2000 BUDGET ISSUE


 
PETROLEUM INCOME TAX


1.
Disposal Value as Gross Income [Section 13(1A)]

Presently, the disposal value of qualifying assets vested in Petroleum Nasional Bhd (Petronas) or the Malaysia-Thailand Joint Authority (MTJA) is treated as their gross income on a disposal of such assets.

It is proposed that Section 13A of the Petroleum (Income Tax) Act, 1967 (PITA) be amended whereby the disposal value of a vested asset will no longer be treated as gross income of Petronas or MTJA if the asset disposed of continues to be used for petroleum operations by another chargeable person (the acquirer) in another petroleum agreement under which the acquirer has not incurred qualifying expenditure in respect of that asset and at the time of the disposal :-

  1. the disposer of the asset is a company and the acquirer of the asset is a partnership in which the disposer is also a partner;
  2. the disposer of the asset and the acquirer of the asset are the same partnership but operating under separate petroleum agreements;
  3. the disposer of the asset and the acquirer of the asset are partnerships and all the partners in the partnership that is disposing of the asset are also partners in the partnership that is acquiring the asset; or
  4. the disposer of the asset and the acquirer of the asset are the same company but operating under separate petroleum agreements.

This amendment is effective from year of assessment 2000.


2. Ministerial Power to Prescribe Rates for Capital Allowances

Presently, paragraphs 8, 12, 13 and 14 of the Second Schedule to PITA stipulate specific rates of initial and annual allowances for qualifying expenditure incurred on plant and machinery, fixed offshore platforms and industrial buildings.

It is proposed that amendments be made to the aforesaid paragraphs to give power to the Minister of Finance to prescribe other rates for both initial and annual allowances.

These amendments have effect from year of assessment 1996.



3. Transfers Subject to Control

It is proposed to introduce new paragraphs 21A and 23A into the Second Schedule to PITA to provide for the transfer of the residual expenditure of a vested asset under one petroleum agreement to another petroleum agreement where :-

  1. the relationship under Section 21A(a), (b), (c) or (d) exists between the disposer and the acquirer of the vested asset (such a relationship is similar to that stated in paragraph 1(a), (b), (c) and (d) above);
  2. the vested asset continues to be used for petroleum operations by a chargeable person under the second petroleum agreement; and
  3. the chargeable person has not incurred qualifying expenditure in respect of the vested asset.

This amendment is effective from year of assessment 2000.


4. Balancing Allowance

It is proposed that subparagraph 41(b) of the Second Schedule to PITA be amended to provide that the disposer of a vested asset will not be entitled to a claim for balancing allowance if the asset has vested in Petronas subject to the control transfer provision of paragraph 22(1) to the Second Schedule.

This amendment is effective from year of assessment 2000.





|Home|Contents|

This report is reproduced with permission from Kassim Chan Tax Services Sdn Bhd (36421-T) and Deloitte Touche Tohmatsu Tax Services Sdn Bhd (151497-P).
Address: Level 16, Uptown 1, 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Malaysia.
Tel: (603) 715 1888, Fax: (603) 715 7768, (603) 715 7769
Email:
tax@kassimchan.com.my / tax@deloitte.com.my

No part of this report may be reproduced in any form without the prior consent of Kassim Chan Tax Services Sdn Bhd and Deloitte Touche Tohmatsu Tax Services Sdn Bhd.

Another Malaysian resource site designed and hosted by MIR Communications Sdn Bhd.