Tax and Secretarial Fee Tax Deduction Malaysia 2020

New rules are coming to town!! Changes in tax treatment of secretarial and tax filing fees.

01Overview

On 18.09.2020, the IRB had issued a technical guideline on tax deductions for secretary and tax agent fees effective from YA2020.

02Key takeaway

• What is the current practice (YA 2019 and before)?
• Changes in year 2020 onwards
• What is the secretarial fee?  DeductibleNOT deductible

What is the secretarial fee? 

• Deductible
• NOT deductible

• What is tax filing fees?

03Summary of learning

04What 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).

05Changes 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.

06Scenario:

ABC Sdn. Bhd. has received following invoices for financial year end is 31 December 2020 and made payment as follows:

07What 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

08What 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

09Source:

LHDN Technical Guide

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