Act have been amended to expand the definition of public entertainer and royalty.

Public entertainer includes :-

(a)  a compere, model, circus performer, lecturer, speaker, sportsperson, an artiste or individual       exercising any profession, vocation or employment of a similar nature; or

(b) an individual who uses his intellectual, artistic, musical, personal or physical skill or character in,carrying out any activity in connection with any purpose through live, print, electronic, satellite, cable, fibre optic or other medium, for film or tape, or for television or radio broadcast, as the case may be.

Royalty includes any sums paid as consideration for, or derived from -

(a)  the use of, or the right to use in respect of, any copyrights, software, artistic or scientific works, patents,  designs or models,  plans,  secret processes or formulae, trademarks or other like property or rights;

(b)  the use of, or the right to use, tapes for radio or television broadcasting, motion picture films, films or video tapes or other means of reproduction where such films or tapes have been or are to be used or reproduced in Malaysia, or other like property or rights;

(c)  the use of, or the right to use, know-how or information concerning technical, industrial, commercial or scientific knowledge, experience or skill;

(d)  the reception of, or the right to receive, visual images or sounds, or both, transmitted to the public by —

(i)         satellite; or

(ii)        cable, fibre optic or similar technology;

(e)  the use of, or the right to use, visual images or sounds, or both, in connection

with television broadcasting or radio broadcasting, transmitted by —

(i)         satellite; or

(ii)        cable, fibre optic or similar technology;

(f) the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence;

(g) a total or partial forbearance in respect of —

(i)        the use of, or the granting of the right to use, any such property or right as is mentioned in paragraph (a) or   (b) or any such knowledge, experience or skill as is mentioned in paragraph (c);

(ii)       the reception of, or the granting of the right to receive, any such visual images or sounds as are mentioned in paragraph (d);

(iii)      the use of, or the granting of the right to use, any such visual images or sounds as are mentioned in paragraph (e); or

(iv)      the use of, or the granting of the right to use, some or all such part of the spectrum specified in a spectrum licence as is mentioned in paragraph (f); or

(h) the alienation of any property, know-how or information mentioned in paragraph (a), (b) or (c) of this definition.

Section 15A – Derivation of Special Classes of Income and in Certain Cases

Section 15A of the principal Act is amended :

Gross income in respect of -

(a)  by substituting for the colon at the end of subparagraph 15A(iii) a full stop; and

(b)  by deleting the proviso.

Section 15A would now read as follows:-

(a)    amounts paid in consideration of services rendered by a person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from, such person;

(b)    amounts paid in consideration of technical advice, assistance or services rendered in connection with technical management or administration of any specific, industrial or commercial undertaking, venture, project of scheme;

(c)    rent or other payments made under any agreement or arrangement for the use of any moveable property, shall be deemed to be derived from Malaysia –

(i)          if responsibility for payment of the above or other payments lies with the Government, a State Government or a local authority;

(ii)        if responsibility for the payment of the above or other payments lies with a person who is a resident for that basis year; or

(iii)       if payment of the above or other payments is charged as an outgoing or expense in the accounts of a business carried on in Malaysia.