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Finance (No. 2)
LAWS OF MALAYSIA
REPRINT
Act 274
FINANCE (NO. 2) ACT 1982
Incorporating all amendments up to 1 January 2006
PUBLISHED BY
THE COMMISSIONER OF LAW REVISION, MALAYSIA
UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968
IN COLLABORATION WITH
PERCETAKAN NASIONAL MALAYSIA BHD
2006
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ACT 274
Laws of Malaysia
FINANCE (NO. 2) ACT 1982
Date of Royal Assent
... ... ... ... ...
30 December 1982
Date of publication in the Gazette ... ...
31 December 1982
PREVIOUS REPRINT
First Reprint
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...
...
...
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2001
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Finance (No. 2)
LAWS OF MALAYSIA
Act 274
FINANCE (NO. 2) ACT 1982
ARRANGEMENT OF SECTIONS
CHAPTER I
PRELIMINARY
Section
1.
Short title and commencement
2.
Amendment of Acts and Ordinances
CHAPTER II
AMENDMENTS TO THE INCOME TAX ACT 1967
3.
Commencement of amendments to the Income Tax Act 1967
4.
Amendment of section 34
5.
New section 34A
6.
Amendment of section 35
7.
Amendment of section 39
8.
Amendment of section 67
9.
Amendment of section 103
10.
Amendment of section 104
11.
New section 107A
12.
Amendment of section 127
13.
Amendment of section 128
14.
Amendment of Schedule 3
15.
Amendment of Schedule 6
16.
Amendment of Schedule 7A
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CHAPTER III
AMENDMENTS TO THE PETROLEUM
(INCOME TAX) ACT 1967
Section
17.
Commencement of amendments to the Petroleum (Income Tax) Act
1967
18.
Amendment of section 18
19.
Amendment of section 65A
CHAPTER IV
AMENDMENTS TO THE STAMP
ORDINANCE 1949
20.
Commencement of amendments to the Stamp Ordinance 1949
21.
Amendment of section 16
22.
New section 20A
23.
Amendment of First Schedule
24.
Amendment of Second Schedule
25.
Amendment of Third Schedule
CHAPTER V
AMENDMENTS TO THE STAMP ORDINANCE
(SABAH)
26.
Commencement of amendments to the Stamp Ordinance (Sabah)
27.
New section 5A
28.
Amendment of section 16
29.
New section 20A
30.
Amendment of First Schedule
31.
Amendment of Second Schedule
32.
Amendment of Third Schedule
CHAPTER VI
AMENDMENTS TO THE STAMP ORDINANCE
(SARAWAK)
33.
Commencement of amendments to the Stamp Ordinance (Sarawak)
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Finance (No. 2)
Section
34.
New sections 3A and 3B
35.
Amendment of First Schedule
36.
Amendment of Second Schedule
CHAPTER VII
AMENDMENTS TO THE SALES TAX ACT 1972
37.
Commencement of amendment to the Sales Tax Act 1972
38.
Amendment of section 31
39.
New section 31A
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Finance (No. 2)
LAWS OF MALAYSIA
Act 274
FINANCE (NO. 2) ACT 1982
An Act to amend the Income Tax Act 1967 [Act 53], the *Petroleum
(Income Tax) Act 1967 [Act 45 of 1967], the **Stamp Ordinance
1949 [Ord. No. 59 of 1949], the Stamp Ordinance (Sabah) [Cap.
137], the Stamp Ordinance (Sarawak) [Cap. 32] and the Sales Tax
Act 1972 [Act 64] and to provide for matters connected therewith.
[
]
BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan
Agong with the advice and consent of the Dewan Negara and
Dewan Rakyat in Parliament assembled, and by the authority of
the same, as follows:
CHAPTER I
PRELIMINARY
Short title and commencement
1.  This Act may be cited as the Finance (No. 2) Act 1982 and
shall have effect or be deemed to have effect as provided in this
Act.
Amendment of Acts and Ordinances
2.  The Income Tax Act 1967, the Petroleum (Income Tax) Act
1967, the **Stamp Ordinance 1949, the Stamp Ordinance (Sabah),
the Stamp Ordinance (Sarawak) and the Sales Tax Act 1972 are
amended respectively in the manner specified in Chapters II, III,
IV, V, VI and VII respectively.
*NOTE--The Petroleum (Income Tax) Act 1967 [Act 45 of 1967] has been revised to become the
Petroleum (Income Tax) Act 1967 [Act 543]
**The Stamp Ordinance 1949 [Ord. No. 59 of 1949] has been revised to become the Stamp Act
1949 [Act 378].
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CHAPTER II
AMENDMENTS TO THE INCOME TAX ACT 1967
Commencement of amendments to the Income Tax Act 1967
3. (1) Except for sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 14 and
paragraph 15(a), the provisions of this Chapter shall have effect
for the year of assessment 1983 and subsequent years of assessment.
(2) Sections 4, 5, 6 and 14 shall have effect for the year of
assessment 1984 and subsequent years of assessment.
(3) Sections 7, 8, 9, 10, 11 and 12 shall come into force on
1 January 1983.
(4) Paragraph 15(a) shall have effect on those cases whose
approval for retirement is given on or after 22 October 1982.
Amendment of section 34
4.  Section 34 of the Income Tax Act 1967, which in this
Chapter is referred to as "the principal Act", is amended by deleting
subsection (7).
New section 34A
5.  The principal Act is amended by inserting immediately after
section 34 the following new section 34A:
"Special deduction for research expenditure approved by
Minister
34A. (1) In ascertaining the adjusted income of a person from
a business for the basis period for a year of assessment,
deductions shall be made from the gross income from the
business for that period in respect of expenditure, not being
capital expenditure incurred on plant, machinery, fixtures,
land, premises, buildings, structures or works of a permanent
nature or on alterations, additions or extensions thereof or in
the acquisition of any rights in or over any property, incurred
by that person during that period on research approved by the
Minister.
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(2) The Minister in approving the research shall allow a
further deduction of one third of the amount of expenditure
on research in addition to the deduction under subsection (1)
and may impose such conditions as he thinks fit or may
specify the period for the purpose of deduction under this
section.
(3) Where any deduction in respect of expenditure on research
is made under this section, no deduction in respect of that
expenditure shall be made under section 33 or 34.".
Amendment of section 35
6.  Section 35 of the principal Act is amended by substituting for
the words "and 34" in subsection (2) the words ", 34 and 34A".
Amendment of section 39
7.
Subsection 39(1) of the principal Act is amended--
(a) by deleting the word "or" appearing at the end of paragraph
(g);
(b) by substituting for the full stop at the end of paragraph
(h) a semi-colon and the word "or"; and
(c) by inserting immediately after paragraph (h) the following
new paragraph (i):
"(i) any contract payment from which tax is deductible
under section 107A, if tax has not been deducted
therefrom and paid to the Director General in
accordance with subsection (1) of that section.".
Amendment of section 67
8.  Section 67 of the principal Act is amended by inserting
immediately before the figures "108" in subsection (4) the figures
"107A,".
Amendment of section 103
9.  Section 103 of the principal Act is amended by inserting
immediately before the figures "108(5)" in subsection (7) the words
"107A(2) or".
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Amendment of section 104
10.  Subsection 104(1) of the principal Act is amended by inserting
immediately before the figures "109(2)" in paragraph (c) the words
"107A(2) or".
New section 107A
11.  The principal Act is amended by inserting immediately after
section 107 the following new section 107A:
"Deduction of tax from contract payment
107A. (1) Where any person (in this section referred to as
" t h e payer") is liable to make contract payment to a
non-resident contractor in respect of services under a contract,
he shall upon paying or crediting such contract payment
deduct therefrom tax at the rate of--
(a) fifteen per cent of the contract payment on account
of tax which is or may be payable by that non-resident
contractor for any year of assessment; and
(b) five per cent of the contract payment on account of
tax which is or may be payable by employees of that
non-resident contractor for any year of assessment,
and (whether or not that tax is so deducted) shall within one month
after paying or crediting such contract payment render an account
and pay the amount of that tax to the Director General:
Provided that the Director General may--
(i) give notice in writing to the payer requiring him to
deduct and pay tax at some other rates or to pay
or credit the contract payment without deduction of
tax; or
(ii) under special circumstances, allow extension of
time for tax deducted to be paid over.
(2) Where the payer fails to pay any amount due from him
under subsection (1), the amount which he fails to pay shall be a
debt due from him to the Government and shall be payable forthwith
to the Director General.
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(3) Where in pursuance of this section any amount is paid to
the Director General by the payer or recovered by the Director
General from the payer--
(a) the Director General shall apply the amount paid or
recovered under paragraph (1)(a) towards payment of the
tax payable for any year of assessment by the non-resident
contractor to whom the payer was liable to pay the contract
payment to which that amount relates;
(b) the Director General shall refund the amount paid or
recovered under paragraph (1)(b) to the non-resident
contractor to whom the payer was liable to pay the contract
payment to which that amount relates as and when the
Director General deems appropriate; and
(c) if the payer has not deducted any amount in paying the
contract payment with respect to which the amount relates,
he may recover the amount from the non-resident contractor
as a debt due to the payer.
(4) In relation to any case, nothing in paragraph (1)(b) shall
prevent the deduction of any tax (not being tax deducted in accordance
with this subsection) in accordance with section 107.
(5) In this section--
"contract payment" means any payment, not being a payment
that is a royalty within the meaning of subsection 2(1) made for
services under a contract to the non-resident contractor or his
agent or any other person acting on his behalf;
"contract project", in relation to any non-resident contractor,
includes any undertaking, project or scheme, being an undertaking,
project or scheme carried on, carried out or performed in Malaysia;
"non-resident contractor" means any person who is not resident
in Malaysia within the meaning of section 7 or 8 and who, under
a contract or a subsidiary contract (not being a contract of service
or apprenticeship) or an agreement or arrangement undertakes
(otherwise than as an employee) any services under a contract;
"person" includes a partnership;
"professional service", in relation to any non-resident contractor,
includes any advisory, consultancy, technical, industrial, commercial
or scientific service;
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"services under a contract" in relation to any non-resident
contractor, means--
(a) the performing or rendering of any work or professional
service in Malaysia, being work or professional service
in connection with, or in relation to, any contract project;
or
(b) the granting, providing or supplying of the use, or the
right to use, in Malaysia (whether or not in connection
with or in relation to any contract project), any personal
property or any services of any person being a person
other than the non-resident contractor.".
Amendment of section 127
12.  Section 127 of the principal Act is amende